According to Bloomberg, the decision by Nigerian President Bola Tinubu to permit the country’s currency to depreciate has caused losses of USD 385 million at six of the country’s largest enterprises.
Among the top Nigerian corporations, Airtel Africa Plc reported the largest loss for the quarter ending June 30.
The local subsidiaries of Mondelez International Inc. and Nestle SA both recorded losses for the first half of this year, due to the 40% depreciation of the local currency.
Bola Tinubu, who took over leadership in late May, has put in place a slew of policies to entice foreign investment and revitalise Africa’s largest economy.
Apart from weakening the naira, the government terminated a USD 10 billion fuel subsidy that caused a more than threefold increase in petrol prices at the pump and a rise in food costs.
Consumer demand for commodities like chocolate and beer is declining as inflation picks up speed.
The devaluation of the naira is having an impact on the continent and beyond.
The second-largest wireless phone provider in India, Bharti Airtel Ltd., missed analysts’ forecasts for earnings by 44% after taking into account a one-time foreign exchange loss of 34.2 billion rupees (USD 413 million) in Nigeria.
Meanwhile, Unilever Plc. and MTN Group Ltd., the largest mobile phone provider in Africa, both reported a decline in profits from their local subsidiaries.
Dangote Sugar Refinery Plc suffered a loss of 68.7 billion naira, after lowering its foreign exchange rate from 461 naira per dollar on December 31 to 756 naira per dollar.
According to Cadbury Nigeria Plc, the devaluation has also increased the cost of importing raw ingredients.
“Consumer spending power has really reduced and that has affected sales volumes of companies,” Ogaga Ologe, finance director at the unit of Mondelez said in an interview, Zawya reported.
Ogaga Ologe also said that Cadbury raised prices helping it increase revenue by 28%.