Nigerian businesses, particularly small and medium-sized enterprises (SMEs), are struggling under the weight of commercial bank loan rates that have climbed as high as 36 per cent. This financial pressure is hampering economic growth, investment, and job creation across the country.
According to bank officials and analysts, the high rates are a result of several factors, including high inflation, the risk of loan defaults, and the Central Bank of Nigeria’s (CBN) tight monetary policy. The CBN has raised its benchmark interest rate to 27.50 per cent and requires banks to hold 50 per cent of their deposits, reducing the funds available for lending.
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), stated that interest rates above 30 per cent are a “death sentence” for businesses. He added that the combination of high costs and short loan tenures makes it nearly impossible for businesses to expand or meet their operational needs. The business community is now urging the CBN to adopt a more balanced approach that controls inflation without crippling the economy.
