This follows a decline in inflation, which has fallen for 11 consecutive months to 15.1% in January, according to CBN Governor Yemi Cardoso.

The MPR sets the benchmark for borrowing costs in the economy. Lowering it could reduce funding expenses for digital lenders, who rely on borrowed capital rather than customer deposits.

“Digital lenders and members of the Money Lenders Association usually borrow at interest rates linked to MPR, so any change in such MPR will have a significant impact on our cost of lending to customers,” Gbemi Adelekan, president of the Money Lenders Association, said in a report.

Unlike commercial banks, which fund loans largely with customer deposits, most digital lenders depend on wholesale funding, private capital, or institutional borrowing.

This makes them highly sensitive to changes in benchmark rates. High MPR levels over the past year have forced many lenders to either raise loan rates or absorb thinner margins.

Currently, commercial banks charge annual interest rates exceeding 30% in some cases, while digital loan apps charge between 5% and 15% monthly.

Experts caution that borrowers should not expect immediate relief.

“Everyone benchmarks around MPR and their cost of borrowing,” said Babatunde Akin-Moses, co-founder of digital lending app Sycamore. “Rates should come down as the cost of funds becomes cheaper, but it may not happen immediately since some loans are already in effect, and may not have agreed variable rates with customers.”

Adeshina Adewumi, CEO of Trade Lenda, a digital bank for small businesses, also anticipates only modest changes. “I do not envisage any significant impact,” he said.

“However, a lower MPR means lower cost of funds to digital lenders, and we can afford to relax our numbers slightly.” Adelekan expects loan app interest rates to stay largely within the current range for now.

The digital lending sector in Nigeria has grown even as households seek short-term credit to manage living costs and limited access to traditional bank loans.

As of February 2026, the Federal Competition and Consumer Protection Commission had authorised 469 digital lenders. Consumer credit reached ₦3.11 trillion ($2.31 billion) in Q3 2025, with personal loans accounting for more than two-thirds of activity.

High interest rates have prompted lenders to move away from small nano loans, usually under ₦10,000, toward larger loans for customers with verifiable income.

“High MPR rates led to a tightening of credit by our members,” Adelekan said. “Lately, most of our digital lenders are shifting away from high-risk, small-ticket nano loans (under ₦10,000) toward quality and customers with verifiable income to reduce our non-performing loans.”

The sector is now prioritising portfolio quality over rapid user growth, showing a prudent recalibration as borrowing conditions gradually respond to monetary policy easing.

At the Monetary Policy Committee (MPC) meeting on September 22 to 23, 2025, the committee adjusted the Standing Facilities corridor around the MPR to +250/-250 basis points, aiming to improve interbank market efficiency and monetary policy transmission.

The corridor sets the rates at which banks can deposit with, or borrow from, the CBN on an overnight basis. Adjusting it encourages more interbank transactions and supports market stability.

The MPC also directed that banks keep 75% of public sector funds not held in the Treasury Single Account (TSA) with the CBN. This measure targets the excess cash generated by government spending, particularly fiscal disbursements.

The Committee said the decision was prompted by the persistent build-up of liquidity in the banking system, largely due to improved revenues.

To maintain economic stability, the MPC highlighted the risks posed by excess cash in the banking sector and stressed that a strong interbank market is essential for effective policy transmission.

This led to the adjustment of the standing facilities corridor and the CRR to boost interbank transactions and enhance market stability.