Fortune Made in Dollars, Ruined by Naira…Nigerian Banks, Billionaires Groan Under Shaky Mountain of Debt

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Fortune Made in Dollars, Ruined by Naira…Nigerian Banks, Billionaires Groan Under Shaky Mountain of Debt

Fortune Made in Dollars, Ruined by Naira…Nigerian Banks, Billionaires Groan Under Shaky Mountain of Debt
June 21
07:52 2021
As naira devaluation escalates incidences of bad loans, defaulters

The thunder of debt reached them well before its lightning charred their pockets’ threads, and whirlwinds of liabilities knocked the cojones off their frames even as it stamped the kahuna off their deified names.

In the storm, hundreds sank into the surf of indebtedness; a well-heeled few plunged headfirst, dabbling breaststroke, backstroke, and death-stroke perhaps, in a spirited dart for a lifeguard or something like it. In the end, their mercantile flurry disappeared in the flare of intense currents and chilling jetsam and flotsam – the grave of venturous tycoons.

If you could read between the lines, you just might decipher the saddening fable of the maverick businessmen, who assumed a burden of debt in frantic quest of entrepreneurial acclaim. To attain wealth, they plunged in indebtedness, incurring tons of liability, forgetting that debt has never been a dependable harbinger of wealth.

There is no gainsaying several businessmen have borrowed their way into a bind. When the going was good, and the foreign exchange rate humoured their frantic lusts, many of them took fancy loans from the banks; they borrowed $10 million at the exchange rate of N350 to $1. The horizon seemed rid of storms and the crisis of perilous liabilities. But no sooner did the naira take a plunge, now exchanging at N502 to a dollar, they sank in the riotous waves of debt.

Due to the financial crisis, many of them have incurred millions of debts in dollars even though their earnings are in naira. Tough luck. While the naira exchanges at an unrealistic N450 to a dollar, they have to pay up their million-dollar debt and buy inflow at N515 or thereabouts.

Unfortunately for them, no help is coming from their cohorts in the banking industry as their bankers are caught up in the wave of debt and ugly liabilities. Even the banks are in crisis; a consequence of bad management, lack of visionary planning, and inability to recoup many of the bad loans they gave in the time of plenty.

To repay their soaring debts, many businessmen have been forced to sell their properties and borrow more voraciously from official and unofficial sources within and outside the country. There is no gainsaying the rising mountain of debt is casting an ominous shadow across the nation’s banking scene. A growing number of monetary experts, bank regulators, and economists are concerned about the ability of some less well-heeled businessmen to repay their debts. They worry that a series of defaults could severely jolt the banking system and other major lending platforms—and perhaps imperil the banking industry.

Yet bad loans and defaulting debtors are not the plagues of the banking industry. More worrisome is the lavish management culture and reckless spending of the banks.

Goaded by the belief that wealth has never been a sufficient source of honor in itself; that it must be advertised, and the normal medium is obtrusively expensive goods, like a private jet, many of the banks embarked on a profligate quest to acquire the aircraft as a prestige symbol.

While the acquisition of a private jet by an individual may be deemed excessive, extreme, it runs against the current of reason that a bank would acquire such a vessel as a prestige marker or simply to keep up appearances.

Banks are expected, among other things, to be frugal and inclined to deploy their enormous financial resources as a means of enabling it to do some good in today’s bleak and impoverished world but not a few Nigerian banks flouted this rule of reason.

They acquired private jets for their Chief Executive Officers (CEOs) even as it constituted a severe strain on their resources.


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