At least 20 of Nigeria’s largest companies recorded a combined N2.1 trillion in finance costs in 2025, underscoring how elevated borrowing rates continue to weigh on corporate earnings despite early signs of monetary easing.
The figure, compiled from company filings, represents a 0.99 percent increase from N2.05 trillion in 2024, highlighting the persistence of funding pressures across sectors ranging from telecommunications and oil and gas to cement, consumer goods and power.
Heavyweights including MTN Nigeria Communications Plc, Dangote Cement Plc, Seplat Energy Plc and Oando Plc accounted for a significant share of the total, reflecting the capital-intensive nature of their operations and reliance on debt financing.
Finance costs, which cover interest on loans, lease liabilities and commercial paper, have become a central pressure point for corporate Nigeria as borrowing rates climbed to multi-decade highs in response to aggressive monetary tightening by the Central Bank of Nigeria.
The central bank eased its benchmark rate slightly to 27 percent from 27.5 percent in 2025, but lending conditions remain restrictive. Data from the apex bank show the average maximum lending rate stood at 29.32 percent in December, only marginally lower than 29.71 percent a year earlier.
For many companies, the cost of servicing debt has risen faster than revenue, eroding margins and limiting capacity to invest or return cash to shareholders. Analysts say weak consumer purchasing power has compounded the strain, making it difficult for firms to pass higher costs on to customers.
Among the companies reviewed, MTN Nigeria posted the largest finance bill. The telecom operator reported N524.91 billion in finance costs in 2025, up about 22 percent from N431.65 billion a year earlier. The increase was driven largely by higher lease obligations tied to tower infrastructure and ongoing network expansion.
Oando followed with N465.4 billion in finance expenses, nearly doubling from N235.84 billion in 2024. The sharp rise reflects increased borrowing and financing requirements tied to upstream investments and restructuring efforts.
In contrast, Dangote Cement reported a decline in finance costs to N351.5 billion from N700.3 billion in 2024, suggesting a reduction in debt exposure or improved financing terms. The drop stands out in a year when most corporates faced rising funding pressures.
Seplat Energy, however, moved in the opposite direction, with finance costs climbing to N281.21 billion from N138.7 billion, an increase of more than 100 percent. The surge points to higher debt levels and increased interest obligations in a capital-intensive operating environment.
The broader trend reflects a difficult macroeconomic backdrop shaped by high inflation, currency volatility and policy reforms, including foreign exchange liberalisation and the removal of fuel subsidies. While these measures aim to stabilise the economy, they have tightened liquidity and raised the cost of capital in the short term.
Historically, Nigeria’s lending rates have been volatile, but recent levels remain elevated compared with long-term averages. Banking sector data show lending rates averaged about 14.17 percent between 1961 and 2024, far below current levels. Rates peaked at 37.8 percent in 1993 and fell to as low as 6 percent in 1975.
The latest tightening cycle has pushed borrowing costs close to those historical highs. In early 2024, the average maximum lending rate stood at 27.07 percent when the policy rate was 18.75 percent. By March, as the benchmark rate rose to 24.75 percent, lending rates climbed to 29.38 percent, and later exceeded 30 percent as tightening intensified.
Although the central bank has begun to ease policy at the margin, analysts say lending rates are unlikely to fall quickly. Commercial banks typically price loans based on their cost of funds, deposit structure and risk assessment, rather than relying solely on the benchmark rate.
“Banks review their lending rates regularly based on their cost of funds and prevailing market conditions,” said Tajudeen Olayinka, an investment banker and stockbroker. “The monetary policy rate mainly signals direction, but actual pricing depends on each bank’s funding profile.”
The implication is that even with a gradual moderation in policy rates, corporate borrowing costs may remain elevated, particularly for companies with weaker credit profiles or exposure to foreign currency liabilities.
For corporates, the impact is already visible in financial statements. A growing share of operating income is being diverted to debt servicing, leaving less room for capital expenditure, expansion and dividends. In some cases, companies have had to restructure debt or delay investment plans to preserve cash.
The strain is most pronounced in sectors with heavy infrastructure requirements, such as telecommunications and energy, where long-term financing is essential. Lease-heavy business models, like telecom tower arrangements, have also amplified exposure to interest rate movements.
At the same time, the operating environment remains fragile. Consumer demand has been constrained by inflation, while input costs, including energy and logistics, have risen sharply. This combination has squeezed margins and limited the ability of firms to absorb higher finance costs.
Despite these challenges, some companies are taking steps to manage their exposure. These include refinancing existing debt, reducing leverage, and shifting toward alternative funding sources such as equity or internally generated cash flows.
The outlook for 2026 will depend largely on the trajectory of inflation and monetary policy. A sustained decline in inflation could create room for more aggressive rate cuts, easing pressure on borrowing costs. However, any renewed currency instability or inflationary spike could delay that process.
For now, the data point to a corporate sector still under strain. While headline profits may recover in some cases due to currency gains or one-off factors, underlying performance remains closely tied to the cost of capital.
The N2.1 trillion finance bill serves as a reminder that Nigeria’s fight to stabilise its macroeconomic environment is far from over, and that the burden of adjustment continues to fall heavily on corporate balance sheets.