Alex Osho, the Group Chief Operating Officer of WalterSmith Group, and other business leaders disclosed that Nigeria’s economic environment has made it difficult for companies to hedge against the continued depreciation of the local currency.
He made this known at this Lagos Business School Chief Financial Officers’ Conference in Lagos, adding that though companies usually have a number of tools to hedge against currency depreciation, these tools are often incongruent within the context of Nigeria’s economy.
He stated, “Even though the tools are there, there is no liquidity. All the companies that declared huge foreign (forex) losses, it is not as if the CFOs didn’t know what to do or have a way around it. It is just that they were helpless to a large extent.
“What tends to happen is that companies that have a natural hedge tend to fare better. Natural hedge means that your revenue sources match your funding sources. That is why many companies are looking for revenue sources by having an export route. Without that, it’s difficult.” Similarly, when asked what his company was doing to cushion the impact of the recent forex illiquidity, the Chief Executive Officer of IHS Nigeria, Mohamad Darwish, said that “we don’t know how to cope.”
Also speaking, Boye Olusanya, the Chief Executive Officer of Flour Mills of Nigeria Plc, stressed that companies must investigate business models such as import substitution to insulate themselves from forex-related shocks.
Olusanya said, “The biggest thing is sitting and looking at ways to manage your business by looking for divergent inflows that are non-FX driven.”
Meanwhile, Olu Delano, the bank’s Executive Director, Personal and Private Banking Nigeria, who speak on behalf of Wole Adeniyi, the CEO of Stanbic IBTC Bank, urged firms to find ways to adapt to the currency devaluation and “keep moving forward.”.
Prof Chris Ogbechie, stressed that in today’s rapidly evolving landscape, the role of a CFO has never been more pivotal, especially because businesses were struggling with inconsistent government policy and a vast array of challenges in the macroeconomic environment being faced by the nation.
The CEO, Financial Reporting Council of Nigeria, Rabiu Olowo, represented by the Council’s Coordinating Director, Accounting Standards and Sustainability Reporting Unit, Iheanyi Anyahara, said that to unlock (FDI) and attract Foreign Portfolio Investors (FPIs) in Nigeria, companies must incorporate sustainability reporting in their annual report.
