•Abiodun Keripe
Managing Director of Afrinvest Consulting Limited, Abiodun Keripe, has touched on the impact of inflation and high interest rates on loan repayment being recorded by financial institutions across the country.
His stance followed a recent fourth-quarter survey by the Central Bank of Nigeria (CBN), which said banks are recording a broad rise in loan defaults across households and businesses.
While speaking on Channels Television yesterday, Keripe tied the loan repayment defaults to the high inflation rate and forex challenges.
“The MPR is the base lending rate, and we are in an era where we have seen very high interest rates, which is creating a lot of repayment stress on borrowers.
“Upon that is the inflationary rate, even though recently it has dropped to around 15 per cent from an initial 33 per cent.
“Then we have had the FX issues, which are creating repayment bottlenecks.
“The farther you are from the MPR, the harder it is for you to borrow money from the banking system.
“Before the bank can lend you money, they need to be sure you can pay back, with the most important one being cash flow and credibility to pay back. Collateral is the last one”, he said.
The CBN survey noted that loan repayment defaults are spiking despite increased credit availability and rising demand for loans.
The report had identified key drivers such as high interest rates, which it said are eroding disposable incomes (inflation), and high energy and operating costs for firms.
The apex bank had kept the 2025 Monetary Policy Rate at 27.5 per cent for most of the year, before slashing it to 27 per cent.
