CBN rate cuts yet to reflect in banks’ lending rates – Breadmakers

Despite recent reductions in interest rates by the Central Bank of Nigeria (CBN), commercial banks are still demanding as much as 34 per cent interest on loans to small businesses, the Premium Breadmakers Association of Nigeria (PBAN) has said.

The association also revealed that about 40 per cent of its membership had been lost in the last two years due to the harsh operating environment, rising energy costs and difficulties accessing affordable credit.

These were disclosed yesterday by the President of PBAN, Emmanuel Onuorah on the sidelines of the association’s 2026 Day-Out event with the theme: ‘Baking Through the Economic Storm: Innovation, Efficiency and Growth for a Sustainable Industry, held in Lagos.

Onuorah alleged that financial institutions, particularly the Bank of Industry (BoI), had failed to provide the necessary financial support to genuine entrepreneurs in the country.

The CBN, had in September, cut the Monetary Policy Rate (MPR) from 26.5 per cent to 23 per cent, arguing that this would further encourage business growth.

But, Onuorah lamented that the prevailing lending rates had made it almost impossible for bakery operators to access funds for expansion, modernisation and the adoption of alternative energy sources.

He disclosed that despite the CBN’s recent monetary policy adjustments, he was offered a loan at 34 per cent interest, alongside a requirement for 20 per cent counterpart funding, to finance a N12 million solar energy project for his business.

He added: “How do I pay back the loan when you are charging 34 per cent interest? We are not asking for free money. We are asking for single-digit interest rates that can help small businesses grow.

“Quote me on this, no PBAN member has received a Bank of Industry loan. They give these facilities to politically exposed people and those who do not need them, rather than businesses that require the money for growth and development.”

He decried that the stringent requirements imposed on small businesses had continued to frustrate their access to financing.

Onuorah emphasised that the situation had become more troubling as bakeries struggled with escalating energy costs, which he described as one of the biggest threats to the industry’s survival.

According to him, the association was exploring alternative energy arrangements, including Compressed Natural Gas (CNG) and hybrid oven burners that could operate on both diesel and gas.

He, however, said the transition would require between N40 million and N50 million for a small bakery, making it difficult for operators to undertake the investment without government support.

Also, the Chairman, Organising Committee, PBAN Day-Out, Hadijat Olopade, lamented about the difficult operating environment in the country.

Like Onuorah, she lamented that interest loan is between 33 per cent to 34 percent in the country, while the profit on breadmaking was less than 30 per cent.

She appealed to the Federal Government to intervene in the situation, warning that without this, businesses would continue to collapse in the country.

“We expect the government to come to our aid and assist us in getting cheaper sales of funds so that our business can survive. Energy is 50 per cent of the cost of production and for my bakery, for example, my diesel cost had increased from an average of about N9 million to N19 million monthly as we speak.

“Unfortunately, we have not been able to increase the price of bread. So, you can imagine if your cost of doing business had doubled and you can’t increase your output.”

In his presentation, Manager, Crown Flour Mill Limited, Gbenga Sotimirin, urged bakery operators to embrace innovation and take advantage of the enormous opportunities in the Nigerian market.

Sotimirin explained that the country’s growing population presented huge opportunities for the baking industry, stressing that operators needed to develop products that catered to the changing needs of different consumer groups.

He argued that contrary to the perception that the Nigerian bread market was saturated, available opportunities remained enormous, provided operators adopted innovative approaches and efficient production processes.

According to him, the future belonged to bakeries that could innovate ahead of competitors, while managing their operating costs effectively.

He urged operators to embrace data-driven decisions, digital technologies and improved production processes, saying these would help them remain profitable and competitive despite prevailing economic challenges.

PBAN, which comprises owners, managing directors and partners of premium bakeries across Nigeria, was established about seven years ago to promote standards, professionalism and sustainable growth in the baking industry.