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ARTICLE AD BOX
Kayode Tokede
With the Monetary Policy Rate (MPR) retained at 26.50 per cent by the Central Bank of Nigeria (CBN), the banking sector’s average maximum lending rate remained flat at 35.17 per cent in March 2026.
Maximum lending rate is the highest permissible interest rate that lenders can charge borrowers. It is often defined as the rate that is one percentage point above the benchmark prime lending rate, which is determined by the CBN .
The rate is crucial for ensuring fair lending practices and protecting borrowers from excessive interest rates.
According to the “Money Market Indicators” of CBN, the average maximum ending rate opened January 2026 at 32.68 per cent and closed February 2026 to 35.17 per cent.
The Monetary Policy Committee (MPC) of the CBN in 2025 retained MPR at 27 per cent, and it remained so till January 2026. However, the committee at the 304th meeting in February 2026 cut the rate by 50 basis points to 26.5 per cent.
Despite the cut, the average maximum lending rate has remained flat at 35.17 per cent, becoming a challenge for borrowers who wanted to access capital from Nigerian banks.
As gathered by THISDAY, the average maximum lending rate in March 2025 was at 30.19 per cent from 29.79 per centn amid MPR at 27 per cent.
It, however, closed December 2025 at 29.32 per cent from 29.79 per cent at the time interest rate was hovering between 27.50 per cent- 27 per cent.
With interest rate at 27.00 per cent, commercial banks typically add a margin of 300–500 basis points above the interest rate to cover credit risk, inflation, and operational costs.
In the move to tackle inflation rate and stabilise Naira at the foreign exchange market, the CBN since November 2024 retained its rate at 27.50 per cent from 27.25 per cent.
In December 2024, the maximum lending rate was 29.71 per cent, when the MPC voted to retain the MPR at 27.50 per cent
The steep increase in the interest rate has sparked concerns regarding the potential impact on the cost of credit for businesses already facing economic hardships due to foreign exchange unification and fuel subsidy removal by the federal government.
CBN data revealed that the average prime lending rate also remained flat at 19.29 per cent for the second consecutive month. In January 2026, the average prime lending rate was at 19.54 per cent, making it the highest so far since 2006.
The prime lending rate indicates the possible rate offered to the most creditworthy customers by Nigerian banks.
Nigeria’s average prime lending rate reached an all-time high of 19.66 per cent in November 2009 and a record low of 11.13 per cent in March 2021.
The steady increase in interest rate reflected in the average prime lending rate last year as the CBN intensified its effort to tackle inflation rate and stabilize the local currency at the foreign exchange market.
However, analysts have predicted a further increase in the average maximum lending and primer lending rate amid steady increase in inflation figures.
According to National Bureau of Statistics (NBS), inflation rate in Nigeria has increased to 15.69 per cent as of April 2026 from 15.06 per cent January 2026.
The increase reflects ongoing pressures in the economy, particularly in food and energy costs. The month-on-month inflation rate slowed to 2.13 per cent, indicating a moderation in the pace of price increases.
Data from the NBS showed that inflation increased by 0.31 percentage points on a year-on-year basis in April, underscoring lingering pressures from food prices, energy costs, and broader supply-chain disruptions.
Commenting, the Vice President of Highcap Securities, Mr. David Adnori explained that commercial banks review their lending rates regularly, subject to their respective cost of funds and the direction of interest rate, not necessarily using interest rate as a distinct value.
He stated that the interest rate gives them the direction of interest rates in the market and the price they will pay if they have to borrow from or lend to CBN.
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