Businesses across Nigeria’s major sectors are reeling under mounting financial pressure as bank lending rates surge to record highs, with some reaching an astonishing 46 percent, according to the latest data from the Central Bank of Nigeria (CBN).
A Vanguard analysis of banks’ published deposit and lending rates reveals that while prime lending rates—typically extended to top-rated borrowers—hover between 25 and 32 percent, maximum lending rates applied to higher-risk or unsecured loans have soared, signaling worsening liquidity and risk aversion in the banking sector.
The sharp increase has hit small and medium-sized enterprises (SMEs) the hardest, alongside firms in oil and gas, construction, manufacturing, power and energy, transportation, and storage, where credit demand remains high but access has grown increasingly prohibitive.
CBN figures show that lending rates in these sectors ranged from 25–32 percent for prime borrowers, but spiked to between 35–46 percent for businesses deemed riskier. The trend reflects banks’ cautious approach amid tightening monetary conditions and elevated inflation.
Further breakdowns highlight wide disparities across institutions. In the oil and gas sector, top lenders such as Ecobank, Polaris Bank, Globus Bank, and Access Bank charged up to 46 percent.
In construction and real estate, Sterling Bank, Unity Bank, and Wema Bank posted rates ranging from 35 to 40 percent, while Fidelity Bank, FCMB, and Union Bank offered manufacturing loans at peak rates of about 38 percent.
Similarly, firms in power, energy, and transportation reported maximum borrowing costs between 36 and 39 percent, especially for long-term or unsecured loans, from institutions like Access Bank, Zenith Bank, and UBA.
Despite the steep lending rates, deposit returns remain largely stagnant, widening the interest rate spread. Average savings deposit rates stood at just 8.1 percent, while demand deposits yielded less than 2 percent. Although time deposits in select banks offered up to 19 percent, they still fell far short of the soaring lending costs faced by businesses.
The widening gap underscores the growing strain on the private sector, particularly manufacturers and SMEs, which depend heavily on credit for working capital and expansion. Analysts warn that unless interest rates moderate, Nigeria’s productive sectors could face slowed growth, job losses, and heightened operational risks in the months ahead.
