At the heart of Nigeria’s consumer goods industry, a silent struggle is unfolding.
Once-resilient firms are now wrestling with a sharp rise in finance costs, which surged by 56 per cent in 2024.
The Central Bank of Nigeria (CBN) drove this surge by aggressively hiking interest rates from 18 per cent in mid-2023 to 27.5 per cent by the end of 2024.
This rising cost of debt has forced companies to rethink their strategies.
An analyst at ChapelHill Denham, attributes this trend to high interest rates and naira devaluation, which have inflated the cost of foreign-denominated loans.
Meanwhile, A Professor of Lagos Business School, Professor Uzo Uchenna, points out that firms are borrowing more to manage cash flow issues, even as dwindling sales and rising production costs create additional pressure.
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Anticipation
While some companies have struggled, others have adapted. Champion Breweries recorded the highest finance cost increase at 529.4%, while Guinness Nigeria (+197.5%), Nestlé Nigeria, Dangote Sugar, and BUA Foods also saw sharp rises.
In contrast, Nascon (-18.06%), Cadbury (-41.2%), and Unilever (-97.8%) successfully reduced their debt burden by restructuring their finances.
Now, as inflation stabilises and the naira strengthens, analysts anticipate that the CBN will ease interest rates.
However, until that happens, consumer firms must proactively cut costs, optimise operations, and restructure debt to remain competitive in this challenging economic climate.
