Nigerian businesses are increasingly strained as commercial lending rates hover around 30 per cent, forcing many companies— especially SMEs—to scale back operations, postpone investments and struggle with loan repayments.
Bank officials and analysts warn that the current credit environment is eroding business confidence and worsening Nigeria’s fragile economic recovery. Across the banking sector, commercial loan rates now cluster between the high20s and low-30s, depending on risk profile, sector and collateral quality.
At a Tier-2 bank, a senior credit officer confirmed lending rates of 32 to 36 per cent, though Federal Government-backed facilities such as CreditCorp loans still offer some relief at 24 per cent. Providus Bank places its commercial lending between 29 and 35 per cent, Globus Bank at 29 to 30 per cent, while UBA Plc says its average loan rate is around 29 per cent.
The Central Bank of Nigeria’s tight monetary stance is driving the high-rate environment. After its September 2025 meeting, the CBN raised the Monetary Policy Rate (MPR) to 27.5 per cent and maintained a stringent 50 per cent Cash Reserve Ratio (CRR) for commercial banks, effectively reducing liquidity available for lending.
“This is one of the most restrictive monetary periods we’ve seen in years,” said Abuja-based financial analyst, Kola Aremu. “When the benchmark rate is almost 28 per cent, it’s unrealistic to expect commercial loans below 30 per cent. Banks have to price in risk, inflation and regulatory costs.”
CBN Governor, Yemi Cardoso, has defended the hawkish position, emphasising that slowing inflation remains the priority. The IMF supports the stance but has urged the government to adopt broader fiscal measures to cushion private-sector impact. Business groups, however, say the tightening is squeezing productivity.
Former DG of the Lagos Chamber of Commerce and Industry and CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, described the current interest rate regime as economically damaging. “Interest rates at 30 per cent are still hostile to investment.
No productive enterprise can thrive under such conditions, especially with short loan tenures,” he said. “We need a more balanced policy that tackles inflation without strangling financing for the real sector.” Economist and former banker, Dr. Tina Okei, also warned that the cost of borrowing is now discouraging capital formation.
“Manufacturers are delaying equipment purchases, exporters can’t scale, and SMEs who create most of the jobs are the hardest hit. Without affordable credit, productivity stalls.”
Central Bank of Nigeria data from early 2025 shows that 75 per cent of Nigerian businesses now cite high interest rates as their biggest operational challenge. Many firms have begun cutting production, freezing hiring and reviewing expansion plans.
A Lagos-based rice processor told our reporter that his firm has reduced output by 40 per cent. “Our working capital loan is at 33 per cent. We’re servicing it, but growth has stopped entirely,” he said.
A 2025 report by CFG Advisory found that interest rate spreads deposit rates at 5–7 per cent and lending rates near 30 per cent are reducing private sector credit and weighing on GDP growth. The firm urged targeted easing for productive sectors and greater fiscal coordination.
The Federal Government has introduced interventions such as the Bank of Industry (BOI) loans, SME Development Fund programmes and CreditCorp facilities, but experts say their scale is inadequate for an economy with millions of active SMEs.
Analysts warn that unless lending conditions ease, Nigeria risks slower job creation, weaker consumer spending and prolonged business stagnation. “Affordable credit is the engine oil of the economy. At 30 per cent, the engine is knocking,” Dr. Okei said.
