Digital lenders in Nigeria could start cautiously reducing borrowing prices after the Central Financial institution of Nigeria (CBN) minimize the Financial Coverage Charge (MPR) to 26.5% from 27% on Tuesday, signalling a possible easing of the nation’s extended high-interest-rate setting.
The speed minimize, the primary since September 2025, follows indicators of moderating inflation. Based on Yemi Cardoso, CBN governor, this resolution adopted the sustained drop in inflation, which has fallen for 11 consecutive months. Headline inflation stood at 15.10% in January.
The MPR is the benchmark rate of interest set by the CBN to regulate inflation, handle cash provide, and affect borrowing prices within the financial system.
A decrease benchmark fee might ease funding prices for digital lenders that rely closely on borrowed capital fairly than buyer deposits, doubtlessly reshaping mortgage pricing, borrower entry, and danger urge for food.
“Digital lenders and members of the Cash Lenders Affiliation often borrow at rates of interest linked to MPR, so any change in such MPR can have a big affect on our price of lending to prospects,” Gbemi Adelekan, president of the Cash Lenders Affiliation, an trade group for registered digital cash lenders, instructed TechCabal in an interview on Wednesday.
Not like industrial banks, which rely closely on low-cost buyer deposits, most digital lenders rely upon wholesale funding, non-public capital, or institutional borrowing, making them extra delicate to benchmark fee actions.
Larger MPR ranges over the previous 12 months have pressured many lenders to both elevate borrowing prices for patrons or take in thinner margins amid rising competitors.
Presently, industrial banks’ rates of interest exceed 30% yearly in lots of instances. Mortgage apps are at the moment charging between 5 and 15% month-to-month, in keeping with Adelekan.
Charge cuts could take time to achieve debtors
Trade specialists don’t anticipate the speed cuts to offer rapid reduction.
“Everybody benchmarks round MPR and their price of borrowing,” stated Babatunde Akin-Moses, co-founder of Sycamore, a digital lending app. “Charges ought to come down as the price of funds turns into cheaper, however it could not occur instantly since some loans are already in impact, and will not have agreed variable charges with prospects.”
Present mortgage books and beforehand negotiated funding preparations imply lenders could regulate pricing solely regularly.
Adeshina Adewumi, CEO of Commerce Lenda, a digital financial institution for small companies, additionally expects solely modest adjustments.
“I don’t envisage any important affect,” he stated. “Nevertheless, a decrease MPR means decrease price of funds to digital lenders, and we will afford to calm down our numbers barely.”
Adelekan expects mortgage app rates of interest to stay largely throughout the present vary for now.
Digital lenders adapting
Nigeria’s digital lending market has expanded quickly as households flip to short-term credit score to deal with rising dwelling prices and restricted entry to conventional financial institution loans. As of February 24, 2026, the Federal Competitors and Client Safety Fee (FCCPC) had authorised 469 digital lenders working throughout the nation.
Client credit score stood at ₦3.11 trillion ($2.31 billion) within the third quarter of 2025, in keeping with the CBN, with private loans accounting for greater than two-thirds of lending exercise.
Nevertheless, the high-interest-rate setting has pressured digital lenders to adapt.
Based on Adelekan, many corporations are transferring away from small nano loans, sometimes underneath ₦10,000, that powered the early progress of Nigeria’s mortgage app ecosystem.
“Excessive MPR charges led to a tightening of credit score by our members,” he stated. “These days, most of our digital lenders are shifting away from high-risk, small-ticket nano loans (underneath ₦10,000) towards high quality and prospects with verifiable revenue to cut back our non-performing loans. ”
This shift displays a broader trade recalibration as lenders prioritise portfolio high quality over fast consumer acquisition.
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