Businesses debate whether high interest or limited credit is the bigger problem
Businesses in Nigeria are split over whether high borrowing costs or restricted access to credit is the main barrier to growth. Some business owners, like Blessing Isizuwa and Dipo Oluwanjobi, say they would accept higher interest rates if loans were more available, while others stress the need for lower rates. The Central Bank of Nigeria’s tight monetary policy has pushed up lending rates, making loans expensive for many small businesses. Experts like Ibrahim Maigari Ahmadu and Muda Yusuf highlight that collateral requirements and short-term loans further complicate financing for entrepreneurs.
TLDR
- The Central Bank of Nigeria’s policies have led to benchmark interest rates of 26.5 per cent, with lending rates for small businesses often exceeding 28 per cent.
- Major banks have prime lending rates ranging from 21.0 per cent to 28.5 per cent, and maximum rates as high as 48.0 per cent.
- According to the 2025 World Bank Enterprise Survey, 94.8 per cent of MSMEs have bank accounts, but only 20.2 per cent have access to bank loans.
- Business owners say high collateral requirements and short-term loan tenors make it difficult for SMEs to access and effectively use credit.
- Analysts warn that unless lending rates fall and credit access improves, private investment and MSME growth could remain weak.
