Forex Challenges: Firms Strive To Repay Foreign Loans

The continued depreciation in value of the naira against major foreign currencies has turned them into a huge burden for borrowers in Nigeria. Reports claim Nigerian firms that borrowed dollar denominated loans are facing the risk of foreclosure on assets pledged as collateral and loss of credibility among creditors.

The naira currently exchanges for N197 to a dollar at the official window and N320 at the parallel market.

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Some of these firms took credit facilities at a time when the dollar exchanged for N150, now that the currency is exchanging for N320, the cost of servicing the loans had now gone up by 100 per cent.


Although the losses would have been less if some of the firms were able to service the loans at the official exchange rate of N197 to a dollar, the Central Bank of Nigeria had in the wake of the sharp drop in crude oil prices embarked on forex rationing measures, cutting off most firms from access to the official window.

The Managing Director of Spectranet, a leading Internet Service Provider in the country, David Venn, said the company had taken foreign loans when the exchange rate was N160 to a dollar, but that difficulties in accessing dollars to service the loans at the official exchange rate posed a lot of challenges for the company’s earnings and credit rating.

He said, “We have some debts due for repayment in dollars. We have borrowed billions of dollars at N160 but the exchange rate is now above N300.

“We have the cash but we cannot pay and it affects our credit rating. The official rate is N200 but we cannot get the dollar at N200.”

Also, the Managing Director, Kasapreko, makers of the popular Alomo Bitters, Mr. Kojo Nunoo, regretted that the inability to access dollars to service the loan had plunged the business into a lot of difficulties.

He said, “The dollar scarcity has plunged our business into a lot of difficulties, because we have serious working capital tied up here.

“That has posed a lot of challenges to the company, because the money is sitting here earning nothing; and then we are borrowing in Ghana to finance the business in Nigeria and pay interest. So, we are not getting any of our money here and then we are paying interest on the loans we have borrowed back home. If we are not careful, we may collapse if we don’t get out.”


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Daniel Enisan is a content writer at With a degree in mass communication, Daniel is a full breed journalist. Daniel is a realist, loves the use of sarcasm, a movie and music junkie. He is also a poet and a good listener.

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