By Muhammad Mamman
The Central Bank of Nigeria (CBN) has taken a calculated step to revive credit flows to the real economy, even as its benchmark interest rate remains unchanged. In a move designed to discourage banks from parking excess liquidity, the apex bank has reduced returns on its Standing Deposit Facility (SDF), nudging commercial banks toward lending to businesses and the domestic private sector.
At its 303rd Monetary Policy Committee (MPC) meeting, the CBN opted to keep the Monetary Policy Rate (MPR) at 27 percent — opting for monetary stability over rate cuts — but recalibrated the interest corridor around that rate to +50 / –450 basis points. The decision signals the bank’s dual priorities: containing inflation and reviving private-sector borrowing.
“By lowering the reward for idle funds, we make lending more attractive — that’s the central idea behind this policy tweak,” said a senior central bank official on condition of anonymity. The move comes amid concerns over a stagnant lending climate: private sector credit had peaked at N78.1 trillion in April 2025, but by September had fallen sharply to N72.5 trillion.
Analysts say the policy change could mark a turning point: with borrowing costs potentially easing and banks incentivised to extend loans rather than hoard cash, some breathing room may return for businesses — especially small and medium enterprises (SMEs) strapped by high capital costs in recent months.
Still, caution remains. The MPR’s retention at a lofty 27 percent — despite falling inflation — has drawn criticism from some economists who fear the tight stance will continue to stifle private-sector growth. The coming weeks will show whether this latest recalibration succeeds in unlocking credit and reviving Nigeria’s growth-starved real economy.
