Losses Highlight Challenges of Doing Business Amid Nigeria’s Economic Volatility
MultiChoice Group Limited has written off $21 million held in Nigeria’s Heritage Bank following the financial institution’s liquidation earlier this year. The disclosure was made in the company’s interim financial statements for the half-year ending September 30, 2024.
The funds were declared irrecoverable after the Central Bank of Nigeria (CBN) revoked Heritage Bank’s operating license on June 3, 2024, leading to its liquidation. MultiChoice stated in its report, “Following the revocation of Heritage Bank’s banking licence by the Central Bank of Nigeria on 3 June 2024 and its subsequent liquidation, the group wrote-off its receivable relating to the cash held with the bank.”
The loss underscores the financial obstacles faced by businesses operating in Nigeria, where economic instability and currency depreciation have proven challenging. MultiChoice’s operations in Nigeria, one of its largest African markets, have also been strained by rising inflation and a weakened naira.
In addition, the group reported a decline in cash remittances from Nigeria, with $65 million extracted during the period under review, a decrease from $91 million in the corresponding period of the previous year. This drop has been further complicated by foreign exchange losses, which impacted the group’s bottom line.
“The further depreciation of the naira against the US dollar has resulted in further foreign exchange losses on non-quasi equity loans (on the USD-denominated intergroup loan from MultiChoice Africa Holdings B.V. to MultiChoice Nigeria Limited), contributing to the ZAR2.1bn (1H FY24: ZAR2.4bn) recognised in the condensed consolidated income statement,” the statement read.
MultiChoice noted that it held $11 million in cash within Nigeria at the end of the reporting period, down from $39 million at the close of FY24. This decline was attributed to the ongoing effort to remit funds, currency devaluation, and the write-off of the $21 million held in Heritage Bank prior to its closure.
Additionally, Nigeria has presented challenges in terms of subscriber retention for the company. The nation accounted for 63 percent of the MultiChoice Group’s subscriber losses within its Rest of Africa segment since FY23. Economic challenges, particularly high inflation and currency depreciation, have contributed to a net loss of 1.1 million subscribers in Nigeria from FY23 to 1H FY25.
Before the bank’s liquidation, MultiChoice disclosed it held an account balance of N31.6 billion with Heritage Bank. In a related development, the Nigeria Deposit Insurance Corporation (NDIC) recently announced plans to sell off Heritage Bank’s assets and properties to recover funds for uninsured depositors. The sale, set to commence on December 4, 2024, will involve competitive bidding for the bank’s properties across 36 locations nationwide as part of NDIC’s statutory mandate under Section 62(1)(d) of the NDIC Act, 2023.
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