Fast-moving consumer goods firms are grappling with rising finance costs, with Champion Breweries and Guinness Nigeria topping the chart with the fastest growth on interest rate hikes.
According to BusinessDay, the Central Bank’s interest rate hikes in combatting inflation have led to fast-moving consumer goods firms being hit by huge finance costs which grew 56 percent in 2024.
Champion Breweries recorded the highest finance cost growth of 529.4 per cent, Guinness Nigeria recorded 197.5 per cent, Nestle Nigeria at 68.22 per cent growth, Dangote Sugar Refinery at 49.4 per cent growth, and BUA Foods recorded 14.9 per cent growth.
Uzo Uchenna, a professor of marketing at Lagos Business School, said finance costs have been rising because of the way interest rates have increased with the effort to curb inflation.
“The movement in the interest rate and the devaluation impact are the two major elements that are affecting the cost of securing finance for the consumer goods firms,” Abiodun Keripe, managing director at Afrinvest Consulting Limited, said.
Analysts warn that the rising cost of debt is squeezing profit margins and may lead to higher product prices for consumers.
The cumulative finance cost of eight consumer goods firms tracked by BusinessDay increased to ₦811.7 billion last year, highlighting the impact of the hawkish stance of the nation’s Central Bank.
Nigeria’s central bank jacked up benchmark interest rates from about 18 per cent in July 2023 to 27.5 per cent by the end of 2024 in an attempt to rein in stubbornly high inflation that averaged 32 per cent in the year under review.
The interest rate increase made it difficult for the consumer goods firm to borrow as borrowing became more expensive as a result of the increasing cost of servicing debts.
