Guinness Nigeria Says It Can’t Get Dollars Despite FX Reforms

Guinness Nigeria Plc, a unit of Diageo Plc, has said it is struggling to obtain dollars to pay back foreign-currency loans, despite the government’s liberalisation of the foreign-exchange market to help to revive Africa’s biggest economy.

Nigeria’s new government in June allowed the naira to trade freely to attract inflows and boost dollar supply. According to Bloomberg, although the liberalisation has led the local currency to depreciate around 40 per cent against the dollar, supply of the greenback was still limited relative to demand.
As a result, it noted that Nigerian companies with significant dollar debts have suffered significant currency-related losses.

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.

It wants to pay off the loans but can’t at present owing to dollar shortage, according to Finance and Strategy Director Emmanuel Difom.
“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.
“We have sufficient cash in naira to pay off and all we need is access to hard currency.”

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, Difom said.

At the Nigerian forex market, “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.”