Manufacturers struggle with borrowing rates up to 60% despite CBN’s rate cuts

Manufacturers in Nigeria are still grappling with extremely high borrowing costs, with lending rates reaching as much as 60 per cent, despite recent efforts by the Central Bank of Nigeria (CBN) to ease monetary policy.

Latest data released by the apex bank on lending and deposit rates across deposit money banks as of March 20, 2026, shows that although some banks offer relatively lower prime lending rates, the maximum rates charged on loans remain sharply elevated, placing significant pressure on manufacturers seeking credit.

The development comes months after the CBN’s Monetary Policy Committee (MPC) reduced the benchmark Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent in February 2026.

CBN Governor Olayemi Cardoso, who announced the decision at the end of the MPC’s 304th meeting in Abuja, said the committee opted for a cautious easing of monetary policy.

“The Committee decided to reduce the monetary policy rate by 50 basis points to 26.5 per cent,” Cardoso said, adding that the MPC resolved to retain the Standing Facilities Corridor around the MPR at +50/-450 basis points.

The committee also retained the Cash Reserve Requirement (CRR) at 45 per cent for deposit money banks, 16 per cent for merchant banks, and 75 per cent for non-TSA public sector deposits.

The February decision marked the second rate cut under the current CBN leadership, following a similar reduction in September 2025, after which the MPC held rates steady in November 2025.

Cardoso explained that the rate cut was based on what the committee described as a balanced assessment of risks to the economic outlook.

He noted that inflationary pressures were beginning to moderate, supported by the lagged impact of earlier monetary tightening, improved exchange rate stability, and increased food supply.

However, the latest CBN data suggests that the impact of the rate cut has yet to significantly lower borrowing costs in the banking system.

Prime lending rates for the manufacturing sector vary widely across banks. While Stanbic IBTC offered the lowest prime rate at one per cent, several banks maintained prime lending rates above 30 per cent. These include First City Monument Bank (FCMB), Globus Bank, Keystone Bank, Polaris Bank, Unity Bank, and Wema Bank.

Even more concerning for manufacturers are the maximum lending rates, which remain significantly high.

Stanbic IBTC recorded the highest ceiling at 60 per cent, followed by FCMB at 46 per cent. Union Bank and Unity Bank posted maximum lending rates of 37 per cent and 38 per cent respectively, while Fidelity Bank, First Bank, Polaris Bank, and Sterling Bank quoted rates ranging between 33 and 36 per cent.

Some banks with relatively moderate prime lending rates still maintain high maximum lending limits. For instance, Access Bank quoted a 25.5 per cent prime lending rate but retained a 32 per cent maximum rate, while Ecobank posted 26.75 per cent and 33 per cent respectively.

Similarly, Guaranty Trust Bank recorded a prime rate of 10 per cent, but its maximum lending rate stood at 32 per cent.

Merchant banks also reflected similar lending patterns. Coronation Merchant Bank reported a prime rate of nine per cent and a maximum lending rate of 35 per cent, while FSDH Merchant Bank posted seven per cent and 30 per cent respectively.

While borrowing costs remain high, returns on deposits remain relatively low, reflecting a wide spread between lending and deposit rates in the banking system.

Savings deposit rates were largely clustered around 7.95 per cent across most banks. However, Standard Chartered Bank, United Bank for Africa (UBA), and SunTrust Bank offered slightly higher rates of about 8.1 per cent, while Stanbic IBTC recorded one of the lowest savings rates at 2.65 per cent.

Interest paid on demand deposits remained even lower across the industry.

Data showed Globus Bank offering just 0.01 per cent, Access Bank paying 0.52 per cent, and Wema Bank quoting 0.74 per cent.

For time deposits, rates varied more widely across institutions. Citibank recorded one of the lowest at 7.8 per cent, while Keystone Bank offered the highest rate at 19.59 per cent.

Meanwhile, Greenwich Merchant Bank offered 14 per cent on demand deposits and 17.5 per cent on time deposits, indicating relatively stronger incentives for depositors compared with many commercial banks.

The large gap between lending and deposit rates underscores the high cost of financial intermediation in Nigeria, with manufacturers bearing a significant share of the burden.

CBN data indicates that lending to the manufacturing sector has declined in recent months, reflecting the impact of elevated borrowing costs and weakening demand.

According to the figures, credit to manufacturing dropped from N8.53 trillion in December 2024 to N7.09 trillion by September 2025, representing a decline of N1.44 trillion or 16.9 per cent.

Industry stakeholders say such borrowing conditions continue to discourage long-term investment in the sector.

Manufacturers have repeatedly warned that double-digit interest rates significantly undermine expansion plans, weaken competitiveness, and reduce the sector’s ability to create jobs.

Economic analysts also caution that the persistence of high lending rates, despite the slight easing of monetary policy, could weigh on economic growth if productive sectors remain constrained by expensive credit.

The Director-General of the Nigerian Association of Small and Medium Enterprises (NASME), Eke Ubiji, said borrowing conditions remain difficult for businesses despite some improvements in macroeconomic indicators.

“The CBN needs to still go around their decision on the MPR and see what could be done. It is still not encouraging borrowing from the private sector,” Ubiji said.

At the same time, foreign investment in Nigeria’s manufacturing sector has declined sharply, raising additional concerns about the sector’s outlook.

Data from the National Bureau of Statistics (NBS) shows that capital inflows into manufacturing fell by $654.43 million year-on-year, dropping from $1.43 billion in 2024 to $772.45 million in 2025, representing a 45.9 per cent decline.

Manufacturing’s share of total capital importation also shrank significantly, falling from 11.58 per cent in 2024 to just 3.33 per cent in 2025.

Analysts say the drop reflects growing investor preference for sectors offering faster returns and lower risks, as manufacturers continue to grapple with high financing costs, energy challenges, and weak consumer demand.