Central Bank of Nigeria rate adjustment aims to align with market realities

George Onafowokan, Managing Director and CEO of Coleman Technical Industries Limited, has characterized the Central Bank of Nigeria’s recent monetary policy rate adjustment as a “reset” intended to align policy with market realities.

Onafowokan noted that commercial lenders had already begun offering loans at rates between 22 and 23 per cent, creating a misalignment with the previous 26.5 per cent policy rate. He attributed this market shift to the recapitalization of Nigerian banks, which required institutions to significantly increase their capital bases—for example, moving from N50 billion to N200 billion, or from N200 billion to N500 billion.

This increase in capital has boosted liquidity within the financial system, leading banks to compete for lending opportunities and driving market rates below the previous central bank rate. While the full economic impact may take two to three months to manifest, Onafowokan suggested the adjustment could influence treasury bill yields and foreign portfolio investment decisions.