Coleman Technical's Onafowokan Reports Drop in Lending Rates

The recapitalisation of Nigerian banks has resulted in commercial lending rates falling to between 22% and 23%, which is below the Central Bank of Nigeria’s (CBN) Monetary Policy Rate (MPR) of 26.5%. George Onafowokan, managing director and chief executive officer of Coleman Technical Industries Limited, stated that the increased capital in the banking system has enhanced liquidity and intensified competition for lending opportunities.

This has forced actual market lending rates to drop below the previous policy rate. Onafowokan described the recent reduction in the MPR as a “reset” to align monetary policy with market realities.

He noted that banks were required to increase their capital bases significantly, with those at N50 billion needing to rise to N200 billion, and those at N200 billion to N500 billion. While he indicated that the effects of the CBN's rate adjustment would take two to three months to manifest, he warned that lower interest rates might impact treasury bill yields and foreign investment decisions.

Nonetheless, he expressed confidence in Nigeria's attractiveness to foreign investors due to high market returns.