And Goes: “This desperation to raise capital from international markets to meet Central Bank’s new minimum capital requirements may be pushing these banks towards FX risk buildup that could significantly weaken them in the future. Read More
The recent memory of widespread FX losses recorded by foreign and local companies in Nigeria, and the struggle of Nigerian businesses to pay for Dollar – quoted cloud and software services, have shown clearly that businesses that earn mostly in Naira should be really careful with Dollarizing their obligations and costs. It’s a quick way to get into existential troubles.
If these monies are raised mostly with debt instruments and Naira falls again, we will likely have to put up with a devastating banking crisis.”
By C’Lawrence