Nine out of ten companies have spent N1.7 trillion on loan repayments in the first nine months of 2024, as foreign exchange losses and rising monetary policy rates weigh on their balance sheets.
These businesses have had to deal with economic challenges such the devaluation of the Naira, which resulted in a record amount of foreign exchange losses, and rising interest rates, which the central bank implemented to fight inflation. As a result, these businesses have had to pay back more of their loans over this time.
To combat growing inflation and support the naira, which has lost around 70% of its value, the Olayemi Cardoso CBN raised the benchmark interest rate by a total of 875 basis points in November, from 18.75 percent to 25.7 percent.
According to an additional study, Dangote Sugar Refinery and Unilever Nigeria did not repay debts throughout the time under consideration, while only eight companies, totalling N691.8 billion, did so during the nine months of 2023.
However, with the exception of Unilever Nigeria, which could not repay the debt, Dangote Cement, BUA Foods, BUA Cement, Nigerian Breweries, Nestle Nigeria, Lafarge Africa, International Breweries, Cadbury Nigeria, and Dangote Sugar recorded a total of N1.7 trillion in the nine months of 2024.
The biggest increase in debt payback was 643 percent for Lafarge Africa, 487 percent for Dangote Cement, 385 percent for BUA Foods, 236 percent for Nestle Nigeria, and 165 percent for International Breweries.
Analysis
Lafarge Africa
Compared to the same time in 2023, Lafarge Africa’s loan and borrowing repayments decreased to N25.5 billion from N3.43 billion. After being negative N34.8 billion, net cash from financing activities was negative N70.1 billion.
Positive N40.8 billion was the net cash earned from operating activities, up from positive N93.5 billion. From negative N19.4 billion to negative N47.6 billion, net cash used for investing operations was negative.
Dangote Cement
Repaid debts from Dangote Cement rose from N170.4 billion to N1 trillion. From a negative N347.9 billion, net cash from financing activities was down N686.7 billion.
Operating activities produced N532.2 billion in net cash, up from N460.3 billion. The amount of net cash used for investing operations was N109.4 billion less than the positive amount of N45.5 billion.
BUA Foods
The amount borrowed by BUA Foods was repaid from N68.9 billion to N334.4 billion. From a negative N143.2 billion, net cash from financing activities was down N455.07 billion.
Operating cash increased from N223.9 billion to N415.5 billion. From negative N28.6 billion to negative N7.9 billion, net cash used for investing operations was negative.
Nestle Nigeria
Nestle Nigeria’s loan payments went from N29.4 billion to N98.8 billion. From a positive N7.59 billion to a negative N105.8 billion, net cash from financing operations was present.
Operating activity cash climbed from N79.7 billion to N25.2 billion. From negative N26.6 billion to negative N36.28 billion, net cash used for investing operations was negative.
International Breweries
International Breweries’ loan and borrowing repayments decreased from N7.75 billion to N20.5 billion.
After negative N20.8 billion, net cash from financing activities was N131.9 billion.
Operating cash flow was negative by N12.95 billion, down from positive by N9.37 billion.
The amount of net cash used for investing operations was N108.5 billion less than the positive amount of N3.33 billion.
Dangote Sugar Refinery
Repayment of loans and borrowings at Dangote Sugar Refinery decreased to N0.23 billion, compared to none the year before. After being negative by N18.4 billion, net cash from financing operations was positive by N204.2 billion.
Operating cash flow was negative by N267.5 billion, down from positive by N8.53 billion. From negative N5.75 billion to negative N21.1 billion, net cash used for investing operations was negative.
Unilever Nigeria
During that time, Unilever did not repay any loans. After being negative N0.624 billion, net cash from financing activities was negative N6.83 billion.
Operating cash flow was negative by N350 million, down from a positive N6.71 billion. From a positive N1.4 billion, the net cash used for investing operations was negative N0.817 billion.
BUA Cement
Repayment of loans and borrowings by BUA Cement decreased from N129.8 billion to N124.5 billion. After being positive at N89.66 billion, net cash from financing operations was negative at N89.34 billion.
Positive N167.6 billion was the net cash earned from operating activities, up from positive N147.6 billion.
After subtracting N104.12 billion, net cash used for investing operations came to a negative N219.8 billion.
Nigerian Breweries
Repayment of loans and borrowings by Nigerian Breweries decreased from N267.2 billion to N103.5 billion. N179.8 billion was the net cash from financing activities, up from N165.9 billion.
Operating cash generated was negative N111.1 billion, down from negative N102.4 billion. Negative N62.7 billion was the net cash used for investing operations, down from negative N64.6 billion.
Cadbury Nigeria
Cadbury Nigeria’s loan and borrowing repayments decreased from N14.9 billion to N0.35 billion. After negative N9.47 billion, net cash from financing activities was negative N3.49 billion.
Positive N14.57 billion was the net cash earned from operating activities, up from positive N2.79 billion.
From negative N1.43 billion to negative N1.31 billion, net cash used for investing operations was lower.