On the back of the recent in Monetary Policy Rate (MPR) to 26.75 per cent, by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), the average maximum lending rate in Nigeria’s banking sector dropped to 28.89 per cent in July 2024 from 29.11 per cent June 2024.
Maximum lending rate is the upper limit of interest rates for loans to the sector, which might apply to higher-risk scenarios or different loan structures.
With the average maximum lending rate at 28.89 per cent, bank customers are expected to witness a hike in lending to real sectors, a factor contributing to weak business activities.
The banking sector lending rate in Nigeria averaged 14.17 per cent from 1961 until 2024, reaching an all-time high of 37.80 per cent in September 1993 and a record low of 6.00 per cent in April 1975.
In 2020, the average maximum lending rate reached a peak of 30.73 per cent when the MPR rate stood at 13.5 per cent.
Analysis of the CBN “Money market indicator” data revealed that the average maximum lending rate opened in January 2024 was at 27.07 per cent when MPR was at 18.75 per cent and dropped to 26.55 per cent in February 2024 when the monetary policy committee of CBN hiked MPR to 22.75 per cent.
