Eight prominent Nigerian firms have collectively declared a staggering N918.1 billion in currency revaluation losses.
This substantial downturn is attributed to the Naira’s sharp decline of 68.55 percent against the US Dollar as of the end of September 2023.
The depreciation of the Naira can be traced back to the Central Bank of Nigeria’s decision in June to allow market forces to determine the local currency’s value.
Since then, the Naira has fallen from 461/$1 as of December 2022 to 777/$1 in September 2023.
Financial statements analysis of leading companies, including Dangote Sugar Refinery, Dangote Cement, Nestle Nigeria, Nigerian Breweries, Guinness Nigeria, MTN Nigeria Communications, Airtel Africa, MRS Oil Nigeria, and Seplat Energy, revealed substantial losses due to the devaluation of the Naira from N465/$ in May 2023 to N776.79/$.
The World Bank has labeled the Naira as one of the worst-performing currencies in Africa, witnessing a nearly 40 percent loss of its value since June.
This depreciation has adversely affected companies such as Dangote Sugar, which reported a revaluation loss of N90.99 billion.
Dangote Cement posted a revaluation loss of N99.02 billion, while Nestle recorded a loss of N143.4 billion during the reviewed period.
MRS Oil reported a loss of N2.37 billion, Seplat Energy recorded N16.38 billion, and Nigerian Breweries declared a N86.83 billion revaluation loss.
MTN Nigeria faced a substantial forex loss of N232.8 billion on its net foreign currency liabilities due to the Naira’s devaluation from 461/$1 in December 2022 to 777/$1 in September 2023.
In a related context, Airtel Africa documented a foreign exchange loss after tax amounting to $317 million (N246.31 billion).
The company attributed this loss to the devaluation of the Nigerian Naira in June 2023.
Airtel, similar to MTN, expressed challenges in meeting foreign exchange obligations, citing limited supply in some markets, impacting their ability to make timely payments to international suppliers.
Financial experts anticipated these forex losses, attributing them to the challenging economic conditions businesses faced in 2023.
Many of the affected companies reportedly have foreign loans or obligations, exacerbating the impact of the Naira’s devaluation.
Ayodeji Ebo, the Managing Director/Chief Business Officer of Optimus by Afrinvest, emphasized the substantial impact of the exchange rate shift, causing significant foreign exchange losses for these companies.