I do not think that the deficient lending to small and medium-sized enterprises (SME) has anything to do with the willingness of banks to lend. - Razia Khan

The key stumbling blocks have been related to the bankability of individual projects, and there are a number of factors feeding into this. The first one is cost recovery: the power sector is one example where many investment projects exist but the returns are affected by electricity tariffs that are well below market levels

There is little guarantee that interests rates would result in a significant boost in bank lending. The reasons for the current lack of lending are more structural. To get to the point where interest rate cuts would affect lending would be hugely destabilising to the country’s macroeconomic health. So, for the time being, there is no clear-cut argument for monetary easing.

The recent probe on the fuel subsidy has raised significant concerns about Nigeria’s effectiveness to curb leakages and prevent extra-budgetary spending. In addition to this is the delayed passage of the Petroleum Industry Bill, which is holding back substantial investments in the sector and risks further undermining production levels.