Telecoms, ICT firms owe banks N1.69 trillion as tariff hike looms

Nigeria’s technology and telecommunications companies owed banks N1.69 trillion as of September 2024. This comes at a time when these companies are asking their customers to charge more for data and phone calls.

According to the Central Bank of Nigeria report, this debt is actually N68.04 trillion (3.9%) less than what these companies owed as of September 2023, which stood at N1.77 trillion. . This decline occurred because the Central Bank continued to raise interest rates, making it harder and more expensive for businesses to borrow money. However, month-on-month, the debt increased marginally by N31.61 billion (1.9%) compared to August 2024.

Throughout 2024, borrowing patterns have changed significantly. January started high at N2.47 trillion, almost double the amount in January 2023. In March, borrowing slowed to N1.67 trillion. From June onwards, the figures started to decline compared to 2023. In September, the decrease of N68.04 billion showed that businesses were cautious in borrowing due to uncertain economic conditions and interest rates. high interest.

The main reason for the decrease in borrowing was the strict monetary policy of the Central Bank. The new central bank governor, Yemi Cardoso, who took office in September 2023, raised interest rates six times in 2024. The largest increase was in February, from 18.75% to 22.75%. Subsequently, rates continued to rise: up to 24.75% in March, 26.25% in May, 26.75% in July, 27.25% in September and finally 27.50% in November. These increases, totaling 875 basis points, were intended to combat inflation and stabilize the Nigerian economy. This makes it harder for companies to borrow money, especially for tech companies that need a lot of capital.