Nigeria targets single-digit inflation by 2027. Can it finally make borrowing cheaper?

Nigeria wants to bring inflation down to single digits by the end of 2027, a move the government believes could open the door to cheaper loans, more investment and faster economic growth. But after years of rising prices and expensive credit, the bigger question is whether Nigerians will feel the difference in their pockets.

Speaking at the Nigeria Economic Summit today, Finance Minister Taiwo Oyedele said the government wanted to cut inflation to low single digits before the end of 2027. He argued that lower inflation could create room for interest rates to fall, making it easier for businesses to borrow and expand.

“If you are growing at 4.43% and borrowing at close to 30%, imagine what is possible when you borrow at single-digit rates,” Oyedele said, according to Reuters.

The gap he described is familiar to Nigerian businesses. A company may have customers and a promising product but still struggle to borrow enough to expand because the cost of credit eats into its potential profit.

Nigeria’s headline inflation rate fell to 14.63% in September 2026, from 15.39% in August, according to the National Bureau of Statistics. Food inflation, however, remained high at 19.59%. Meanwhile, the Central Bank of Nigeria (CBN) cut its benchmark interest rate from 26.5% to 23% in September.

That is some progress, but prices are still rising, and borrowing remains expensive. Reaching single-digit inflation would require more than a government target; it would mean sustaining the policies that slow price increases without creating fresh pressures elsewhere in the economy.

Nigeria has achieved single-digit inflation before

This is not the first time Nigeria has tried to keep inflation in single digits. In December 2006, inflation fell to 8.5%, meeting the single-digit target at the time. The CBN said it maintained single-digit inflation through 2007, using measures that included open market operations and government securities to absorb excess money in the financial system. The bank also used foreign exchange interventions and other monetary tools to manage liquidity and support price stability.

The experience matters because it shows that single-digit inflation is possible in Nigeria. But reaching the target at one point is different from keeping prices stable over several years, particularly when the economy faces exchange-rate pressure, food supply problems and rising transport costs.

The current challenge has been shaped by recent reforms. Since 2023, the government has removed petrol subsidies and changed the foreign exchange regime. These moves were intended to improve public finances and the functioning of the currency market, but they also pushed up the naira cost of fuel, imported goods and other essentials.

The International Monetary Fund (IMF), in its June 2026 analysis of Nigeria’s inflation, identified food prices, supply disruptions, deficit financing and sharp currency depreciation as important drivers of inflation. It also found that tighter monetary policy and greater exchange-rate stability had helped reduce the persistence of price increases.

That points to what must happen next. The CBN needs to keep inflation under control, while the government must avoid fiscal decisions that undermine that effort. Food production and distribution also need attention, as poor harvests, insecurity, transport costs and other supply problems can keep prices high even when monetary policy is tight.

The CBN is also transitioning towards an inflation-targeting framework, in which it would announce a clear inflation target and use monetary policy to achieve it. The bank says this approach is intended to improve transparency, accountability and policy effectiveness. Its success will depend on clear targets, credible decisions and coordination between monetary and fiscal authorities.

The important distinction is that Oyedele’s announcement is the government’s stated ambition. It should not automatically be read as evidence that the CBN has already committed to achieving a particular formal target by that date.

Lower inflation does not automatically mean cheaper loans

Even if inflation falls into single digits, Nigerians should not expect loan rates to drop to single digits overnight.

The CBN’s benchmark rate influences the cost of money in the financial system, but it is not the rate every borrower pays. Banks and other lenders also consider their own funding costs, the risk of a borrower failing to repay, operating expenses and the return they need to make on a loan.

For a small business, that distinction can determine whether expansion is possible. A retailer seeking money to restock goods, for example, may still face a steep interest rate if a lender considers its income unpredictable or its repayment risk high. A lower inflation rate could make costs easier to plan for, but it would not remove those lending risks.

The same issue affects fintech lenders. Companies offering digital loans need access to funding before they can lend to customers. If their own borrowing costs remain high, they may continue charging customers expensive rates or limit the amount of credit they provide. Lower inflation could eventually help, but the benefit depends on whether funding becomes cheaper and lenders pass those savings on.

Similar read: What Nigeria’s 14.63% September inflation rate means for fintechs, banks

Consumers face a similar test. Slower inflation means prices are rising more slowly; it does not mean that food, transport or rent automatically becomes cheaper. If incomes remain under pressure, households may still struggle to repay loans, even as the inflation rate falls.

Nigeria’s own recent experience illustrates the gap. The CBN cut its benchmark rate to 23% in September, but the move did not immediately make credit affordable for every borrower. The bank itself noted that market interest rates had diverged from its benchmark.

For cheaper borrowing to become a real outcome, inflation must fall sustainably, the naira must avoid renewed sharp depreciation, and the government must manage spending and borrowing in a way that does not add to price pressures. Lenders must also see lower funding costs and manageable credit risks before they can offer more affordable loans.

Oyedele’s target sets out an important ambition, but the real test will be what happens between now and the end of 2027. Nigeria has brought inflation into single digits before. This time, success will mean not only reaching the number, but keeping it there long enough for businesses to invest, fintechs to lend on better terms and households to find credit less punishing.