Rate cut raises hopes for cheaper business loans

For over two years, Nigerian businesses grappled with soaring operating costs and exorbitant credit. Manufacturers endured thin margins as they borrowed at high rates, while smaller enterprises struggled to fund working capital, and investors reaped unusually high returns from government securities. In a significant shift, the Central Bank of Nigeria (CBN) reduced its benchmark interest rate by 350 basis points to 23 per cent at its 307th meeting on September 22.

This was the largest single reduction since the current easing cycle commenced and marked the second cut this year. The CBN's decision came after a 50 basis point reduction in February, when the rate was held steady at 26.5 per cent from May to July. Analysts believe the move could alleviate some of the economic strain and pave the way for cheaper business loans.