The House of Representatives has called on the Federal Government and the Central Bank of Nigeria (CBN) to urgently review commercial lending frameworks and establish single-digit interest rates for Small and Medium-Scale Enterprises (SMEs) across the country.
The call followed a motion moved by Hon. Bamidele Salam, highlighting the grave economic hardship faced by local entrepreneurs due to exorbitant borrowing costs, stringent collateral demands, and cumbersome loan documentation.
Addressing the legislative chamber, Hon. Salam emphasized that SMEs serve as the backbone of Nigeria’s productive economy, driver of innovation, and largest provider of jobs. He cited data from the 2021 SMEDAN/NBS National Survey, noting that MSMEs make up 96.9% of businesses in Nigeria, contribute 46.32% to the national GDP, account for 87.9% of total employment, and generate 6.21% of exports.
Despite recent interventions by the Central Bank of Nigeria—including lowering the Monetary Policy Rate (MPR) from 26.5% to 23%—commercial bank lending rates in Nigeria remain prohibitively high, ranging between 20% and 46% per annum.
High borrowing costs create a vicious cycle for Nigerian businesses. Entrepreneurs are forced to raise product prices to service expensive loans, which erodes consumer purchasing power, reduces profitability, and ultimately leads to business failures and job losses.
Hon. Bamidele Salam
The House expressed deep concern that Nigerian businesses are being placed at a severe competitive disadvantage compared to their regional and international peers:
Central Africa (CEMAC): Average SME interest rate stands at 10.97% (ranging from 8.31% in Cameroon to 21.51% in Gabon).
South Africa: Recorded SME lending rates averaging 10.7%.
Kenya: Recorded average rates around 16.6%.
United States: SBA-backed small business loans generally range between 8% and 13%.
Lawmakers noted that under Sections 16(1)(a) and 17(3)(a) of the 1999 Constitution (as amended), the Federal Government is constitutionally obligated to harness national resources to promote an efficient, dynamic, and self-reliant economy while ensuring suitable employment opportunities for all citizens.
To address the credit crunch and insulate small businesses from economic shocks, the House of Representatives resolved to:
-Urge the Federal Government to approve special emergency funding for the Bank of Industry (BOI) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) to provide credit facilities to qualified SMEs at single-digit interest rates.
-Request the CBN, in collaboration with commercial banks, development finance institutions, and SME industry associations, to review monetary and risk-pricing frameworks to establish a concessional lending window for productive sector enterprises without compromising financial system stability.
-Call on the Federal Ministry of Industry, Trade and Investment to convene an Emergency National Summit on Affordable SME Finance within 30 days. The summit will bring together key stakeholders to outline time-bound action plans for reducing interest rates, simplifying application processes, and accelerating credit disbursement.
-Mandate the House Committees on Industry, Banking Regulations, Small and Medium-Scale Enterprises, Finance, and National Planning and Economic Development to ensure strict compliance with these resolutions and report back within four (4) weeks for further legislative action.
