SNOW TV NEWS DESK
Nigerian banks have increased average prime lending rates across several key sectors of the economy despite successive interest rate reductions by the Central Bank of Nigeria (CBN), raising concerns about the cost of borrowing for businesses.
The development comes after the CBN reduced the Monetary Policy Rate (MPR) from 27.5 per cent in September 2025 to 23 per cent in September 2026, following a gradual decline in inflation.
However, an analysis of the CBN’s published interest rate schedules for August 2025 and October 2026 shows that average prime lending rates increased in eight of 11 economic sectors.
Agriculture, forestry, and fishing recorded the highest increase, with lending rates rising from 23.44 percent to 24.77 percent. Construction increased from 25.25 per cent to 26.40 per cent, while manufacturing rose from 23.79 per cent to 24.36 per cent.
Other affected sectors included government, healthcare, real estate, education, and finance and insurance.
In contrast, prime lending rates declined slightly in arts and entertainment, oil and gas, and information and communication.
Meanwhile, average maximum lending rates across 10 sectors dropped from 33.78 per cent to 32.58 per cent, indicating that some borrowers have begun benefiting from lower borrowing costs.
Commenting on the development, Tunde Abioye, Head of Equity Research at Quest Merchant Bank, explained that lending rates depend on several factors beyond the CBN’s benchmark rate, including banks’ funding costs, liquidity, operating expenses, and borrowers’ credit risks.
Similarly, Nnamdi Nwizu, Co-Founder of Comercio Partners, described the development as evidence of uneven monetary policy transmission rather than a complete failure of interest rate reductions.
He noted that the latest 350-basis-point reduction occurred only 17 days before the October lending-rate assessment, making it too early to determine its full impact.
The report also showed that average savings deposit rates declined from 7.81 per cent to 6.61 per cent, while time-deposit rates dropped from 14.52 per cent to 12.28 per cent.
Analysts warned that persistently high borrowing costs could discourage business expansion, reduce investment, weaken profitability, and affect employment creation, particularly in agriculture, manufacturing, and real estate.
SNOW TV EDITORIAL ANALYSIS
The continued rise in prime lending rates despite CBN interest rate cuts highlights the gap between monetary policy decisions and their impact on the real economy.
While reducing the benchmark rate is important, businesses need affordable credit to expand production, create jobs, and contribute to economic growth.
The CBN should strengthen monetary policy transmission by encouraging greater transparency in banks’ lending practices and addressing factors that keep borrowing costs elevated.
Commercial banks must also balance profitability with their responsibility to support productive economic activities.
Ultimately, the success of monetary easing should not be measured by reductions in the policy rate alone but by whether businesses and households can actually access cheaper loans. Without affordable credit, the expected benefits of lower interest rates may take longer to reach the wider economy.
“Sir Bartholomew White Ebe is a Lagos-based media personality, Music Artist, Producer, and a Relationship Coach and independent journalist. With over seven years of experience tracking political developments and cultural shifts in Nigeria, he specializes in local current affairs, grassroots politics, and community-driven reporting across Lagos State. As the founder and chief editor of Snow Multimedia Connect {SNOW TV}, he leads the editorial team to deliver verified, high-impact stories to digital audiences.”
Email: snowmediaconnect@gmail.com
