Nigerian lenders are in retreat. Rising costs and declining appetite to lend is prompting banks to repay dollar borrowings.
Brent crude prices near their lowest levels in a year have slashed earnings from Nigeria’s main source of foreign income, reducing the amount of foreign exchange banks need to fund deals. At least four of seven Nigerian lenders have either paid up their Eurobonds or are weighing early redemptions as banks struggle to grow loans in an economy battling to gain momentum.
The lenders are also facing uncertainties around what is shaping up to be a close presidential election in February, the ever-lurking risk of a currency devaluation and a surge in soured loans following the 1.6 percent contraction in the economy in 2016. Gross domestic product in Africa’s most populous nation rose by 1.8 percent in the three months through September from a year earlier, less than economists had predicted.