High interest rates driving micro-businesses to dodgy lenders
With growing interest rates and ambiguous requirements to access credit from banks for their daily business activities, many Micro, Small, and Medium Enterprises (MSMEs) now opt for non-bank lenders.
According to reports, Nigeria’s lending rate is one of the highest in the world. Although, lending rates in Nigerian banks officially remain at 18 per cent, four percentage points above the MRR, loans are available in the banks only at an interest rate of between 20 and 21 per cent.
This underscores the disconnection between the small businesses and the banking sector of the Nigerian economy.
In a statement late last year, the Central Bank of Nigeria (CBN) unveiled the applicable rates for deposit money banks (DMBs) showing the lowest and the highest rates from the 24 lenders. The statement showed that Skye Bank, Keystone Bank, Unity Bank, and Wema Bank had the highest lending rates of between 30 and 31 per cent while Citi Bank, Guarantee Trust Bank, Rand Merchant Bank had the lowest rates of…more
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