‘CBN rate cut may ease borrowing costs’

Coleman Technical Industries Limited's Managing Director/CEO, George Onafowokan, has commented on the Central Bank of Nigeria's recent monetary policy rate cut, describing it as a "reset" to align policy with market realities. Onafowokan noted that commercial lenders had already begun offering loans at reduced rates, around 22 to 23 per cent, compared to the previous 26.5 per cent.

He attributed the gap between the CBN's policy rate and actual lending rates to an imbalance, which the latest adjustment seeks to correct. The CEO also pointed to bank recapitalization as a key factor in increasing banks' equity and lending capacity, from around N50 billion to N200 billion for smaller banks and N500 billion for larger institutions.

This increased capital, Onafowokan explained, boosted liquidity in the financial system and led banks to offer loans at lower rates than the previous policy rate. He predicted the full impact of the rate adjustment would take two to three months to be evident across the economy. Onafowokan also suggested that lower interest rates could affect treasury bill yields and foreign investment decisions, but emphasized Nigeria's continued appeal to international investors due to attractive returns.

He called for the Bank of Industry to reduce its lending rate to better align with its development finance mandate and highlighted positive signs in the Nigerian economy, such as economic growth over four per cent, declining inflation, and relative naira stability.