Nigeria: Guinness Nigeria struggles with USD scarcity to pay foreign loans

Guinness Nigeria Plc, a unit of Diageo Plc, has revealed that it is struggling to obtain US Dollars to pay back foreign-currency loans in the country, the Business Post Nigeria reported on August 7.

This is despite the recent liberalisation of the foreign-exchange market by the Central Bank of Nigeria (CBN) as part of efforts to help to revive the Nigerian economy and boost FX supply.

Supply of the greenback is still limited relative to demand, and the rates have started widening, reaching more than N100 between the official rate and the black market rate.

As a result of this unavailability, Nigerian companies with significant Dollar debts have suffered significant currency-related losses.

It has not been easier for beer manufacturers, especially Nigerian Breweries, makers of Heineken, Star, and Maltina. The brewer is planning to upwardly review the prices of some of its Stock Keeping Units (SKUs) from Thursday, August 10, 2023.

On its part, the Diageo subsidiary, Guinness Nigeria Plc, declared a loss of N18.2 billion for 2023 compared to N15.7 billion profit in the previous year after its finance costs soared on the currency devaluation.

According to its Finance and Strategy Director, Mr Emmanuel Difom, the organisation cannot pay off its loans due to the scarcity of Dollars to do so.

“If liquidity improves, our plan is to actually pay off everything we owe on hard currency to reduce our vulnerability”, he said on an investor call in Lagos, per Bloomberg.

“We have sufficient cash in naira to pay off, and all we need is access to hard currency,” he added.

The company is substituting imported raw materials with locally produced items and also expanding exports to boost dollar earnings to curb dependence on external sources for foreign currency, Mr Difom said.

“We have seen a little bit of offers, at rates ranging between N800 and N850 a Dollar, but not big supply,” he said.

“We expect liquidity to improve in the next couple of months. The rate is not the problem; we need Dollar availability.”

08 August, 2023