The House of Representatives on Tuesday asked the Federal Government to approve special emergency funding for the Bank of Industry and SMEDAN to help provide SMEs with affordable credit at single-digit interest rates.
In its resolution following a motion by Bamidele Salam (Accord, Osun) at plenary, the House also asked the Central Bank of Nigeria (CBN), in consultation with deposit money banks, development-finance institutions and SME associations, to review the monetary, prudential and risk-pricing measures affecting SME lending, with a view to establishing a transparent framework for affordable, single-digit or otherwise concessional financing for qualifying productive-sector SMEs, without compromising financial-system stability. BuyMaps
In addition, the House asked the Federal Ministry of Industry, Trade and Investment to convene, within thirty days, an Emergency National Summit on Affordable SME Finance, bringing together all relevant stakeholders, to agree on time-bound measures on interest rate reduction, simplified application requirements, faster disbursement, and improved access to government-backed credits.
Presenting the motion before the House, Salam said Small and Medium-Scale Enterprises (SMEs) constitute the foundation of Nigeria’s productive economy, entrepreneurship ecosystem, and employment structure.
According to him, the 2021 National Survey of Micro, Small and Medium-Scale Enterprises (MSMEs) jointly conducted by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the National Bureau of Statistics (NBS) reported that MSMEs constitute approximately 96.9% of businesses, contribute 46.32% to the GDP, account for 87.9% of employment, and contribute 6.21% to exports in Nigeria.
He said the Constitution of the Federal Republic of Nigeria, 1999 (as amended), under Section 16(1)(a), requires the State to harness the resources of the nation and promote national prosperity and an efficient, dynamic and self-reliant economy; while Section 17(3)(a) directs the State towards ensuring that all citizens have the opportunity of securing adequate means of livelihood and suitable employment.
The Osun lawmaker said SMEs’ continued survival depends largely on access to affordable, predictable credit, particularly for working capital, machinery acquisition, wage payments, inventory management, and business expansion.
He said the prevailing cost of credit in Nigeria remains significantly burdensome for SMEs. Despite the Central Bank of Nigeria’s recent reduction of its Monetary Policy Rate from 26.5% to 23% in September 2026, commercial lending rates reportedly still range broadly between 20% and 46% per annum.
He said this contrasts sharply with several African markets, where SME lending rates are considerably lower.
He said, “In the Economic and Monetary Community of Central Africa region (CEMAC), the average interest rate is about 10.97%, ranging from 8.31% in Cameroon to 21.51% in Gabon. In Kenya, the rate was 16.6% in 2024, while South Africa recorded 10.7% in 2025. The United States’ Small Business Administration programme-backed loans generally fall within an 8–13% range.
“The Nigerian situation therefore places domestic enterprises at a serious competitive disadvantage, hampers investment and expansion, discourages job creation, and underscores the urgent need for targeted legislative and policy measures to reduce the effective cost of SME finance, expand credit guarantees, and strengthen access to affordable, long-term lending.”
He added that high borrowing costs, stringent collateral demands, and excessive documentation have made formal loans inaccessible to most Nigerian businesses, a situation that persists despite high unemployment, especially among youths, and continued labour-market fragility, where SME survival is critical.
Salami expressed concern that high interest rates can create a vicious cycle in which businesses raise prices to service expensive loans, lose market share as purchasing power declines, see profitability decline, and become increasingly unable to meet loan obligations.