Coleman Predicts Gradual CBN Rate Cuts as Nigeria’s Economy Stabilises

Coleman CEO Predicts Interest Rate Cuts in Coming Months

Nigeria could see a gradual reduction in interest rates in the coming months if improvements in foreign exchange and liquidity conditions continue, George Onafowokan, Managing Director and Chief Executive Officer of Coleman Technical Industries Limited, has said.

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Onafowokan backed the Central Bank of Nigeria’s decision to retain the Monetary Policy Rate at 26.5 per cent, describing the current stance as an appropriate balance between controlling inflation and maintaining macroeconomic stability.

However, he said the current rate was unlikely to remain at that level for much longer, predicting that the Monetary Policy Committee could begin easing rates within its next two meetings if economic conditions remain favourable.

CBN Could Begin Rate Cuts Soon

Onafowokan said any reduction would likely occur gradually, with possible cuts of 0.25 or 0.5 percentage points at a time.

His forecast depends on continued stability in Nigeria’s foreign exchange and liquidity markets. He argued that sustained improvements in these areas could give the CBN greater room to reduce monetary policy restrictions without undermining efforts to contain inflation.

The prediction comes after the CBN maintained the Monetary Policy Rate at 26.5 per cent, signalling that the central bank remains focused on managing inflation and preserving macroeconomic stability.

For businesses, however, the prospect of lower rates could provide some relief from the high cost of borrowing that has constrained investment and expansion.

High Borrowing Costs Continue to Pressure Businesses

Onafowokan argued that monetary policy alone cannot deliver the economic transformation Nigeria needs.

He called for stronger fiscal policies to complement the CBN's measures and stimulate production, investment and employment.

The Coleman CEO specifically criticised the high cost of funds available to manufacturers, pointing to the recent increase in lending rates by the Bank of Industry.

He argued that development finance institutions should provide patient, long-term capital rather than operate at rates comparable to commercial banks. He suggested financing periods of seven to eight years could give manufacturers more room to expand production and create jobs.

Lower Rates Could Support Housing Investment

A sustained decline in interest rates would have important implications for Nigeria's housing and real estate markets.

High borrowing costs remain a major constraint for both property developers and prospective homeowners. Developers that rely on debt financing face higher project costs when interest rates rise, while households face greater repayment burdens when seeking mortgage finance.

A gradual reduction in lending rates could therefore improve the viability of housing projects and make mortgage financing more accessible.

However, the impact would depend on how quickly reductions in the CBN's policy rate translate into lower commercial lending and mortgage rates.

Developers Could Gain From Cheaper Construction Finance

Property developers typically require substantial upfront capital to acquire land, obtain approvals, purchase building materials and finance construction before generating sales revenue.

High financing costs can make projects more expensive and reduce developers' ability to launch new schemes.

Lower interest rates could reduce the cost of project finance and improve the feasibility of developments that currently struggle to meet required returns.

The effect could be particularly important for developers targeting middle- and lower-income housing, where profit margins are often narrower and affordability remains a major constraint.

Mortgage Affordability Could Also Improve

The prospect of lower interest rates could also strengthen demand for mortgage-backed homeownership.

Nigeria's mortgage market remains relatively shallow compared with the scale of its housing needs. High interest rates make long-term housing loans expensive and can exclude households that might otherwise qualify for financing.

If monetary easing eventually feeds through to mortgage lenders, borrowers could benefit from lower monthly repayments or greater borrowing capacity.

However, lower rates alone will not resolve Nigeria's mortgage challenges. Household incomes, housing prices, land costs, mortgage availability and lenders' risk assessments will continue to influence access to home finance.

Manufacturing and Housing Face Similar Cost Pressures

Onafowokan's comments on manufacturing are also relevant to housing because construction depends heavily on domestic manufacturing and industrial supply chains.

Cement, steel, cables, roofing materials, glass, fittings and other construction inputs all depend on industrial production and transportation.

Higher financing and energy costs can therefore feed into the cost of building homes.

The Coleman CEO said energy costs remained another major challenge for manufacturers. He disclosed that the company had invested more than $20 million in gas-powered electricity generation to sustain its operations.

Industrial Energy Costs Remain a Concern

Onafowokan called for lower domestic industrial gas prices, arguing that cheaper gas would reduce production costs, encourage expansion and improve Nigeria's export competitiveness.

He proposed an industrial gas price of about $3.50 per thousand standard cubic feet, compared with the significantly higher price he said manufacturers currently face.

For the construction sector, lower industrial energy costs could have wider implications if manufacturers pass some of the resulting savings through the supply chain.

Cheaper production could help moderate the costs of locally manufactured construction materials and improve the economics of housing delivery.

Government Support for Productive Sectors

Onafowokan also called for stronger government support for manufacturing, agriculture and trade, arguing that these sectors have greater capacity to generate employment on a large scale.

He said Nigeria needs to strengthen the connection between agriculture and manufacturing by supporting value addition, infrastructure and affordable financing.

The argument is relevant to the broader housing market because stronger employment and household incomes can improve effective demand for housing.

A growing economy does not automatically translate into affordable homes, but sustained employment and income growth can improve households' ability to save, secure mortgages and purchase property.

Policy Consistency Remains Important

The Coleman CEO said sustained investor confidence would depend on policy consistency and political stability.

He expressed optimism about recent changes within Nigeria's economic management team, while stressing that economic corrections require time to produce results.

For investors in property and infrastructure, policy stability remains particularly important because housing projects typically require significant capital and have long development timelines.

Uncertainty around taxes, financing costs, land policies, construction regulations and other economic variables can affect investment decisions.

Nigeria Needs More Domestic Investment

Onafowokan also urged policymakers to focus more strongly on domestic direct investment alongside portfolio investment and foreign direct investment.

He argued that domestic investment demonstrates that Nigerian businesses are expanding and can contribute to sustained economic growth.

For the property sector, stronger domestic investment could support development across residential, commercial and industrial real estate.

A more favourable financing environment could also encourage local businesses to expand their premises, warehouses, offices and production facilities, creating additional demand across the built environment.

Outlook

George Onafowokan's forecast points to the possibility of gradual monetary easing if Nigeria maintains the recent stability in foreign exchange and liquidity markets.

His expectation that the CBN could begin cutting rates within its next two meetings remains a forecast rather than a commitment by the central bank. The pace and timing of any easing will depend on economic conditions and the CBN's assessment of inflation and financial stability.

For Nigeria's housing market, lower interest rates could provide a significant boost by reducing financing costs for developers and potentially improving mortgage affordability for homebuyers.

The wider impact, however, will depend on complementary reforms that address construction costs, household incomes, infrastructure and access to long-term housing finance. If monetary easing combines with stronger productive-sector investment, it could create a more supportive environment for housing development and real estate investment.

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