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Dollar borrowers worry over naira fall
Top businesses, especially in the manufacturing and oil and gas sectors, are finding it difficult repaying dollar loans they took from banks when naira was stable, The Nation has learnt.
The naira has come under intense pressure in recent months, hitting N570 to a dollar at the parallel market before its gradual recovery with oil prices rising above $83 per barrel.
The borrowers are contending with a naira-dollar exchange rate mismatch between the time the dollar loans were taken and presently.
One of the key players in the oil and gas sector, Kola Adesina, said his company, Sahara Power Group, took dollar loans at a period when the naira was stronger, but faced a major crisis in a repayment following naira’s fall against the dollar.
He said that banks are also reviewing loan pricing for risks and dealing with currency mismatch problems faced by many of their customers that borrowed in foreign currency.
Adesina spoke at the FBNQuest webinar held at the weekend with the theme ‘Mobilising Onshore and Offshore Capital for Strategic Infrastructure Projects in Nigeria.”
He added: “Access to capital is challenging and difficult. Banks are reviewing pricing for risks and loans. We have secured cheap capital but suffered currency mismatch because of the loans we took in dollars. Revenue has not increased in line with exchange rate changes. ”
The Managing Director of Sahara Power Group said the company is, however, exploring traditional and non-traditional approaches in resolving the dollar loan challenge.
“We are resilient. We did not expect the current naira volatility at the point of borrowing but we are sitting down and resolving it with the banks,” Adesina added.
A director at African Development Bank, Martin Orji, said Development Finance Institutions (DFIs) should work together to deploy cheap capital to Africa to support their continent’s businesses.
He said there are legal frameworks that allow DFIs to collaborate and pull capital together to support businesses in the continent.
