Interest rates on bank loans rising — says 42% Nigerians

Nigeria's financial services sector is experiencing simultaneous pressure from two distinct but interconnected challenges that European investors operating in Africa's largest economy need to understand: domestic credit market stress and international reinsurance cost inflation. Together, these developments are reshaping the risk-return calculus for foreign investors with exposure to Nigerian banking, insurance, and working capital financing. The Central Bank of Nigeria's latest Consumer Expectation Survey reveals that 42.7% of respondents perceive bank lending rates as elevated—a significant warning signal about credit market conditions. This perception reflects a genuine tightening of monetary conditions that began in 2024 when the CBN embarked on an aggressive interest rate hiking cycle to combat inflation. While base lending rates have moderated slightly from their 2024 peaks, they remain substantially above pre-pandemic levels, fundamentally altering the cost structure for businesses throughout the economy. For European enterprises operating in Nigeria—whether in manufacturing, retail, logistics, or services—this translates directly to higher working capital costs. Companies refinancing existing debt or accessing new credit lines face significantly steeper borrowing expenses than they did two years ago. This is particularly consequential for businesses in nascent or capital-intensive sectors where margins are already compressed by currency volatility and infrastructure challenges. Compounding these domestic