SMEs express frustration over CBN’s 27.5% interest rate decision  

The decision, announced after the latest Monetary Policy Committee (MPC) meeting, has sparked concerns among business owners who rely on credit facilities to sustain operations.

According to the MPC communique, the decision to maintain rates was driven by “recent macroeconomic indicators that suggest improved market stability”, particularly in the foreign exchange market and inflation trends.

“The Committee noted that core inflation remains a concern, even as recent data indicates a slowing trajectory. Food prices continue to exert upward pressure, and thus, premature monetary easing could reverse recent gains,” the CBN communique stated.

The MPC voted unanimously to keep rates steady, with CBN Governor, Olayemi Cardoso, stating that while inflation showed early signs of easing, it was “too early to start considering rate cuts.” 

Speaking with entrepreneurs in Abuja on Tuesday, many SMEs expressed frustration to Naijaonpoint over their inability to access loans or service existing debts due to the high-interest rates.

“I don’t really know what to tell you. But what I can say is that collecting loans from banks is not easy. The interest rate is too high for me and many of us. How do they want us to survive or continue our business?” 

“How do we grow when loans are unaffordable? Many of us rely on these facilities to keep our businesses afloat, but the cost is just too high,” he said.

Economic analysts have also reacted to the CBN’s decision, highlighting its implications for business sustainability and economic growth.

“The impact is that it will bring some relief to businesses, especially those that are already indebted to banks. At least, interest rates are not increasing further,” Yusuf noted.

“However, the desire of many businesses is that the rate should be reduced. It is not just about pausing the rate but actually decreasing it because servicing loans at nearly 30% interest is excruciating, burdensome, and outrageous.” 

“Those who are already indebted are the worst hit because they cannot walk away from the loan. Fresh borrowers can choose whether or not to take a loan, but existing debtors are stuck. We hope that at the next MPC meeting, there will be some relaxation of these rates. We want to see a drop in the MPR and the Cash Reserve Ratio (CRR),” he added.

“MPR at 27.5% has no real impact on inflation control. Instead, it is making life difficult for entrepreneurs. Businesses need access to affordable credit to create jobs and expand investments. The current policy discourages borrowing and, by extension, hinders economic growth,” he said.

As businesses grapple with the reality of high borrowing costs, industry stakeholders are calling on the CBN to reconsider its approach in the next MPC meeting. Analysts believe that a lower interest rate would stimulate economic activity, encourage investments, and boost job creation.

For now, Nigerian businesses must find alternative means of financing their operations, as the cost of traditional bank loans remains prohibitive.