Year in Review: How Naira Crash Affected Local, Foreign Companies in Nigeria in 2024

• 2024 has been a challenging year for various businesses in the country as they faced acute FX shortages
• The development resulted in the exit or outright shutdown of local and foreign businesses
• Some foreign businesses stated that they are leaving the Nigerian market due to the naira’s devaluation

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The outgoing 2024 was brutal for many businesses in Nigeria, especially businesses that depended on forex to thrive.

Available data shows that the Nigerian currency, the naira, depreciated by 70% in 2024 to as low as N1,681 per dollar in the official window, while the parallel market saw the naira nearing N1,800 per dollar.

Foreign companies exit due to naira’s fall

This development dealt a severe blow to local and foreign businesses, which grappled with high exchange rates for imports and FX repatriation.

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This year saw the closure of more foreign businesses, which said they are exiting the Nigerian market due to the negative impact of FX.

PZ Cussons, the consumer goods and personal care product giant, is exiting the Nigerian market and Africa because of the naira's devaluation.

The multinational company, PZ Cussons, the parent company of PZ Cussons Nigeria, set plans to sell its assets and African subsidiaries, citing naira’s depreciation as the key reason.

In its operational year’s results, PZ Cussons disclosed that it is considering either a partial or complete sale, saying that the sale will reduce its exposure to naira fluctuations.

PZ cites naira’s devaluation

The consumer foods maker said the board had received multiple interests in selling its Africa business.

It said that the naira’s devaluation has negatively impacted its operations, disclosing that FX losses of over 107.5 million came due to the translation and settlement of dollar-denominated liabilities in its Nigeria subsidiaries and wholly due to the naira’s depreciation, which crashed by 70% from May 31, 2023, to May 31, 2024.

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Pick ‘n’ Pay leaves Nigeria

Also, the South African retail firm Pick ‘n’ Pay left Nigeria, citing macroeconomic factors as the basis of its decision.

Legit.ng reported that Pick ‘n’ Pay, the South African grocery retailer, is the latest foreign firm to exit the Nigerian market. The retailer disclosed its intention to close shops in Nigeria.

Pick ‘n’ Pay cites reasons for departure

On Monday, October 28, 2024, the company disclosed that it would leave the Nigerian market and sell a 51% stake in its joint venture.

The company’s chief executive officer, Sean Summers, disclosed that the decision aligns with its broader restructuring plan outside its home market.

The company entered the Nigerian market via a 2016 deal with A.G. Leventis (Nigeria) and opened its first store in 2021. It currently operates two locations.

The venture was seen as a strategic move into the Nigerian market, aiming to leverage Nigeria’s growing demand for grocery retail.

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Manufacturers faced tough times in 2024

Experts believe economic challenges, naira volatility and regulatory hurdles have affected the company’s investment in Nigeria.

While there is no available data on the number of local businesses that went out of business, the Manufacturers Association of Nigeria (MAN) highlighted the impact of high FX rates.

The association stated that the scarcity of FX has hampered business operations in the country, resulting in many unsold products.

While the naira began to show some signs of stability between November and December 2024 due to critical policies of the Central Bank of Nigeria (CBN), such as the newly introduced Electronic Foreign Exchange Matching System (EFEMS), Nigerians have asked the government to implement a more holistic approach to stabilise the local currency.

Expert asks for CBN’s intervention

Senior banker and economist Janet Ogochukwu has asked the CBN to begin immediate interventions in the FX market to prop up the naira’s value.

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“In the past two months, the naira has been on holiday for several reasons. Nigerians abroad are returning with FX, the country just issued a Eurobond, and there has been a surge in diaspora remittances. 

These factors are the reasons for the naira’s rebound. But it may not last because these activities are seasonal. The CBN needs to pump more FX to bring up the naira’s value,” she said.

Naira poised for a great 2025, experts predict

Legit.ng previously reported that experts predicted a good 2025 for the Nigerian currency, naira.

They stated that growing oil production, increased net capital inflows, and lower petrol and food imports would positively affect the naira's value.

The director of the Institute of Capital Market Studies at Nasarawa University, Uche Uwaleke, says the outlook for the naira is bright in the coming year

Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng

Source: Legit.ng