The Central Bank of Nigeria (CBN) increased the monetary policy rate (MPR) by 400 basis points, elevating it to a historic high of 22.75% to combat inflation and foster economic stability.
This pivotal adjustment signifies a major shift from the previous rate of 18.75%, which had been in effect since the Monetary Policy Committee’s (MPC) meeting on July 24th and 25th, 2023.
The recent announcement, made by CBN Governor Yemi Cardoso, highlights the central bank’s proactive approach towards monetary tightening amidst challenging economic conditions.
This unprecedented move has not only set the MPR at its highest level to date but also reflects the CBN’s determined effort to address the persistent economic pressures.
The decision has garnered praise from the International Monetary Fund (IMF), which commended the MPC’s resolve to tighten monetary policy further by increasing the policy rate to 22.75%.
Such a strategic manoeuvre aims to curb the inflation surge, which recorded a year-on-year peak of 31.70% in February 2024, and to mitigate the depreciative pressures on the naira.
Since May 2022, this has accumulated to a total policy tightening of 1,025 basis points, showcasing the CBN’s commitment to restoring macroeconomic equilibrium.
However, the steep increase in the policy rate has sparked concerns regarding the potential impact on the cost of credit for businesses already facing economic hardships.
Each bank offers different lending rates that reflect their respective approaches to lending to the manufacturing industry.
The prime rate indicates the best possible rate offered to the most creditworthy customers, while the maximum rate suggests the upper limit of interest rates for loans to the sector, which might apply to higher-risk scenarios or different loan structures.
Here are the top 10 banks with the highest prime lending rates for manufacturing firms in Nigeria, according to the CBN as of March 8, 2024:
10. Titan Trust Bank
With a prime rate of 23.00%, this bank offers competitive lending options for the manufacturing sector. Its maximum rate stands at 30.50%, indicating a range of loan products that could cater to different types of manufacturing businesses.
9. Optimus Bank
Offering a prime rate of 23.75%, Optimus Bank positions itself as a strong contender for manufacturing firms looking for loans. The maximum rate here is 35.00%.
8. Fidelity Bank
With a prime lending rate of 24.00%, Fidelity Bank is another bank that serves the manufacturing industry with tailored financial solutions. Its maximum rate is comparatively lower at 26.00%, potentially indicating a narrower range of loan products or more consistent loan terms.
7. Providus Bank
At a prime rate of 25.00%, Providus Bank extends credit to the manufacturing sector, likely with various loan options, as suggested by its maximum rate of 30.00%. This could mean a variety of terms and conditions to meet the different financial needs of manufacturing businesses.
6. Unity Bank
Unity Bank’s prime rate for manufacturers is 26.00%, with a maximum lending rate of 33.00%. This spread allows for flexibility in financing, offering a range of possibilities for manufacturers with varying credit needs.
5. Ecobank
With a prime rate of 26.75%, Ecobank offers one of the highest rates to the manufacturing sector. The maximum rate of 35.00% indicates that the bank has a broad spectrum of loan products, which could cater to a wide array of manufacturing ventures.
4. Heritage Bank
Offering a prime rate of 27.00%, Heritage Bank stands as one of the highest lending options for the manufacturing industry. Its maximum rate of 35.00% showcases its readiness to accommodate various manufacturing operations with diverse financial requirements.
3. United Bank for Africa (UBA)
United Bank for Africa presents a prime rate of 28.50%, making it the third most expensive lending option for the manufacturing sector. The bank’s maximum rate is 32.00%, signifying a range of loan options available to manufacturers.
2. Wema Bank
With a prime rate of 30.50%, Wema Bank is among the most expensive lenders for manufacturing firms in Nigeria. The bank’s maximum rate is at 31.50%, which likely suggests a lesser appetite for loans to manufacturers.
1. Keystone Bank Ltd
Keystone Bank Ltd leads with the highest prime rate of 31.00%, making it the most expensive in lending to the manufacturing sector. The maximum rate of 36.00% is also the highest on this list.