The Central Bank of Nigeria’s (CBN) October 2024 Inflation Expectations Survey has revealed an urgent call from Nigerian businesses for reduced interest rates as they face rising inflation and escalating operational costs. In the survey, 76% of respondents—including households and businesses—expressed a need for rate cuts to alleviate economic pressures and boost spending power.
With inflation intensifying across sectors, small businesses and MSMEs in particular are feeling the strain from high energy, transportation, and raw material costs. High borrowing rates have added to these challenges, leaving many businesses struggling to manage expenses and maintain profit margins. Micro-enterprises in urban areas are most affected, while smaller rural businesses report slightly less pressure, benefiting from localized economic conditions.
Drilling into the survey results, which captured perspectives from 1,750 businesses and 1,665 households nationwide, only 16.5% of respondents favored keeping rates steady, while a minority 7.5% supported an increase. Notably, support for rate cuts has grown from 71.4% in September, indicating a strong shift in sentiment as inflation concerns heighten.
“Escalating costs are preventing many small businesses from expanding, and the high cost of borrowing makes it challenging to sustain operations,” said a middle-income business owner who participated in the survey. Business owners across essential service sectors shared similar concerns, emphasizing that rising expenses are disproportionately affecting their operations.
The CBN survey comes at a critical time, highlighting a pivotal moment for policy action. Business leaders are advocating for rate cuts to create economic stability, reduce borrowing costs, and foster growth. “Lower rates would be a lifeline for many small enterprises that are struggling to stay afloat,” said a representative from the Nigerian Association of Small and Medium Enterprises.
Looking ahead, some MSMEs are cautiously optimistic, hoping for inflation relief with potential seasonal adjustments and CBN actions that could stabilize costs. The survey underscores an opportunity for policymakers to support economic resilience by responding to businesses’ calls for interest rate cuts, especially as they work to navigate a difficult economic landscape.
As Nigeria’s MSME sector continues to grow, the focus on inflation and borrowing costs will remain central to fostering sustainable business growth.
