Nigeria hikes lending rate amid high inflation

Just two months after it was set at 14%, the Central Bank of Nigeria increased interest rates for local bank lending to 15.5%, its highest level yet.

It happens at a time when Nigeria's inflation is still on the rise and, as of August, was above 20%.

Godwin Emefiele, the governor of the bank, reported that the monetary policy committee unanimously decided to raise the rate after considering the effects of the expanding gap between the policy rate and the inflation rate.

Accordingly, "the committee unanimously decided to increase the policy rate to reduce the interest rate differential and control inflation," Mr. Emefiele stated in a statement.

Nigeria's economy still faces difficulties due to low foreign exchange earnings and declining reserves.

Local banks take their time financing to businesses and demand strict conditions like the submission of sufficient collateral.

According to business owners, taking on debt with high-interest rates puts their companies at risk.