In 2023, several prominent Nigerian companies, including Dangote Group, Nestle Nigeria, and MTN Nigeria, among others, collectively suffered a significant loss of N1.7 trillion due to the depreciation of the naira. Analysis of their financial statements, available on the Nigerian Exchange Group’s website, revealed substantial losses primarily attributed to forex-related challenges.
Dangote Industries, Nigeria’s largest conglomerate, reported an FX loss of N164 billion in 2023, primarily stemming from its international operations. Similarly, BUA Group experienced a forex loss of N69.9 billion, a notable increase from the previous year. Nigerian Breweries recorded a loss of N153 billion, significantly higher than its 2022 figures, leading to an 83% increase in losses within 12 months.
FMCG giants like Nestle Nigeria and Cadbury Nigeria also faced forex-related losses. Nestle Nigeria reported forex losses amounting to N195 billion, impacting its profit-after-tax due to increased operating costs. Cadbury Nigeria incurred a loss of N36.93 billion due to exchange rate differences, prompting strategic restructuring plans to address financial challenges.
In the telecommunications sector, MTN Nigeria recorded a staggering forex loss of N740.4 billion, representing an 804% increase compared to the previous year. FBN Holdings, in the banking industry, suffered forex losses exceeding N350 billion in the 2023 financial year, with N253.7 billion recorded in the final quarter alone. These losses were attributed to a policy shift implemented in June 2023, leading to the liberalization of the foreign exchange market.
The cumulative impact of forex losses across these seven firms amounted to N1.7 trillion, reflecting the adverse effects of exchange rate volatility on businesses in Nigeria. The situation worsened after the Central Bank of Nigeria announced plans to float the local currency in June 2023, leading to further depreciation and instability in the exchange rate.
The Economist Intelligence Unit’s ‘Africa Outlook 2024’ warned of continued exchange rate instability in Nigeria, fueled by high inflation and disparities between official and parallel market rates. The CBN’s decision to change the methodology for calculating the official exchange rate in January 2024 resulted in further devaluation, with the naira reaching an all-time low of N1,800/$ in February.
