NIGERIAN FIRMS DIVIDED ON HIGH INTEREST RATES VERSUS LOAN AVAILABILITY

Business owners in Nigeria remain divided over whether high borrowing costs or limited access to credit is the bigger barrier to growth.

While commercial banks have expanded their loan books, many entrepreneurs say affordable finance is still scarce. High collateral demands and lending rates often exceeding 28–35 per cent for small firms make expansion difficult, especially under the Central Bank’s tight monetary policy that keeps the benchmark rate at 26.5 per cent.

Some operators argue that lower rates should be the priority. A Lagos small-business owner noted that borrowing at 35 per cent requires returns of at least 40–45 per cent just to break even after fees. Others, however, say they would willingly pay elevated interest if funds were readily available when needed.

Data from the 2025 World Bank Enterprise Survey shows that while nearly 95 per cent of MSMEs hold bank accounts, only about 20 per cent have access to bank loans. Most rely on retained earnings or informal sources. Analysts warn that without moderation in rates and improved credit conditions, private investment and non-oil growth will continue to face pressure.