Naira slide threatens loan defaults, business credit access – expert warns
Financial expert Busari Akande, Fellow of the Institute of Credit Administration, warns the naira's 0.12% daily depreciation at NAFEM this week could compound financial pressure on businesses and households. Import-dependent manufacturers and consumer goods firms face rising raw material costs and shrinking margins, undermining their ability to repay loans and forcing short-term borrowing for operations instead of expansion.
Household purchasing power is also weakening, reducing capacity to service personal loans and mortgages. SMEs with limited hedging access are especially vulnerable. Akande adds that banks' preference for high-yield government securities could further squeeze private-sector lending.
Buffers exist: $55.22 billion in forex reserves and a narrow official-parallel market gap reduce systemic crisis risk. But Akande urges banks to strengthen loan monitoring, run stress tests at N1,450/$, and identify vulnerable borrowers early. He recommends restructuring viable but cash-strapped businesses through extended repayment periods and principal moratoriums.
The naira's movement shouldn't trigger panic but should prompt proactive risk management. If you run an import-dependent business or carry variable-rate debt, now is the time to review your exposure and discuss restructuring options with your bank before conditions tighten further.