Emmanuel OchayiMajor players in Nigeria’s corporate landscape, including Dangote Group, Nestle Nigeria, and MTN Nigeria, among others, faced a loss of N1.7 trillion due to naira depreciation in 2023.
This loss was revealed in an analysis of financial statements published by the Nigerian Exchange Group, showcasing the profound impact of forex-related losses on these firms.
Dangote Industries, Nigeria’s largest conglomerate, reported a significant FX loss of N164 billion, attributing it primarily to its operations abroad. BUA, another manufacturing giant, saw its forex loss spike to N69.9 billion from N5.5 billion in 2022, indicating a sharp escalation.
Nigerian Breweries, in its audited 2023 financial report, faced a notable loss of N153 billion, marking an 83% increase from the previous year. This loss greatly influenced the company’s overall performance, leading to a net loss of N106 billion.
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FMCG giant Nestle Nigeria wasn’t spared either, recording forex-related losses of N195.5 billion. This naira depreciation significantly impacted the company’s profit-after-tax, driving operating costs up by 41.2%.
Cadbury Nigeria, in its 2023 financial statement, reported a loss of N36.93 billion due to exchange rate differences. To address its financial structure, the company proposed converting outstanding loans into equity.
In the telecommunications sector, MTN Nigeria suffered a massive forex loss of N740.4 billion, representing an 804% increase from the previous year. Even in the banking industry, FBN Holdings faced substantial forex losses exceeding N350 billion in the 2023 financial year.
Naira depreciation has sent shockwaves through the business community, particularly after the Central Bank of Nigeria decided to float the local currency in June 2023. This abrupt policy change left little room for companies to adjust, resulting in severe impacts on profitability.
David Adonri, Vice Chairman of Highcap Securities Ltd, expressed concerns about the situation, warning that if the exchange rate crisis persists, more multinational companies may exit Nigeria. He emphasized that the suddenness of the exchange rate floating caught many off guard, leaving them vulnerable to its repercussions.
The adverse effects of naira depreciation underscore the urgent need for proactive measures to stabilize the exchange rate and restore confidence in Nigeria’s business environment. Failure to address this issue decisively could lead to further economic challenges and the departure of more multinational corporations, exacerbating the country’s financial woes.
