The Central Bank of Nigeria (CBN) recently announced that it had cut interest rates by 50 basis points, bringing the rate down from 27.5 percent to 27 percent. For many Nigerians, that sounds like grammar meant for bankers and economists. But behind the jargon are questions that touch everyday life: Will garri, rice, and bread become cheaper? Will transport fares reduce?
What is a basis point?
A basis point is simply a tiny measure of percentage. One basis point is one-hundredth of one percent. So, when CBN says it cut interest rates by 50 basis points, it means it reduced its rate by half a percent. That means the interest rate has dropped from 27.5% to 27%.
How does this matter to ordinary Nigerians?
Most Nigerians don’t borrow from banks. They borrow from friends, cooperatives (ajo/esusu), or money lenders in the market. So when CBN adjusts its interest rate, the effect on the “common man” is not direct. But it still matters—slowly and indirectly—because interest rates shape the cost of doing business, the cost of goods, and sometimes the strength of the naira.
Here are six ways the cut could affect daily life:
1. Food prices may stop rising as fast
Food is where most families feel the heat. Today, food inflation is above 22 percent. A bag of rice that sold for ₦55,000 last year now goes for ₦75,000 in many markets. Tomatoes, pepper, and onions have doubled in price.
By lowering interest rates, CBN hopes to make it easier for businesses that import fertilizer, transport food, or borrow money to finance farming. If their costs reduce, the speed at which prices rise could slow down. That doesn’t mean garri will suddenly get cheaper, but it could mean the jump from ₦1,200 to ₦1,600 per paint bucket slows or even pauses.
2. Cheaper cost of doing business
Small shop owners, manufacturers, or transport companies that actually borrow from banks may get loans at slightly cheaper rates. For example, a small bakery in Abuja that pays 28% interest on a bank loan to buy flour may see its repayment fall a little. If flour prices also stabilise, bread prices may stop climbing as fast.
3. Indirect help for market credit
Even though the common man does not take loans from banks, many traders get credit from wholesalers or money lenders who themselves borrow from formal banks. If bank loans become a bit cheaper, wholesalers may not raise their own charges as aggressively. A tomato seller in Mushin who usually takes ₦50,000 weekly stock on credit could benefit if her supplier’s borrowing cost drops.
4. Hope for more jobs
If businesses can borrow a little more cheaply, they may expand and employ more people. Imagine a transport company in Kaduna that wants to add two more buses but is discouraged by high loan costs. A lower rate makes the loan less frightening. If they hire more drivers and conductors, that means more employment opportunities for ordinary people.
5. More stability for the naira and imported goods
Nigeria imports fuel, medicines, wheat, sugar, and even toothpicks. The price of these items depends on the exchange rate. Investors see CBN’s move as a sign that inflation is under control. If that confidence keeps the naira stable, it could reduce wild price jumps for imported goods. A steady naira means less shock when buying things like fuel or bread (which depends on imported wheat).
6. A little more money left in people’s pockets
If food prices stop rising quickly and businesses don’t pass high loan costs into the prices of goods, households may have a bit more money left after feeding. For example, a family in Benue that used to spend ₦40,000 monthly on food now spends ₦55,000. If inflation slows and spending stays closer to ₦55,000 rather than racing to ₦65,000, that’s some relief—even if small.
But here’s the catch
Change is slow: Banks do not always reduce their lending rates quickly.
Informal borrowing dominates: Over 80% of Nigerians don’t borrow from banks, so they may not feel the effect directly.
Inflation is still high: Even at 20%, Nigeria’s inflation is among the highest in Africa.
Other problems remain: Fuel prices, insecurity, and poor roads also drive up the cost of food and transport.
Conclusion
The CBN’s 50 basis points cut is like loosening a tight belt. It gives the economy a little more breathing room. But for the ordinary Nigerian, it won’t bring instant relief. What people want to see is garri, bread, yam, and rice prices stop rising every month.
That will only happen if lower interest rates combine with better harvests, stable fuel supply, safer roads for farmers, and a stronger naira. Until then, most Nigerians will judge government policy not by basis points but by the price of food in the market.
