Loan Cost and the Pricing of Syndicated Loans by Nigeria
Abstract
Syndicated loans play a vital role in financing Nigerian companies, especially those operating in capital-intensive industries like oil and gas, infrastructure, and manufacturing. Despite their importance, these loans often carry substantial costs such as interest charges, various fees, and regulatory compliance expenses, which can make borrowing less affordable for local firms. This paper examines the different cost elements tied to syndicated loans in Nigeria, the pricing strategies adopted by lending institutions, and the impact of regulatory frameworks on how these loans are priced. Additionally, it presents an advocacy viewpoint that calls for more equitable pricing models, stronger negotiation tactics by borrowers, and supportive regulatory measures. Drawing on real-life case studies from Nigeria’s syndicated loan market, the paper outlines effective practices and suggests policies to enhance pricing transparency and promote borrower-friendly terms.
Downloads
References
African Development Bank (2021). Infrastructure financing in Africa. African Development Bank Report.
Africa Finance Corporation (2024, December 3). AFC leads up to €2 billion syndicated facility in largest-ever global loan syndication for Bank of Industry. https://www.africafc.org/news-and-insights/news/afc-leads-up-to-2-billion-syndicated-facility-in-largest-ever-global-loan-syndication-for-bank-of-indus
Bae, K. H. & Goyal, V. K. (2009). Creditor rights, enforcement, and bank loans. Journal of Finance, 64(2), 823-860. https://doi.org/10.1111/j.1540-6261.2009.01449.x
Bank of Industry (2025, March 8). BOI awarded African Deal of the Year at the 2024 Global Capital Syndicated Loan Awards. https://www.boi.ng/boi-named-african-deal-of-the-year-at-the-2024-globalcapital-syndicated-loan-awards/
CBN. (2022). Monetary Policy Committee Report. Central Bank of Nigeria.
Echekoba, F. N. & Okonkwo, V. I. (2015). The impact of loan syndication in the growth of Nigerian economy. Scholars Journal of Economics, Business and Management, 2(3), 280-293.
FMDQ (2023). Corporate borrowing and syndicated loans in Nigeria. FMDQ Report.
IMF. (2021). Nigeria’s banking sector and corporate credit. International Monetary Fund Report.
McGowan, J. & Stowe, M. (2012). Risk and pricing in loan syndication markets. Journal of Applied Finance, 22(3), 50-69.
Olaniyi, E. (2019). Financial inclusion and GDP per capita in Africa: A Bayesian VAR model. Journal of Economics and Sustainable Development, 8(18), 44-57.
The authors and co-authors warrant that the article is their original work, does not infringe any copyright, and has not been published elsewhere. By submitting the article to GPH-International Journal of Business Management, the authors agree that the journal has the right to retract or remove the article in case of proven ethical misconduct.
