Access, UBA, Zenith, Other Nigerian Banks Raise Lending Rates Despite CBN’s Interest Rate Cuts
- CBN cut the benchmark rate by 450 basis points, but borrowing costs rose in eight of 11 sectors
- Experts say banks’ funding costs, liquidity and credit risks are slowing the impact of rate cuts
- Expensive loans could delay business investment, while lower deposit rates may reduce returns for savers
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Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigerian businesses hoping for cheaper loans following the Central Bank of Nigeria’s (CBN) interest rate cuts are facing fresh disappointment as commercial banks increase borrowing costs across major sectors of the economy.
Despite a cumulative 450-basis-point reduction in the benchmark Monetary Policy Rate (MPR) over 13 months, average prime lending rates have risen in eight of 11 key sectors, raising concerns about the slow transmission of monetary easing to borrowers.
Source: UGC
The development means businesses in agriculture, manufacturing, construction and other productive sectors are still grappling with expensive credit despite the CBN’s efforts to stimulate economic activity.
CBN cuts rates as inflation eases
The CBN began easing monetary policy in September 2025, reducing the MPR from 27.5% to 27%.
Another 50-basis-point reduction followed in February 2026, bringing the rate to 26.5%, before a substantial 350-basis-point cut lowered it to 23% in September.
The reductions followed improving inflation figures, with headline inflation declining from 15.93% in May 2026 to 15.39% in August and 14.63% in September.
The easing cycle had raised expectations that commercial banks would reduce lending rates, providing financial relief to businesses and households.
However, recent banking data suggest otherwise.
Eight sectors face higher borrowing costs
An analysis by Financial Vanguard of CBN interest rate schedules for August 2025 and October 2026 revealed that average prime lending rates increased across eight major economic sectors.
Agriculture, forestry and fishing recorded the largest increase, with rates climbing from 23.44% to 24.77%.
Construction followed, rising from 25.25% to 26.40%, while government borrowing rates increased from 25.52% to 26.49%.
Other affected sectors included healthcare, real estate, manufacturing, education, and finance and insurance.
Manufacturing rates rose from 23.79% to 24.36%, while education increased from 26.33% to 26.85%.
However, arts and entertainment, oil and gas, and information and communication recorded marginal reductions.
Meanwhile, average maximum lending rates across 10 sectors declined from 33.78% to 32.58%, indicating that borrowing costs are moving unevenly across the banking system.
Experts explain why loans remain expensive
Tunde Abioye, Head of Equity Research at Quest Merchant Bank, attributed the divergence to banks' funding costs, liquidity conditions and credit risks.
He explained that lower benchmark rates do not automatically translate into cheaper loans, particularly when lenders remain concerned about borrowers' repayment capacity.
Similarly, Nnamdi Nwizu, Co-Founder of Comercio Partners, said the increases were not widespread across banks.
According to him, an analysis of 174 comparable bank-sector observations showed that 65 lending rates declined, 79 remained unchanged and only 30 increased.
He noted that substantial adjustments by a relatively small number of banks influenced the overall averages.
Source: Getty Images
What higher rates mean for Nigerians
The development could prolong financial pressure on businesses seeking loans for expansion, equipment purchases and working capital.
Higher borrowing costs may also discourage investment and increase operating expenses, potentially affecting consumer prices.
Meanwhile, banks have reduced some deposit rates, meaning savers may receive lower returns even as certain borrowers continue paying more for credit.
For businesses and households, the figures highlight a troubling reality: the CBN's interest rate cuts have yet to deliver consistent borrowing relief across Nigeria's economy.
CBN releases banks' latest lending rates
Legit.ng earlier reported that the Central Bank of Nigeria (CBN) has released lending rate data for September, showing that Nigerian banks are charging borrowers anywhere from single digits to as high as 60%, depending on perceived credit risk.
The September figures cover two categories: prime lending rates, which apply to customers banks consider lower risk, and maximum lending rates, charged to borrowers seen as higher risk.
Source: Legit.ng
