The Central Bank of Nigeria has been cutting its policy rate steadily through 2026, signalling a shift toward looser monetary policy. Yet if you've tried to borrow recently—or refinance an existing loan—you've probably noticed that bank lending rates haven't budged much. A CBN-backed survey from mid-November 2026 confirms it: despite rate cuts, banks are still charging borrowers near-peak rates. For freelancers and small-business owners who need working capital or equipment financing, this gap is real money.
Why Banks Aren't Passing On Rate Cuts
When a central bank cuts rates, it doesn't automatically force commercial banks to lower theirs. Banks set lending rates based on several factors: their cost of funds (what they pay depositors), their operating costs, the risk they perceive in lending, and—frankly—what they think they can get away with. In Nigeria's case, three things are holding rates up even as CBN policy eases.
First, banks' deposit costs remain high. Many Nigerian banks still pay 8–12% on savings accounts and fixed deposits to attract cash. If a bank's cost of funds is 10%, it won't lend at 12%—it needs a margin. Second, non-performing loans (NPLs) remain a headache for many lenders. When a bank worries that one in ten loans might default, it prices that risk into its rates. Third, inflation expectations are still sticky. Even though headline inflation has moderated from its 2024 peaks, food and energy prices remain volatile, so banks price in a cushion.
The Official vs. Real Spread
The CBN's policy rate (the Monetary Policy Rate, or MPR) has moved down to around 26.75% as of November 2026—a significant cut from the 27% peak earlier in the year. Yet the average prime lending rate (the rate banks charge their best customers) is still hovering near 28–30%, and rates for small-business loans often reach 35–40%. That 8–14 percentage point gap is larger than it should be in a functioning market.
This matters because it distorts credit allocation. Borrowers who can't meet banks' collateral and documentation requirements—which is most small businesses—get priced out entirely. They turn to informal lenders, microfinance, or just do without. The CBN knows this. In November 2026, CBN leadership publicly flagged the issue, noting that monetary policy transmission (the speed at which rate cuts reach borrowers) is weak.
When (and How) This Might Improve
Three things could narrow the gap. First, if inflation stays low and stable, banks' risk premium will shrink. Second, if the CBN keeps rates low for long enough, deposit costs will eventually fall as savers accept lower returns. That takes time—typically 6–12 months. Third, if the CBN introduces targeted credit schemes or pressures banks directly (through moral suasion or regulatory incentives), lending rates could shift faster.
The CBN has hinted at all three. In late 2026, it signalled a commitment to gradual rate cuts through 2027, and it has been working with banks on loan-to-deposit ratios and sectoral lending targets. Some banks have already begun offering promotional rates for specific sectors (agriculture, manufacturing), though these are narrow.
What You Can Do Now
If you need to borrow, don't assume the published prime rate is the only option. Shop across banks—rates vary by 2–3 percentage points depending on your profile. If you're a business owner with good financials and a track record, negotiate. Some banks will offer discounts to retain customers or attract new ones. Consider microfinance institutions and digital lenders (like some fintech platforms) if you're willing to trade a higher rate for faster approval and less bureaucracy. And if you're holding cash, this is a good time to lock in deposit rates before they fall further.
For freelancers and remote workers earning in dollars, the rate environment is less directly relevant—you're not typically borrowing in naira. But if you're running a naira-based business or planning to expand locally, watch this space. As CBN rate cuts eventually flow through to lending rates (likely by mid-2027), the cost of working capital will fall, and more businesses will be able to invest and grow.