There is no gainsaying the fact that the Nigerian banking industry is
experiencing an acute shortage of liquidity. At a time Nigeria is bearing the dubious distinction of having the highest cost of borrowing in Sub Sahara Africa, small business owners who manage to borrow money from banks that are also struggling to find money, do so at very high costs.

According to the Manufacturers Association of Nigeria (MAN), Nigerian
manufacturers paid an average interest rate of 22.9 percent during the
first six months of 2018.

It is not uncommon to find small business borrowers who apply for loans of, say, N5 million, for 12 months, to be asked to pay an interest rate of 25 percent!

The question is: How many small businesses can turnover a N5 million
loan in 12 months, be able to repay principal and interest, and still
make a profit? That would be near impossible, even if the business is doing buying and selling.

It is against this backdrop that we receive the good news coming from one of the nation’s frontline commercial banks.

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