Ibadan, Dec. 25, 2025 (Naija247news) – Persistently high interest rates on loans could erode the benefits of Nigeria’s recent moderation in inflation, particularly for producers and small businesses, an economist has warned.
Dr. Alarudeen Aminu, Reader (Associate Professor) in the Department of Economics at the University of Ibadan, sounded the alarm in an interview with the News Agency of Nigeria (NAN) on Tuesday, noting that while inflationary pressures in the economy are beginning to ease, the cost of borrowing remains a significant constraint to productive activity.
“Interest rates are just too high, and when producers take loans at such rates, they must recover their costs. Eventually, this reflects in higher prices of goods and services,” Aminu said. He cautioned that this could undermine the recent gains in inflation reduction, as producers are discouraged from expanding output due to expensive credit.
The economist highlighted the critical role of affordable financing in boosting domestic production, which is central to tackling inflation. He particularly stressed the importance of food production, noting that food inflation accounts for almost 50 percent of the country’s overall inflation.
“If you can solve the problem of food production, you have addressed more than half of Nigeria’s inflation problem,” Aminu said. He urged the government to review interest rate policies for loans targeting productive sectors, especially agriculture and agro-processing, to ensure that lower borrowing costs translate into more output and stable prices.
Aminu, who is also a member of the Nigerian Economic Society (NES), called for sustained subsidies in strategic areas such as agriculture, energy, and power. He warned that high energy costs further exacerbate production expenses, limiting the positive effects of easing inflation on the purchasing power of ordinary Nigerians.
“Without deliberate intervention to lower borrowing costs, the recent reduction in inflation may not translate into improved living standards for Nigerians,” Aminu said. He added that policies combining inflation control with affordable credit would encourage production, stabilize prices, and support broader economic recovery in the medium term.
As Nigeria navigates the complex balance between monetary policy and economic growth, experts stress that attention to credit costs for productive sectors could be the difference between fleeting inflation relief and sustained economic resilience.
Emma Tochi ✔
Godwin Okafor is the Publisher & CEO of Naija247news Media Group LLC, an independent investigative news platform delivering accurate, data-driven reporting on Nigerian and global politics, economy, finance, and business. Founded in October 2010, Naija247news specializes in developmental journalism, providing timely insights and analysis to readers across Nigeria and the diaspora.
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