Nigeria could see a gradual reduction in interest rates in the coming months if improvements in foreign exchange and liquidity conditions continue, George Onafowokan, Managing Director and Chief Executive Officer of Coleman Technical Industries Limited, has said.
Onafowokan backed the Central Bank of Nigeria’s decision to retain the Monetary Policy Rate at 26.5 per cent, describing the current stance as an appropriate balance between controlling inflation and maintaining macroeconomic stability. However, the managing director said the current rate was unlikely to remain at that level for much longer, predicting that the Monetary Policy Committee could begin easing rates within its next two meetings if economic conditions remain favourable.
Any reduction would likely occur gradually, with possible cuts of 0.25 or 0.5 percentage points at a time. The Coleman CEO’s forecast depends on continued stability in Nigeria’s foreign exchange and liquidity markets, arguing that sustained improvements in these areas could give the CBN greater room to reduce monetary policy restrictions without undermining efforts to contain inflation.
For businesses, the prospect of lower rates could provide some relief from the high cost of borrowing that has constrained investment and expansion. Onafowokan argued that monetary policy alone cannot deliver the economic transformation Nigeria needs. He called for stronger fiscal policies to complement the CBN’s measures and stimulate production, investment, and employment.
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The Coleman CEO specifically criticised the high cost of funds available to manufacturers, pointing to the recent increase in lending rates by the Bank of Industry. He argued that development finance institutions should provide patient, long-term capital rather than operate at rates comparable to commercial banks, suggesting financing periods of seven to eight years could give manufacturers more room to expand production and create jobs.
Manufacturers are also battling high energy costs. Onafowokan called for lower domestic industrial gas prices, arguing that cheaper gas would reduce production costs and improve Nigeria’s export competitiveness.
While cheaper production could help moderate the costs of locally manufactured construction materials, the immediate reality is that construction depends heavily on domestic manufacturing and industrial supply chains. Cement, steel, cables, roofing materials, glass, fittings, and other inputs all rely on industrial production and transportation, meaning that higher financing and energy costs feed directly into the cost of building homes.
A sustained decline in interest rates would have important implications for Nigeria’s housing and real estate markets. High borrowing costs remain a major constraint for both property developers and prospective homeowners. Developers that rely on debt financing face higher project costs when interest rates rise, while households face greater repayment burdens when seeking mortgage finance.
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Lower interest rates could reduce the cost of project finance and improve the feasibility of developments that currently struggle to meet required returns. This effect could be particularly important for developers targeting middle- and lower-income housing, where profit margins are often narrower and affordability remains a major constraint.
The prospect of lower interest rates could also strengthen demand for mortgage-backed homeownership. Nigeria’s mortgage market remains relatively shallow compared with the scale of its housing needs. High interest rates make long-term housing loans expensive and can exclude households that might otherwise qualify for financing.
However, lower rates alone will not resolve Nigeria’s mortgage challenges. Household incomes, housing prices, land costs, mortgage availability, and lenders’ risk assessments will continue to influence access to home finance. Policy consistency remains important for investors in property and infrastructure because housing projects typically require significant capital and have long development timelines. Uncertainty around taxes, financing costs, land policies, and construction regulations can affect investment decisions.
