As of September 2024, technology and telecom companies in Nigeria owed banks a total of N1.69 trillion. This comes at a time when these companies seek to increase data and phone call charges.
The Central Bank of Nigeria’s report indicates that this debt is N68.04 billion (3.9%) lower than the N1.77 trillion owed in September 2023. This decrease occurred due to the Central Bank’s decision to raise interest rates, making borrowing more expensive and difficult for companies. However, when comparing month-to-month data, the debt increased by N31.61 billion (1.9%) from August to September 2024.
Borrowing patterns varied significantly throughout 2024. In January, the amount owed stood at N2.47 trillion, nearly double the figure from January 2023. By March, borrowing had slowed to N1.67 trillion, and by June, the figures started to drop compared to 2023. By September, the reduction of N68.04 billion reflected companies’ cautious approach to borrowing amid uncertain economic conditions and high interest rates.
The decrease in borrowing was driven mainly by the Central Bank’s stringent monetary policies. New Central Bank Governor Yemi Cardoso, who took office in September 2023, raised interest rates six times in 2024. The most significant hike occurred in February when rates jumped from 18.75% to 22.75%. Subsequent increases pushed rates to 24.75% in March, 26.25% in May, 26.75% in July, 27.25% in September, and 27.50% in November. These rate hikes, totalling 875 basis points, were designed to tackle inflation and stabilize Nigeria’s economy, but they made it harder for companies, especially tech firms that rely heavily on capital, to borrow funds.
