Fifteen companies listed on the Nigerian Exchange Limited saw their total borrowings surge to N4.09tn in 2024, marking a 110.3 per cent increase from N1.94tn in 2023, The PUNCH reports.
According to the figures obtained from the audited and unaudited financial statements of these companies for the year ended December 31, 2024. The borrowings were classified under non-current liabilities, which are financial obligations that extend beyond a one-year repayment period.
Seplat Energy had the highest borrowings, rising from N599.4bn in 2023 to N1.41tn in 2024, representing a 135.1 per cent increase.
Dangote Cement’s borrowings jumped from N388.4bn in 2023 to N1.39tn in 2024, marking a 256.9 per cent increase.
Nestlé Nigeria recorded a 49.4 per cent increase in total borrowings, rising from N365.1bn in 2023 to N545.2bn in 2024.
BUA Cement’s borrowings grew by 50.5 per cent, climbing from N295.5bn in 2023 to N444.8bn in 2024.
Nigerian Breweries saw a 17.7 per cent decline in borrowings, dropping from N205.3bn in 2023 to N169.1bn in 2024.
Lafarge Africa’s total borrowings fell significantly by 57.7 per cent, from N1.25tn in 2023 to N529.6m in 2024.
Transcorp reported a slight decrease in borrowings from N52.1bn in 2023 to N50.4bn in 2024, marking a 3.2 per cent decline.
Dangote Sugar Refinery recorded a 15,058 per cent increase in borrowings, rising from N246.1m in 2023 to N37.3bn in 2024.
UAC of Nigeria’s borrowings surged by 334.9 per cent, rising from N2.46bn in 2023 to N10.7bn in 2024.
Fidson Healthcare’s debt increased by 14.8 per cent, from N6.1bn in 2023 to N7.0bn in 2024.
BUA Foods recorded a 47.4 per cent drop in borrowings, decreasing from N1.38bn in 2023 to N724.1m in 2024.
FTN Cocoa Processors saw its debt rise by 124.0 per cent, from N7.66bn in 2023 to N17.15bn in 2024.
Neimeth’s borrowings increased from N288.2m in 2023 to N301.2m in 2024, marking a 4.5 per cent rise.
Nascon Allied Industries recorded a 48.3 per cent drop in borrowings, from N5.53bn in 2023 to N2.86bn in 2024.
NGX Group reduced its borrowings by 62.6 per cent, from N13.35bn in 2023 to N4.99bn in 2024.
Commenting, the former President of the Chartered Institute of Bankers of Nigeria, Segun Ajibola, stated that companies will continue to borrow as long as they remain operational, especially those with high gearing.
“A company will continue to borrow as long as it is in operation. They just need to have reasonable training in borrowing. There are some companies that are very geared, so they are likely to borrow really high. Companies will continue to borrow for expansion and production,” he stated.
He noted that as long as a company generates cash flow, it will not struggle to service its debts. However, he warned that the figures would continue to change due to the compound nature of interest rates, where interest accumulates on previous interest unless there is a deliberate effort by both the company and banks to manage it.
“The figure will continue to change because the interest rate is on a compound interest basis, meaning there will be interest on interest, so the figure will grow unless there is a deliberate attempt in the company and the banks. If interest rates increase, then total debt will increase. If there is a rise in borrowing costs beyond what the business can pass on to consumers, then there is a problem, and it will affect profits and shareholders’ funds,” Ajibola explained.
He pointed out that some companies, such as Dangote, have a history of borrowing, with some loans used for expansion and others for operational purposes.
“We know Dangote borrows a lot, some for expansion and some for operation. As long as the business remains profitable, there is still hope that it will be in a position to service the debt,” he added.
Ajibola also noted that some companies, such as Nigerian Breweries, may not need to rely heavily on borrowings due to strong cash flows generated from high consumer demand.
“Some of them lend to banks as a result of deposits. Some hardly borrow. Companies like Nigerian Breweries and others may not borrow because their products are in high demand, so their leverage is low. Businesses that are cash-flow reinvesting always have better liquidity management,” he said.
The PUNCH reported that nine listed Nigerian companies on the Nigeria Exchange recorded a surge in finance costs, rising by 69 per cent from N757.65bn in 2023 to N1.28tn in 2024, as high interest rates and mounting debts strain corporate finances.