The National Bureau of Statistics show the average interest rate charged by the commercial banks on a loan at 17.09% in Q3 2016 up from 16.82% in Q1 2016. The high interest rate reflects pressures from the spiraling inflation rate to generate a real return for the banks’ investors. The 10 year high cost-push inflation rate of 18.48% in November 2016 is driven by supply constraints in the foreign exchange market that has devalued the
Nigeria’s 37mn SMEs contribute to economic growth and job creation, but face difficulties accessing credit due to collateral requirements by the banks. SMEs are typically unable to utilize most of their movable assets as collateral due to deficiencies in the legal framework as, lenders find it risky to accept movable property as collateral. In order to improve access to credit, the CBN launched an online collateral registry in May 2016, which allows SMEs to secure The total private sector credit issued by Nigeria’s commercial banks increased, from 11.4trn in Q1 2016 to 13.8trn in Q3 2016 according to the National Bureau of Statistics. The provision of credit stimulates and accounts for a statistically significant variation in economic growth in Nigeria due to the underdeveloped capital markets. As such the increase in credit does not correlate with the three consecutive quarters of contraction that has placed the Nigerian economy in a
