CBN Rate Cut Fails to Boost SME Lending, Study Finds
CBN slashed its Monetary Policy Rate by 3.5 percentage points to 23% on Tuesday, its largest single cut.
In Brief
- •CBN slashed its Monetary Policy Rate by 3.5 percentage points to 23% on Tuesday, its largest single cut.
- •SME lending grew 1,270.19% from 2015 to 2025, reaching ₦177.44 billion ($133.46 million), yet remains only 0.38% of total commercial bank credit.
- •Historical data show that higher MPRs in 2015–2017 coincided with falling SME loans, while rate cuts during the pandemic did not spur a significant uptick.
- •Commercial banks still channel the bulk of credit to oil, gas, finance, and general commerce, leaving SMEs with limited access.
Why It Matters
SMEs constitute the backbone of Nigeria’s economy, yet less than 5% receive formal bank credit. While rate cuts are intended to lower borrowing costs, evidence shows they do not translate into more SME loans, highlighting structural barriers beyond interest rates. For policymakers, the findings suggest that monetary easing alone is insufficient; reforms to collateral requirements, credit assessment, and targeted financing may be needed to unlock SME growth and job creation.
Key Details
- CBN MPR after cut
- 23%
- SME lending growth 2015-2025
- 1,270.19%
- SME lending 2025 value
- ₦177.44 billion ($133.46 million)
- SME lending share of total credit 2025
- 0.38%
- CBN MPR 2024
- 27.50%
Original Reporting & Sources
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