Nigeria’s dollar woes leave record N452 billion forex loss across big consumer goods companies

Not showing clear signs of vanishing soon, Nigeria’s dollar drought has become more complicated after Africa’s largest economy allowed its currency to weaken by about 40 per cent in June in a push seeking convergence of the official and parallel market exchange rates of the dollar to the naira.

That, 37 times higher than the N11.9 billion recorded by the companies a year ago, tipped all but one of those firms into loss. “Because they have foreign currency loans, the transmission effect will still continue to have an impact on their balance sheet,” Muyiwa Oni, regional head of equity research, West Africa at Standard Bank Group, told PREMIUM TIMES.

Instead, it said, it would explore a third-party direct distribution model for its pharmaceutical products.Because the bulk of Nestle’s financing as a multinational comes from overseas loans and letters of credit, the blow of foreign exchange loss on its financials was ruinous on a sweeping scale.The food processing giant posted its first half-year loss after tax in at least nine years, having seen its net foreign exchange loss soar 59 times to N123.8 billion within one year.

There is a likelihood that working capital will be stressed in the short term as current liabilities already exceeded current assets by 29.5 per cent in the first half of the year.

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