Nigeria is unlikely to see another steep devaluation of its currency, said Olusegun Ogusanya, managing director of Airtel Africa Plc, the third biggest telecommunications company in Africa’s most populous nation.
“I do not think we are going to have another massive devaluation from where are now like we had in our first quarter,” Ogusanya said in a phone interview from Dubai. “The devaluation after the first quarter has not been as massive.”
The company reported a $471 million foreign-exchange loss for the six months from April to September, which it blamed primarily on devaluation in Nigeria, its biggest market in Africa. The naira has lost more than 40% of its value against the dollar since June after the central bank allowed it to trade more freely, the biggest loss over that period among currencies tracked by Bloomberg globally.
Airtel Africa’s half-year performance reflects currency weakness across its countries of operation with the exception of those using the CFA franc, ChapelHill, a Lagos-based investment banking firm, said in a note this week.
“Removing the impact of currency volatility, Airtel displayed a strong performance across its business lines and regions,” ChapelHill said.
The firm’s shares are up 33% this week and traded at 1,863.50 naira as of 11.51 a.m. on Thursday, the highest since Oct. 5, 2022. The stock rose 10% in early morning trade, the regulatory maximum in Nigeria, for a third consecutive day on Thursday.
Dollar Liquidity
Operating in Nigeria poses a unique challenge in that the country has both a weakening currency and low dollar liquidity, Ogunsanya said. “In other countries, we have devaluation issues but we do have increased liquidity,” he said.
With the move to allow the currency to trade more freely, Nigerian officials were hoping to attract more dollar inflows and improve liquidity that had dried up after years of pegging the naira to the dollar. Dollar inflows have failed to materialize, however, as foreign investors have largely stayed on the sidelines waiting for the central bank to clear a backlog of overdue dollar liabilities estimated at $6.8 billion.
Naira official rate falls 26% as dollar supply drops two-thirds
Airtel Africa should still meet its capital expenditure commitment of as much as $825 million this year, despite the foreign exchange challenges, Ogunsanya said. “We have spent $312 million for the half year, the guidance still remains,” he said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
