The Centre for the Promotion of Private Enterprise has called on Nigerian banks to reduce lending rates following the Central Bank of Nigeria's 350-basis-point cut in the Monetary Policy Rate. The CPPE stated that cheaper credit is critical to unlocking investment and productive activity in the country. The CBN cut the MPR from 26.5 percent to 23 percent at its 307th Monetary Policy Committee meeting held on September 21 and 22, 2026.
The CPPE's Chief Executive Officer, Muda Yusuf, emphasized that the reduction in lending rates is particularly important for the real sector, where high financing costs have constrained investment, production, working capital, and job creation. He noted that the economic benefits of the rate cut would depend largely on how quickly banks adjust their lending rates. The CPPE expects banks to reflect the new monetary policy environment in the pricing of credit.
The CBN's 350-basis-point rate cut is the largest cut in the MPR since December 2006, when the CBN reduced the benchmark by 400 basis points from 14 percent to 10 percent. The rate cut followed a period of easing inflation, with headline inflation standing at 15.39 percent in August, down from 15.43 percent in July and 15.91 percent in June, according to the National Bureau of Statistics.
The CPPE warned that without meaningful transmission to borrowers, the impact of the policy adjustment on investment and economic growth would be limited. The group urged banks to progressively reprice both new and existing facilities to ensure that the monetary policy easing reaches businesses and households. This, it stated, would give businesses greater room to finance inventories, expand production, and undertake new investments.
Alongside the MPR reduction, the MPC recalibrated the policy corridor to +50/-300 basis points around the new benchmark rate. This puts the Standing Lending Facility at 23.5 percent and the Standing Deposit Facility at 20 percent. The committee, however, retained the Cash Reserve Ratio at 45 percent for deposit money banks and 16 percent for merchant banks.
The CPPE noted that lower lending rates could support businesses, particularly highly leveraged companies, by reducing finance costs and improving cash flow. It also stated that lower borrowing costs could make longer-term projects more commercially viable. The key test, however, will be whether the 350-basis-point reduction in the CBN's benchmark rate is reflected in commercial lending rates.
The call comes as businesses continue to contend with elevated borrowing costs despite the easing of inflationary pressures and improved conditions in the foreign exchange market. The CPPE's demand for lower lending rates is aimed at stimulating investment in key sectors such as manufacturing, agriculture, construction, and logistics, which have long investment cycles and tight profit margins.
Key points
- The CPPE demands that Nigerian banks reduce lending rates following the CBN's 350-basis-point cut in the Monetary Policy Rate.
- The rate cut aims to reduce the cost of capital, improve business cash flows, and stimulate investment in key sectors of the economy.
- The CPPE warns that without meaningful transmission to borrowers, the impact of the policy adjustment on investment and economic growth would be limited.
