News
Higher prices loom as businesses rely more on loans to survive
Nigerians will soon experience another wave of increases in the prices of goods by major manufacturers as most of them now depend more on loans to fund their operations, resulting in higher interest payments and increased cost of production.
Financial Vanguard investigations show that due to scarcity of foreign exchange, general cash flow challenges and other economic headwinds during the period, major manufacturing firms sustained their businesses with bank loans amounting N1.833 trillion in the nine months of the year 2023 , 9M’23.
The amount indicates increased borrowing of about 52.6% higher than the N1.2 trillion in the corresponding period of 9M’22.
Financial experts say the companies may have ended up in a debt trap following the rise in Monetary Policy Rate, MPR regime, sustained by the Central Bank of Nigeria, CBN throughout the review period in order to tame inflation that rose to 28.92 % as at December 2023, a development that triggered rising lending rates across the banking and finance sector.
This development, according to financial experts, indicates that the companies that borrowed huge in the 9M’23 are now caught in a serious debt situation as cost of operating capital is now rising, a situation that will impact their profit negatively, and also restrict their ability to pay higher dividend.
Financial information from 17 leading manufacturing companies listed on the Nigerian Exchange Limited, NGX, showed that the finance cost (interest on borrowing) rose by a significant 332.3% percent to N589.623billion in 9M’23 from N136.379 billion in 9M’22.
The companies include: Nigerian Breweries, Dangote Cement, Lafarge Africa, Guinness Nigeria, Gsk, Beta Glass, Unilever Nigeria, Dangote Sugar, Okomu Oil.
Others are Nestle Nigeria, BUA Cement, Notore Chemicals, NASCON Allied Industries, Cadbury Nigeria, BUA Foods, Vitafoam Nigeria and International Breweries.
Analysts and investment experts have decried the high cost of borrowing from the banks, saying that the capital market remains the best financing option for manufacturers to run on long term funds.
International Breweries led the borrowing chart in absolute term recording N323.25 billion in 9M’23 from N148.99 billion in 9M’22. It was followed by Nigeria Breweries whose borrowing rose to N307.99 billion from N113.69 billion in the corresponding year 2022.
Dangote Cement occupied the third position posting N267.13 billion from N269.19 billion in 9M’22. It was followed by BUA Cement occupying the fourth position as its borrowings rose to N258.26 billion from N97.46 billion while BUA Foods followed as its borrowings surged to N 237.79 billion as against N211.67 billion in 9M’22.
Analysts’ insight
Victor Chiazor, Analyst and Head of Research & Investment at FSL Securities Limited said: “The manufacturing sector will continue to be negatively impacted by the high finance cost, especially given that the banks all responded to the high MPR. Until the Benchmark interest rate is reduced by the CBN, the banks won’t drop their interest rate and the high interest expense will continue to weaken the profitability of manufacturing companies and even throw some of them into loss positions.
“In the course of the year, if we see inflation taper down, the MPC team may begin to ease its hawkish stance and drop the MPR which should lead to a gradual drop in interest rates. However if rates remain high, the real sector of the economy will continue to struggle as the interest rates would be too expensive for businesses to thrive.
Also, though expensive, the option of raising equity capital remains viable especially for those who have impressive earning forecast, strong business model and a compelling story to tell. In the course of the year we may see one or two manufacturing companies raise equity capital from the capital market to support their businesses.”
Commenting on the cost of borrowing, he said: “The astronomical jump in finance cost relative to a midsize increase in actual borrowings by these public companies in a 9-month period of 2023 could have been due to multiplicity of factors around inflation: depreciation of the Naira; re-pricing of loans and other assets by lenders; high input cost; reduction or non availability of suppliers’ credit; etc.
The result of this is more inflationary pressure, as the affected companies are pressured to re-price their earning assets to recover costs or reduce losses.”
On government rendering support to the manufacturing sector, he said: “The government may not be able to assist every sector, except for a few companies who have benefited from CBN intervention funds and single digit interest rate borrowing, most are exposed to more of bank borrowing which will be highly toxic to business operations if interest rates remain elevated.”
Reacting to the increase in borrowing, David Adonri, analyst and Executive Chairman at Highcap Securities Limited, said: ” The manufacturing industry was first battered by the rising inflation throughout year 2023 which escalated their costs. Due to decline in purchasing power of consumers their cost recovery efforts failed to preserve their working capital. Hence, their resort to higher bank credit to keep them alive. With higher credit, finance cost will escalate.
“The second reason behind the balloon of their finance cost is the collateral damage they suffered from floating of the Naira. Their hard currency liability exposures magnified in multiple folds when the Naira suffered heavy depreciation. As a result, they had to borrow more money locally, to meet outstanding obligations.
This year, the factors that pressured them into excessive borrowing may not be replicated. The economy is expected to readjust to a new price level where prices will be more stable. However, to repair their damaged balance sheets, manufacturers may need to refinance their huge debt through the capital market.”
On how government intervention can aid manufacturers, Adonri, said: “The administrative intervention of government in the credit market through CBN has not been very effective. It continues to distort the market mechanism that ought to efficiently allocate credit in the economy. The interventions have also not been appropriately directed to the foundational sectors of the economy.
Fiscal intervention can be by way of subsidy to manufacturers to enhance production while monetary policy should target low interest rate environment. If manufacturing inputs can be internalized through appropriate fiscal measures, then manufacturing cost can reduce to the point where finance cost will become negligible.”
Commenting on the borrowings by manufacturing companies, an investment expert and CEO, Wyoming Capital and Partners, Tajudeen Olayinka, said: “Companies can borrow to improve production capacity and reduce average cost. Where this is the case, such borrowing is considered positive, and could improve fortunes of shareholders of the company. Where such borrowing does not improve production efficiency, it can become negative to the value of the company and make shareholders worse off. This is what most companies try to consider before borrowing from short-term money market or long-term capital market.”
On the benefits of borrowing by manufacturing companies, he said: “Borrowing that improves operational efficiency would naturally benefit customers and other stakeholders. Borrowing must be done to improve shareholders wealth; and customers must have been given thoughtful consideration before embarking on such borrowing.”
However, he lamented that, “Short-term borrowing from banks could be more expensive at this time, especially if we consider the effect of rising inflation and interest rate hike by Monetary Policy Committee of CBN, which has compelled many banks to re-price loans and other financial instruments, leading to higher borrowing costs for firms and public companies. Borrowing from banks could be more problematic at this time.
Regardless of cost implications to public companies, short-term borrowings from banks might have been provided as bridging facilities for more flexible long-term capital already arranged by those companies, or as a way of obtaining working capital. It could also be a sign of weakness in annexing suppliers’ credit by some of those companies.”
On whether the government can aid manufacturers, Adeyinka said: “That could be another way of asking the government to provide financial subsidy, when they are already enmeshed in a fiscal crisis. I think the best way is to allow the market to function, so that assets are properly priced in the long-term interest of the economy.”
The Economic and Financial Crimes Commission (EFCC) has re-arraigned Bauchi State Accountant General, Sirajo Muhammad Jaja, and an unlicensed Bureau de Change operator, Aliyu Abubakar of Jasfad Resources Enterprises, before Justice O. A. Egwuatu of the Federal High Court, Abuja.
The duo were re-arraigned on Tuesday, 28 April 2026, on an amended five-count charge bordering on the conversion of public funds belonging to the Bauchi State Government and money laundering to the tune of N1,635,270,350.9k (One billion, six hundred and thirty-five million, two hundred and seventy thousand, three hundred and fifty naira, nine kobo).
DAILY POST reports that they were earlier arraigned on April 7, 2025, with Jaja as the first defendant, while Abubakar was the second.
However, in the amended charge, marked FHC/ABJCR/101/2025, dated January 5, 2026, and filed on the same date, Abubakar, trading under the name of Jasfad Resources Enterprises, became the first defendant and Jaja the second.
Early in the proceedings, prosecution counsel, Abba Muhammed, SAN, informed the court that the prosecution had filed a second amended charge and prayed the court for the defendants to take their plea.
Count two of the charge reads, “That you Aliyu Abubakar (trading under the name and style of “Jasfad Resources Enterprises,” a purported Bureau de Change operator), Sirajo Muhammad Jaja (Accountant General of
Bauchi State), Abubakar Muhammad Hafiz (at large), between 29 October, 2024 and 31st December, 2024 within the jurisdiction of this Honourable Court, did commit an offence to wit: money laundering by converting the sum of One Billion, Two Hundred and Ninety Million, One hundred and Fifty four thousand, Three hundred and Thirty seven Naira, Two kobo (N1, 290,154,337.2) of public funds, belonging to Bauchi State Government which you transferred from the Bauchi State Sub-Treasury Account, domiciled in United Bank for Africa with account number 1018819396 into the bank account of Jasfad Resources Enterprise domiciled in United Bank for Africa with account number 1023444660 and thereby committed an offence contrary to Section 18(2)(b) and punishable under Section 18(3) of the Money Laundering (Prevention and Prohibition) Act, 2022.”
Count three reads; “That you Aliyu Abubakar (trading under the name and style of “Jasfad Resources Enterprises,” a purported Bureau de Change operator), Sirajo Muhammad Jaja (Accountant General of Bauchi State), Abubakar Muhammad Hafiz (at large), Ari Manga (at large), and Muhammad Aminu Bose (at large), between 3rd January, 2025 and 14th March 2025, within the jurisdiction of this Honourable Court, did commit an offence to wit: money laundering by converting the sum of Four hundred and twenty-six million, One hundred and sixteen Thousand, Thirteen Naira, Seven kobo (N426, 116,013.7) of the public funds, belonging to Bauchi State Government which you transferred from the Bauchi State Sub-Treasury Account, domiciled in the United Bank for Africa with account number 1018819396 into bank account of Jasfad Enterprise, domiciled in United Bank for Africa with account number 1023444660 and thereby, committed an offence contrary to Section 18(2)(b) and punishable under Section 18(3) of the Money Laundering (Prevention and Prohibition) Act, 2022.”
They pleaded “not guilty” to the charges, following which counsel to the first and second defendants, Gordy Uche, SAN, and Chris Uche, SAN, respectively, applied for the defendants to continue to enjoy the bail earlier granted by the court, which was not opposed by the prosecution counsel.
The first defendant’s counsel further moved a motion challenging the competence of the charge and asked the judge to strike out counts two, three, four and five for allegedly being a duplicity of action and to save the defendants from suffering double jeopardy.
This found support from counsel to the second defendant, Chris Uche, SAN, while it faced opposition from the prosecution counsel.
The court, however, reserved a ruling on the contention until the end of trial, citing Section 395 of the Administration of Criminal Justice Act (ACJA) 2015.
In continuation of the trial, the prosecution called its first witness, Prosecution Witness One (PW1), Abimbola Williams, a compliance officer with the United Bank for Africa (UBA) with 20 years’ experience.
She informed the court that the bank, in February 2025, received a request from the EFCC for details of some of its clients.
“The request asked for the bank statements of Jaspa Resources account, Bauchi State Sub-treasury account and the documents were printed and copies given to EFCC,” she said.
The banker, who said that the documents were certified by her, tendered them through the prosecution, and they were admitted in evidence by the court and marked as exhibits.
Although the defence lawyers raised an objection, they said their objection would be expounded in their written addresses.
Further in her testimony, PW1 narrated to the court how money running into multi-million naira, belonging to Bauchi State, was allegedly moved from the Bauchi State Sub-Treasury Account number: 1018819396 to Jasfad Resources Enterprises account number: 1023444660, domiciled in UBA.
She told the court that on October 29, 2024, there was a debit transfer from the Bauchi State Sub-Treasury Account to Jasfad Resources to the tune of N13,144,500. Also that “On October 29, 2024, we have a debit transfer of 1N7,196,300. On October 30, 2024 there were two debit transfers from Bauchi Sub-treasury account to Jasfad Resources Enterprise, first for N50 million and the second for N7, 321,000,” he said.
The witness further disclosed that there were 18 other instances, on different dates within the period, when transfers were made from the Bauchi State Sub-Treasury Account to Jasfad Resources.
Following the conclusion of PW1’s evidence-in-chief, Justice Egwuatu adjourned the matter until 12 May for continuation of trial.
Security operatives have foiled a bandit attack on a community watch and hunters’ base in Sukunkumi village, Kankia Local Government Area of Katsina State.
Security sources said the incident occurred around 7:30 pm on March 26, when about 15 heavily armed bandits on motorcycles attempted to overrun the facility.
According to counter-insurgency expert Zagazola Makama, the sources said security teams quickly moved to the area and engaged the attackers in a gun duel, forcing them to flee into nearby bushes.
The sources added that three motorcycles were recovered at the scene, including two that had earlier been taken from hunters during the clash.
They further stated that a Community Watch member, Yusuf Ibrahim, 30, sustained a gunshot wound to his left leg and was taken to General Hospital Kankia for treatment.
The sources also said patrols and clearance operations have been stepped up in the area to track down the fleeing suspects and prevent further attacks.
Former Senator representing Zamfara Central Senatorial District, Senator Kabir Garba Marafa, formally defected to the Nigeria Democratic Congress (NDC) on Tuesday, along with his supporters. This move marks his second party switch in under a month.
Senator Marafa, who served in the Senate from 2011 to 2019, was welcomed by the NDC National Leader and Senator for Bayelsa West, Seriake Dickson, at Dickson’s residence in Abuja. The NDC National Chairman, Senator Moses Cleopas, and other party stakeholders were also present.
The defection comes just three weeks after Marafa joined the African Democratic Congress (ADC) on 8th April 2026. He had previously resigned from the All Progressives Congress (APC) on 28th August 2025, citing internal disputes within the ruling party.
Speaking to journalists shortly after receiving his NDC membership card, Marafa explained that his departure from the ADC was prompted by concerns over numerous ongoing legal challenges and the limited time remaining before critical electoral deadlines set by the Independent National Electoral Commission (INEC).
“The point of joining a political party is to provide an opportunity to contest and serve your people. If I were to ask you, what are the chances of the ADC succeeding?” Marafa questioned.
He stressed that his decision wasn’t motivated by ill will towards the ADC. “I’m not wishing them anything bad, as they are my friends and partners. We are united in this struggle. However, considering the number of legal cases pending and the limited time left, anyone intending to contest an election in Nigeria needs to be a member of a substantial political party by, at the latest, 9th May,” he said.
Marafa expressed doubt about the ADC’s ability to resolve its legal issues before key dates for party primaries and candidate registration. “How many court cases are we waiting for to determine the ADC’s fate? Let’s be honest and fair to ourselves. We’re awaiting a decision from the Supreme Court, knowing that the outcome could be evenly split, potentially leading to further litigation.”
He warned that prolonged legal battles could leave him and his supporters without a viable platform. “If that happens, where would we begin? By the time registration closes, what will I tell my people? That I waited in the ADC hoping for a favourable resolution, which isn’t even in their control?”
The former Senator said the decision to move to the NDC followed extensive consultations with his political base and legal advisors. “This is the main reason I met with my supporters to brainstorm and engaged experienced lawyers to assess the situation and advise us. Their advice led me and my supporters to join the NDC.”
Marafa pledged his loyalty to the NDC’s leadership and internal processes. “Therefore, whatever decision my new party, the NDC, takes regarding its presidential candidate when the time comes, we will respect it,” he said.
Senator Dickson described Marafa as a seasoned politician whose arrival would strengthen the NDC, particularly in Zamfara State and the wider North-West geopolitical zone. He urged Marafa to utilise his grassroots network to mobilise support and help address insecurity in the region.
“I welcome and recognise the distinguished delegation you’ve brought with you. Marafa is a significant figure, hailing from the Savannah region of Nigeria,” Dickson said. “This isn’t simply about joining a political party; it’s about a commitment to service, leadership, and delivering results for the people. The NDC is a party for everyone, including the less privileged and those who are hungry and insecure. That’s why our motto is service to the people.”
NDC National Chairman, Senator Moses Cleopas, added that the party is founded on a people-oriented agenda centred on inclusion, service delivery, and national renewal. He noted that the NDC is positioning itself as a credible alternative platform for women, young people, and people with disabilities as political activity intensifies ahead of the 2027 general election.
Marafa’s defection is considered a boost to the NDC’s efforts to expand its presence in the North-West, a region considered crucial in national elections.
EFCC re-arraigns Bauchi Accountant-General, BDC operator over N1.63bn fraud case
NGX penalizes over 30 firms for filing breaches
Security operatives foil bandit attack in Katsina
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