According to the Business Recovery and Insolvency Practitioners Association of Nigeria, the country's high cost of doing business and the competition from foreign companies are the main causes of non-performing loans. Speaking on the sidelines of a press briefing on Friday to announce its annual insolvency law conference 2025, which is set for September 25 and 26 in Lagos, Mr. Albert Folorunsho, the first Vice President and Co-Chair, Conference Planning Committee, BRIPAN, added that a lack of working capital is another factor contributing to the rise in non-performing loans (NPLs) in Nigeria.
"It is the state of the economy and competition from imports," he stated. the expenses of conducting business, particularly the NPL rivers.
They typically lack working capital when they establish enterprises and make loans.
Therefore, when you are having trouble raising working capital to run your firm, the loan you took out to purchase the assets has already begun to accrue interest and is now due. Thus, this is the main cause of commercial problems in Nigeria," he stated.
His remarks are appropriate given the increase of non-performing loans (NPLs), which he stated are measured in trillions, in bank financial statements.
Speaking at the upcoming conference, he stated that the topics would include market insights, new trends in insolvency rules, how banks can transition from insolvency to other forms of alternative dispute resolution, and how the CAMA 2020 insolvency rule has performed thus far. He also discussed proper rescue as opposed to the previous provisions regarding receivership, takeover, and the sale of a company's properties.
He claims that the current emphasis is on company rescue and restructuring, which allows companies to be reorganized to survive financial difficulties.
This is what we have this year, and there are now legal provisions in CAMA that provide BRIPAN with the foundation to operate as an insolvency practitioner. Sections 705 and 706 of CAMA provide BRIPAN the authority to supervise practitioners.
Therefore, in order to practice among other professions recognized by CAMA, you must register with BRIPAN. Because they are the ones who offer credit facilities, we anticipate that over 80% of our 2000 members will attend this conference. Of course, we also anticipate the bankers.
"We'll be examining how to handle financial institution investments and non-performing loans. We are aware that banks have to fully account for their forbearance loans, and this has been a significant problem that has to be resolved," he said.
As economic challenges force more borrowers into default, non-performing loans (NPLs) have grown in importance in Nigeria's banking industry. An NPL is a loan in which the borrower becomes a liability to the bank because they are unable to make their scheduled repayments, which are usually 90 days or more past due.
The Central Bank of Nigeria reports that, although being within statutory limits, the industrial NPL percentage has steadily increased as a result of macroeconomic instability, currency volatility, growing import prices, and energy.
Inflation, sluggish consumer demand, and shortages of foreign currencies have made matters worse by undermining firm profitability and debt repayment capacity.