Nigerian corporations endured a year of financial strain in 2024 as high interest expenses eroded profits across key sectors.
An analysis of audited financials of top-listed firms reveals that debt servicing costs reached a staggering N1.416 trillion, a 146 per cent year-on-year increase, amounting to 36 per cent of their combined operating profits.
While the policy may have had macroeconomic justification, it left many private-sector players battling for financial stability under the weight of swelling borrowing costs.
The total loan exposure of the analyzed companies rose by 58.57 per cent, from N5.12 trillion in 2023 to N8.12 trillion in 2024.
“The cost of capital in Nigeria is now among the highest in Africa. While some firms like Seplat Energy have managed their leverage well, others are clearly overexposed,” said Olufemi Adebanjo, a Lagos-based financial analyst.
“This signals a structural risk for companies with low cash buffers or unstable forex inflows.”
Leading the list, Dangote Cement recorded a 210 per cent surge in interest expense to N448.08 billion after ramping up borrowings by N1.54 trillion.
Its average borrowing rate also spiked from 17 per cent to over 25 per cent.
MTN Nigeria faced a mix of rate hikes and forex turmoil. Despite reducing its loan book by 17 per cent, rising interest rates drove finance costs up to N422.94 billion—over 54 per cent of operating profit.
With foreign exchange losses of N925.36 billion, MTN posted a pre-tax loss of N550 billion.
Nestlé Nigeria saw a 169 per cent increase in interest expenses due to ballooning debt levels.
The company’s borrowings jumped by over N250 billion, and interest costs consumed more than 60 percent of operating profit.
Coupled with a N291 billion forex loss, Nestlé’s pre-tax loss widened to N221.59 billion, double that of 2023.
Seplat Energy stands out for its resilience. Although it took on two major credit lines totaling $650 million, it managed to keep interest costs to just 19.6 per cent of operating profit.
“Consumer goods companies are particularly vulnerable. High exposure to dollar-denominated inputs and rising local borrowing costs create a perfect storm,” said Ifeoma Chukwuma, an economist with KPMG Nigeria.