Nigerian Businesses Face High Borrowing Costs and Credit Issues

Businesses in Nigeria are currently facing challenges related to borrowing costs and access to credit, with opinions divided on which poses a greater obstacle to growth. Some business owners advocate for reduced lending rates, while others are willing to accept higher costs if financing is accessible.

The Central Bank of Nigeria's tight monetary policy has raised benchmark interest rates to 26.5%, leading to lending rates surpassing 28% for many small businesses. Blessing Isizuwa, a Lagos-based small business owner, highlighted that high interest expenses and processing fees have significantly increased capital costs.

Additionally, banks' risk aversion has tightened credit conditions, with lenders favoring established corporates and imposing stringent collateral requirements on small businesses, particularly in agriculture. The Central Bank recently reported varying prime lending rates among banks, with Guaranty Trust Bank at 21.0% and First Bank of Nigeria at 26%.

According to the 2025 World Bank Enterprise Survey, only 20.2% of MSMEs in Nigeria have access to bank loans, indicating a structural financing challenge.