Small businesses in Nigeria face tough loan conditions
Small and medium-sized enterprises (SMEs) in Nigeria are finding it increasingly difficult to access affordable credit due to high interest rates and stricter lending conditions. Many businesses are turning away from formal loans and relying on costly informal financing options. Muda Yusuf and other experts highlight that the current financial system does not support SME growth, with most banks viewing small businesses as high-risk. Entrepreneurs like Ahamd Tijjani are seeking alternative financing models to survive and expand.
TLDR
- The 2025 Informal Economy Report by Moniepoint shows a significant decline in SMEs’ appetite for loans, with 51% of respondents never taking a loan, up from 30% the previous year.
- Under Olayemi Cardoso, the CBN raised the MPR six times, held it four times, and cut it twice, moving from 18.75% before the February 2024 MPC meeting to 26.5% in February 2026.
- PwC’s MSME Survey 2024 found that 27% of respondents cited high interest rates as the main barrier to loans, with 26% blaming long procedures and 14% citing insufficient collateral.
- Many SMEs pay annual borrowing costs exceeding 60–80% through informal lenders, making business growth difficult.
- Experts and entrepreneurs urge the adoption of asset-based and concessionary financing models to support SME expansion and job creation.
