With the current and continuous downward trend of the dollar to the the naira Nigerian companies who are exposed to foreign loans are really experiencing hard times due to the unending nature of the situation.
Foreign loans are attractive owing to their single digit and low interest rate, but the continuous depreciation of the naira against most foreign currency has constituted a lot of hard times for borrowers in Nigeria.
The naira currently exchanges for N197 to a dollar at the official window and N320 at the parallel market.
It was gathered that some business owners 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.
Some of these people are really basking in discomfort of the scarcity of dollars, some of them aired and explained there woes on the situation
David Venn, the Managing Director of Spectranet, a leading service provider in the country, lamented that his company took foreign loan when the exchange rate was N160 to a dollar, but the difficulties and clumsiness in accessing dollar to service the loans at the the official exchange rate posed a lot of challenges for the company’s earnings and credit rating.
“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.”
Source: The Punch