Let’s be honest.
When you hear that Nigeria’s total public debt is now N159 trillion – and the IMF is warning about “debt sustainability” – your first thought as a business owner is probably:
“If the government can’t manage its debt, what hope do I have?”
That’s fair. But here’s what the headlines won’t tell you:
Household and corporate debt in Nigeria is still relatively low compared to GDP.
That means most businesses aren’t drowning yet. But the ones that are struggling? They made the same three mistakes.
The good news: Those mistakes are fixable.
Here’s how to manage your business debt in a high-interest, low-cash-flow economy—without shutting down.
Mistake #1: Treating all debt as “bad debt”
Many Lagos business owners panic the moment they see a loan repayment deduction.
But debt is not your enemy. Expensive, unstructured debt is.
- A loan at 28% interest that funds a project returning 40% margin? Good debt.
- A loan at 28% that you used to pay salaries because sales were slow? Bad debt.
Fix it: Before you take any new loan, run a simple test:
Will the money I borrow generate more money than the interest I’ll pay?
If the answer is no, don’t borrow. Cut costs instead.
Mistake #2: Having no liability hierarchy
Most SME owners in Lagos pay every creditor as if they are equally important.
They are not.
Your bank loan has a different cost than your supplier credit. Your staff salaries have a different urgency than your equipment lease.
Fix it: Rank your liabilities in order of:
- Survival cost (salaries, CBN-mandated payments, taxes) – pay these first.
- High-cost debt (loans above 25% interest) – pay these second, or refinance.
- Low-cost debt (supplier credit at 0–10%) – negotiate longer terms.
- Internal debt (money you borrowed from friends or your own savings) – pay last, after business stabilises.
This is not about avoiding payment. It is about surviving to pay everyone eventually.
Mistake #3: Ignoring the opportunity to restructure
Many business owners assume loan terms are final.
They are not.
Banks would rather restructure your loan than watch you default. Why? Because a defaulted loan becomes a bad debt on their books – and with the CBN recapitalisation done, banks are desperate to keep their portfolios clean.
Fix it: If you are struggling to meet repayments, go to your bank before you miss a payment. Ask for:
- Extended tenor (longer repayment period)
- Temporary interest-only payments
- A 3-month moratorium
Bring your financial statements (see Post 1) to prove you have a recovery plan.
We’ve seen banks approve restructures within 7 days when approached correctly.
The one number you must track monthly
It’s not revenue. It’s not profit.
It’s your Debt Service Coverage Ratio (DSCR) – but let me translate that to plain English:
Can your monthly cash flow cover your monthly loan repayments at least 1.2 times?
Example:
If your total loan repayments for the month are ₦1,000,000, your business must generate at least ₦1,200,000 in excess cash after operating expenses.
If you are below 1.0, you are in danger. If you are below 0.8, call us today.
Do this next
You don’t need to wait until the bank calls.
Let us review your current liabilities – bank loans, supplier debt, tax obligations – and build a debt survival plan tailored to your cash flow.
We’ve helped Lagos businesses:
- Reduce monthly debt service by 35% through restructuring
- Convert high-interest loans to single-digit supplier credit
- Avoid two foreclosures in the last six months alone
Don’t let N159 trillion of national debt distract you from fixing your own.
Ready to take control of your debt?
We help Lagos businesses restructure liabilities, reduce interest burden, and avoid default – without shutting down.
