The naira plunged deeper to N948/$1 at the parallel market on Friday, August 11, 2023 – two months after Mr Godwin Emefiele was suspended from office as Governor of the Central Bank of Nigeria by President Bola Tinubu on June 9, 2023.
This represents a depreciation of N180 or 23.5 percent compared to N768/$ the local currency traded at the parallel market on June 13 before the new forex reform that saw the abolition of the multiple exchange rates on June 14.
Parallel market dealers in Lagos and Abuja who spoke to THEWILL on Friday attributed the continued slide of the naira to increased demand for foreign currencies, especially the dollar, which has put enormous pressure on the naira.
“There is a high demand for dollar, on a daily basis. People are leaving the country in large numbers and companies are paying through their nose for imported raw materials which cannot be sourced locally. There are also those paying for their relatives’ educational expenses which is becoming more expensive,” said a local currency dealer at the Muritala Muhammed International Airport, Lagos, who would not want his name published because of what he called the sensitive and confidential nature of their business.
At the I and E window, the naira closed at N740.60/$ last Friday – a depreciation of N268.93 or 57 percent from N471.60 the naira traded on June 13 before the new foreign exchange policy was announced on the following day (June 14).
THEWILL tracking of the daily exchange rate movement showed that the naira traded for N777/$ on the average in July, showing that the local currency depreciated by 66.7 percent on the I and E window compared to 4471.47/$ on June 13 – the day before the floating of the naira.
Findings showed that ten Nigeria’s major manufacturing firms, mainly in the consumer goods group, reported a total of N517.1 billion in non-recovery, net foreign exchange losses in the first half of the year (HY 2023), arising from the devaluation of the naira.
The development impacted severely on the balance sheets of Nigerian businesses who had to source extra funds in local currency to meet their dollar-denominated obligations such as foreign loan repayment, raw material supply, consultancy and other services, resulting in operating losses..
Data gleaned from the financial statements of the selected firms, revealed that the huge forex losses impacted severely on their earnings and drained their bottom lines as inflation rises. This resulted in a total pre-tax loss of N695.03 billion in HY 2023 suffered by the surveyed companies against pre-tax profit of N637.61 in the corresponding period of 2022.
The eroding wave of depreciation resulted in total post-tax loss of N370.57 billion by the 10 firms, compared with N175.9 billion post-tax profit they posted in the equivalent period of the preceding year.
Specifically, Nestle Nigeria Plc and Dangote Cement Plc were the worst hit with non-recovery net forex losses of N123.7 billion and N113.6 billion respectively. They are followed by Nigerian Breweries Plc N85.26 billion, Dangote Sugar Refinery Plc N83.09 billion and Guinness Nigeria Plc N41.9 billion.
Others are International Breweries Plc with N40.66 bllion, Neimeth Pharmaceuticals Plc N22.82 billion, Unilever Plc N2.93 billion and Cadbury Nigeria Plc N1.03 billion.
Emefiele was subsequently arrested by the Department of State Services (DSS) and taken into custody on June 10 before he was arraigned on July 25 after over six weeks in detention following a court order on July 13 to charge or release him. He has been entangled in a legal battle for the enforcement of his fundamental human rights since then.
A federal high court in Lagos on August 10 fixed August 15 to entertain applications regarding the custody of Emefiele.
Nicholas Oweibo, the judge, on Thursday, adjourned hearing of the applications seeking to stop further prosecution of the bank chief and that of the Federal Government seeking to appeal the bail granted him by the court.
It would be recalled that on July 25, Mr Emefiele was arraigned on a two-count charge bordering on “illegal possession” of firearms and live ammunition at a federal high court in Ikoyi and was granted bail in the sum of N20 million.
The judge had ordered that Mr Emefiele be kept in the custody of the Nigeria Correctional Service (NCoS) pending the fulfillment of his bail conditions.
But the DSS insisted that Mr Emefiele must return to its custody — a development that led to the face-off between the secret police and prison officials.
After the face-off, the DSS in violation of the court order re-arrested the suspended bank chief in the court premises.
The DSS proceeded to file an application before a high court in the Federal Capital Territory seeking to further detain him.
The application was struck out after it was withdrawn by the service over jurisdictional concerns.
On August 3, the Federal Government also filed an application before the federal high court in Lagos, seeking leave to appeal against the order granting bail to Mr Emefiele.
In the application filed by Nkiru Jones-Nebo, a deputy director of public prosecutions of the federation, the Federal Government also sought a stay of execution of the order remanding Mr Emefiele in the custody of the NCoS.
The Federal /Government wants the court to remand Mr Emefiele in the custody of the SSS.
In the application filed by Mr Emefiele’s lawyer, he asked the court to restrain the federal government from further prosecuting the instant charge or any other charge against him or seeking any form of indulgence before the court, inclusive of the application to grant leave to appeal against the order granting the appellant bail and other ancillary orders.
Meanwhile, the rapid depreciation of the naira has led to some companies closing shop in Nigeria thereby impacting investment inflow in the economy. THEWILL had reported that Nigeria’s equities market will lose N55.3 billion in market capitalisation following GlaxoSmithKline’s (GSK), plan to close its operations in Nigeria after 51 years.
The British multinational pharmaceutical and biotechnology company which commenced operations in Nigeria in 1972 was listed on the Exchange in 1977. The current market price of the company is N55.3 billion.
“In our published Q2 results we disclosed that the GSK UK Group has informed GlaxoSmithKline Consumer Nigeria PLC of its strategic intent to cease commercialisation of its prescription medicines and vaccines in Nigeria through the GSK local operating companies and transition to a third-party direct distribution model for its pharmaceutical products,” GSK Nigeria Plc said in a statement.
It added, “The Haleon Group has also separately informed the Board of its intent to terminate its distribution agreement in the coming months and to appoint a third-party distributor in Nigeria for the supply of its consumer healthcare products.”
“The Board of GlaxoSmithKline Consumer Nigeria Plc has concluded that there is no alternative but to cease operations,” GSK Nigeria said in an official statement signed by its company secretary, Frederick Ichekwai.
“Today we are briefing our employees whom we will treat fairly, respectfully and with care, meeting all applicable legal and consultation requirements,” the company said.
The company said its board was conscious that shareholders would have many questions; “We have been working assiduously with our professional advisors to agree on next steps and we will be shortly submitting to the Securities and Exchange Commission (SEC) a draft Scheme of Arrangement which may, if approved, see shareholders other than GSK UK, receive an accelerated cash distribution and return of capital.
“The Board acknowledges the support of the GSK Group in its intentions to make this possible, full details of which we hope to publish shortly. In the meantime, however, we cannot give you assurance of the final terms of any scheme, or that any scheme will be approved by the SEC or by shareholders,” GSK said.
It added, “Shareholders are advised to seek professional advice and continue to exercise caution when dealing in the company’s shares until a further announcement is made.”
GlaxoSmithKline Consumer Nigeria Plc was incorporated in Nigeria on 23rd June 1971 and commenced business on 1st July 1972, under the name Beecham Limited. Its Head office is located at 1 Industrial Avenue, Ilupeju, Lagos.
In 1982, in order to expand its operations in the country, an ultra-modern drinks factory was established in Agbara Industrial Estate, Ogun State, which has since been expanded to include facilities to manufacture Oral Healthcare (OHC) and Wellness products.
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