One of Nigeria’s major telecommunication company, Etisalat Nigeria has been in the news in the past three months for the wrong reason.

The company had borrowed money which proved too difficult to repay after the price of crude oil fell and Nigeria’s oil revenue fell, forcing the economy into recession.

Etisalat had borrowed from 13 banks, about 1.2 billion dollars and since the debt was dollar denominated, Nigeria’s dollar shortage as crude oil revenue fell meant it had to struggle to repay as the cost of dollar skyrocketed.

Today, the banks would have none of the excuses. They just want their monies back.

Their investors had not helped matters, deserting the company when they were needed the most.

Based on research and interviews with some entrepreneurs, below are 4 lessons other businesses can take away from the debt ordeal faced by Etisalat.

1.Repay Your Loan As Soon As You Can: Do not put off repaying your loan for another time. Businesses all over the world - both small and large - borrow money all the time.

There is nothing wrong with that. The problem is when you get overambitious and instead of repaying your loan promptly, decide to reinvest it putting the repayment off for another time. That could be dangerous.

Unconfirmed reports from certain quarters claim that Etisalat had the chance to repay their debts, before the naira was devalued and the cost of dollar went south, but did not. That delay became their undoing today.

2.Refuse To Borrow Unless You Must:  Some business owners may say Etisalat got into the debt trouble because of the scale of their business. That is not entirely true.

The same could be true for a small or medium scale business depending on the prevailing economic circumstances.

Etisalat became an overnight victim of an unexpected economic volatility and so could you, no matter the size of your business.

However, you could be smarter by refusing to borrow and instead explore other means to of raising funds, according to Tope Niyi, who is Marketing and Business Development Manager at Careers24 Nigeria.

“Loans are expensive in Nigeria so if you are small business, don’t go there. Raise funds from family and friends,” he said.

“But if you have to take a loan, make sure it is short term. If you have an idea you can scale in a few months, take a loan and pay up the interest on time so it doesn’t affect your overall profit margin,” he added.

3.Make Sure To Get Your Investment Partner To Understand Your Operating Environment: The business environment a business operates in determines its success or otherwise.

Some operating environments are tougher than others.

It is your duty to get your investment partner to understand this before making a commitment.

This is so that the partner does not desert you in your hour of need as Etisalat’s investor, Mudabala did.

“Another real lesson would be for businesses to ensure that their investment partners have strong belief in the long-term fundamentals of their operating environment,” said Uche Aniche, who is an economic analyst and the Founder/CEO of             

“Part of the issues Etisalat is having is that Mubadala is no longer confident in Nigerian market like they were when they invested,” he added.

4.Borrow In Local Currency: This is as self-explanatory as it could be. It is very unlikely Etisalat would have been having this trouble if it had borrowed in Naira.

In a country like Nigeria, where speculation plays a critical role in the value of currencies, it is safer to negotiate your loans in local currency.

“Part of the lessons also would be to ensure that businesses’ borrowing is Naira denominated. Although this may be hard in practice, especially for a loan of that magnitude, one could still have played it safe by borrowing in Naira instead of assuming the enormous risks that come with hard-currency denominated debt,” said Aniche.