A few themes shaped Nigeria’s corporate results in 2024 as dramatically as the naira’s relentless depreciation. Since mid-2023, the Central Bank of Nigeria’s decision to allow the currency to float more freely has resulted in the naira losing over 70% of its value against the US dollar. The effects of this seismic shift have rippled through corporate balance sheets, earnings statements, and capital expenditure plans, leaving a trio of listed heavyweights; MTN Nigeria, Nestlé Nigeria, and Lafarge Africa exposed in markedly different ways.
MTN Nigeria: A bruising year of FX losses and capex inflation
For MTN Nigeria, the country’s largest telecoms operator, the exchange rate shift inflicted one of the most punishing blows. The company reported over N740 billion in foreign exchange losses over the first three quarters of the year — a staggering figure even by the standards of a market accustomed to currency volatility.
MTN’s exposure stems from its significant foreign currency-denominated liabilities, largely linked to financing its network expansion and technology upgrades, much of which relies on imported equipment. As the naira tumbled, these liabilities ballooned in local currency terms, hitting MTN’s bottom line hard.
Higher costs have also bled into capital expenditure, with the pricing of core network infrastructure, software and spare parts all surging. The company attempted to claw back some ground by adjusting tariffs upward, but its pricing power was limited by regulatory scrutiny and a fragile consumer environment.
The result: stronger revenue in nominal naira terms, but with much of the gain erased by FX losses and inflated operating costs. For investors, MTN’s 2024 story is a stark illustration of how currency risk can dwarf operational performance in emerging markets.
Nestlé Nigeria: Import dependency magnifies the currency blow
The pain for Nestlé Nigeria has been no less acute. A company that depends heavily on imported inputs from milk powder and cocoa to specialised packaging Nestlé found itself squeezed between rising import costs and weakening household demand.
In 2024, Nestlé reported foreign exchange losses of over N200 billion, a reflection of both its reliance on imported raw materials and foreign currency loans. The company also faces the challenge of repatriating dividends to its Swiss parent, a process made vastly more expensive by the naira’s plunge.
Price increases across its product portfolio provided only limited relief. Nigerian consumers, already grappling with the highest inflation in decades, proved highly price sensitive, limiting Nestlé’s ability to fully pass on higher costs. The result was severe margin compression, even as headline revenue numbers ticked upward.
The broader lesson is clear: companies with dollar-linked supply chains face a structural vulnerability in Nigeria’s volatile currency environment. For Nestlé, the combination of import dependency, external debt, and a weak consumer market made 2024 particularly challenging.
Lafarge Africa: A more insulated supply chain provides relative shelter
By contrast, Lafarge Africa, the local unit of the Swiss cement giant Holcim, weathered the storm with greater resilience. Lafarge benefits from a largely localised supply chain, with core raw materials such as limestone sourced domestically. This insulated it from the worst of the currency-related cost pressures.
That is not to say Lafarge emerged unscathed. The company still relies on imported equipment and spare parts, particularly for maintenance and plant upgrades, meaning capital expenditure costs rose sharply. Rising energy costs, exacerbated by imported fuel inputs, also added to operational pressures.
However, Lafarge’s ability to raise cement prices supported by strong infrastructure demand, allowed it to offset much of the currency impact. Its relative lack of foreign currency debt further reduced direct exposure to translation losses.
In short, while FX pressures were felt across the board, Lafarge’s local sourcing strategy provided a degree of insulation that consumer goods companies like Nestlé simply could not replicate.
Currency risk: now a permanent feature of Nigerian corporate life
The divergent experiences of these three firms offer a microcosm of the broader Nigerian corporate landscape. Companies that are import-dependent or carry dollar liabilities have faced a torrid year, while those with more localised cost structures have fared relatively better.
Yet even for the more insulated players, currency volatility is now an unavoidable fact of doing business in Nigeria. With structural pressures, from low oil revenues to weak capital inflows likely to keep the naira under pressure, companies will need to embed currency risk management into their core strategy.
For some, this will mean aggressively localising supply chains. For others, it will require sophisticated hedging strategies or even restructuring capital profiles to reduce dollar exposure. Either way, the naira will remain a protagonist in Nigerian corporate performance for the foreseeable future, a reality investors can no longer afford to ignore.
