The foreign exchange loss of MTN Nigeria Communications Plc, the country’s biggest mobile network operator, rose to the highest in at least six years in the first three months of 2024, data compiled by BusinessDay shows.

According to the firm’s latest financial statements, its net FX loss widened to N656.4 billion in Q1 from N4.5 billion in the same period of last year as a result of the further devaluation of the naira.

“The operating environment in the first quarter remained very challenging, with rising inflation and continued naira depreciation off an already low base,” Karl Toriola, CEO of MTN Nigeria, said in a statement.

He said the naira depreciated to an all-time low of N1,627/$ at the Nigerian Autonomous Foreign Exchange Market in March, from N907/$ at the end of December 2023, before moderating to N1,309/$ by the end of the quarter.

“Additionally, the inflation rate maintained an upward trajectory, rising to 33.2 percent in March, with an average rate of 31.6 percent in the quarter. To curb inflation, the Central Bank of Nigeria increased the Monetary Policy Rate by four percentage points to 22.75 percent, which has driven up funding costs.”

Toriola noted that these factors have caused significant difficulties for businesses operating in Nigeria, including MTN Nigeria, putting additional pressure on consumers, the cost of doing business, and further foreign exchange losses.

Further analysis of the statement shows that the telco’s finance income dropped to N5.34 billion from N6.63 billion while finance cost surged to N98.7 billion from N45.8 billion.

Net cash generated from operating activities rose to N383.1 billion from N256.3 billion. Net cash flows used in investing activities stood at a negative N173.1 billion from a negative N76.01 billion.

Net cash flow generated from financing activities stood at a negative of N368.6 billion from a positive N36.1 billion. Cash and cash equivalents at the end of the period declined to N191.4 billion from N565.2 billion.

MTN Nigeria’s revenue increased to N752.9 billion in the first three months of 2024 from N568.1 billion in the same period of 2023.

“Our solid commercial operations enabled us to deliver service revenue growth of 32.0 percent which slightly exceeded the average inflation rate in the quarter,” Toriola said. “This growth was led by double-digit growth in voice, data, and digital services; as well as favorable base effects in Q1 2023 arising from the challenge in that period (including the redesign of the naira, which resulted in cash shortages).”

He said EBITDA, however, came under pressure, declining by 1.9 percent. “This was primarily because of a further depreciation of the naira in the quarter, exacerbated by higher general inflation and energy costs.”

Toriola said: “As a result, the EBITDA margin declined by 13.9 basis points to 39.4 percent. The EBITDA margin would have been 51.0 percent adjusted for the naira depreciation effects.

“We continue to pursue our efficiency measures and accelerate efforts to reduce forex exposure to minimise the impact on our business. The further depreciation of the naira in Q1 resulted in a materially higher net forex loss of N656.4 billion (Q1 2023 restated: N4.5 billion), arising from the revaluation of foreign currency denominated obligations.”

The after-tax loss amounted to N392.7 billion from an after-tax profit of N108.4 billion during the period reviewed.

Read also: GTCO reports N509.3bn Q1 pre-tax profit

Capital expenditure

MTN Nigeria’s capital expenditure increased by 49.1 percent to N179.7 billion, while core capex, excluding leases, rose by 84.4 percent to N78.1 billion, with a capex intensity of 10.4 percent.

“The increase in capex reflects the impact of the significant devaluation of the naira amidst forex supply challenges. As a result, free cash flow declined by 35.6 percent to N117.2 billion. In terms of our debt metrics, approximately 47 percent of our debts have fixed interest rates, while 53 percent are floating,” Toriola said.

“We have taken steps to significantly reduce our outstanding short-term trade loans for letters of credit establishment by 41.6 percent to $243.4 million (December 2023: $416.6 million).

The Federal Government may need to raise a supplementary budget to accommodate the proposed minimum wage increase for workers.

This is because the negotiated amount may surpass the budgeted amount in the original 2024 budget.

The International Monetary Fund gave this recommendation in its latest staff country report for Nigeria.

“The authorities noted that a supplementary budget may be needed to accommodate the outcome of the ongoing wage structure negotiations which may exceed what they had included in the 2024 budget,” the report stated.

It also noted that the government might need to raise the domestic and external borrowing ceilings to prevent fresh borrowings from the apex bank’s Ways and Means.

The new minimum wage has been an ongoing matter between Organised Labour and the government since the beginning of this year to cushion the impacts of the harsh economy.

Recent reforms in Nigeria including the removal of fuel subsidy and the unification of the foreign exchange market have pushed the cost of living to newer levels.

While labour leaders demand N615,000 from N30,000 as salaries for lowest ranked workers, there are indications the tripartite committee may recommend N70,000 as the new minimum wage.

In the 2024 budget, the government allocated N6.48tn for personnel costs but the international lender posits that the amount may be insufficient.

The IMF further noted that the country’s budget deficit for 2024 is expected to surpass projections, owing to implicit subsidies for fuel and electricity, alongside rising interest expenses on debt.

The Minister of Finance, Wale Edun, had stated the government planned to reduce the budget deficit from 6.1 per cent in the 2023 budget to 3.8 per cent in the current appropriation.

The report read in part, “Staff projects a higher fiscal deficit than anticipated in the 2024 budget, but broadly unchanged from 2023. The drivers are lower oil/gas revenue projections, reflecting IMF oil price forecasts but incorporating recent production gains; higher implicit fuel and electricity subsidies; continued suspension of excise measures included in the MTEF; and higher interest costs.

Staff factors in an under-execution of capital expenditure in line with past outcomes and estimates an FGN deficit of 4.5 per cent of GDP relative to the 2024 budget target of 3.4 per cent of GDP. For the consolidated government, this implies a projected deficit of 4.7 per cent of GDP in 2024—compared to 4.8 per cent of GDP in 2023 measured from the financing side—which is appropriate given the large social needs and factoring in a realistic pace of revenue mobilisation.

“Over the medium-term, staff projects consolidation in the non-oil primary deficit. With rising interest costs, government debt stabilises towards the end of the projection period.”

Meanwhile, the report also urged the government to consider meeting its financing needs from the market and external borrowing.

It said, “Based on staff’s projections, the authorities must raise the domestic and external borrowing ceilings to prevent renewed recourse to CBN financing. With higher interest rates, banks and nonbanks should have sufficient appetite—as indicated by market sources—conditional on careful management of system liquidity, including a likely reduction in the currently high cash reserve requirement.

“Staff projects that the government’s 2024 net financing needs can be met from the market and external borrowing. Domestic market financing needs to increase by 1.5 per cent of GDP over 2023. In addition, the government wants to retire outstanding ways and means borrowing from the CBN of 2.5 per cent of GDP through the issuance of further domestic securities.

It added, “While staff agrees that ways and means financing should be brought to zero by end-2024 in line with the law, the authorities may need to consider other options to avoid crowding out private sector credit, including drawing down the government’s deposits at the CBN built up in 2023 or a second securitisation operation to tackle this legacy problem.

“While external financing is costlier than when Nigeria last accessed Eurobond markets, staff supports an opportunistic issuance, also given upcoming maturities in 2025. A Eurobond issuance and some official financing are factored into staff’s projections as an integral part of the 2024 financing mix.”

The Federal Government is set to review the nation’s visa policy to attract foreign investments and boost visits to the country.

The Minister of Interior, Olubunmi Tunji-Ojo, disclosed this at the Transcorp Hotel, Abuja during a stakeholders consultative meeting on Nigeria visa on Saturday.

Tunji-Ojo stated that last year’s visitor numbers was inadequate compared to the country’s population and resources, noting that policy on visas has to be reviewed to meet the standards of the Renewed Hope Agenda of President Bola Tinubu.

He said, “We are determined to make sure that in the next couple of weeks, by the grace of God, the new implementation framework will be on the ground.

And people all over the world will start having easy access to the country. We want to welcome investment and people. Just last year, the number of foreign passengers that came to Nigeria whether Nigerians or non, was just less than two million people.

“That is unacceptable for a country of over 200 million people. It means that we are limiting investment and import of forex among other things. So, once we get the visa policy right and we get the implementation framework perfect, then definitely the economic prosperity will come.”

He stressed that a visa policy that attracts investments and encourages visitors to visit Nigeria from across the world without putting the country’s security in jeopardy

Speaking further, the minister stated that though it was difficult to reach a balance between easy access to visa and national security considering its delicate nature “if gotten right, it would no doubt lead to a healthy investment promotion for Nigeria”.

He said, “You see, seamless access to any country is key for investment promotion, job creation, foreign direct investment. In short, it is key to whatever a particular country wants to do or achieve to enable it to progress

The logic is that everything is built on effective visa administration. So, we are here to really talk about it and to be able to streamline the process for the better. Especially, in areas of short stay visa and even our other categories of visa to see how we can optimise them and make it more efficient in such a way that will be able to attract more investment”.

Tunji-Ojo further said if the country is right on its track, the development will open up the nation’s space for tourism, and infrastructural development.

This, he said will equally create a balance in terms of our national security architecture.

He noted that the Tinubu-led administration’s resolve is to make Nigeria’s visa policy the best in the world and that it would not rest on its oasis until it is achieved.

The renewed hope is about business unusual, it is about prioritising Nigeria by making sure that it is the best in the world and that is exactly what we are trying to achieve. It is one thing to have a policy, but it is another thing to be able to implement it

So, we are gathered here today, to deliberate on the need to use technology to reduce the waiting time to get a short-stay visa, business visa, tourism as well as entertainment. And how easy is it going to be for them to have access to their application mechanism? Why must somebody need to travel from British Columbia in Canada all the way to Ottawa, just because you want a Nigerian visa?”

He added that “What are the reasons today people go to Qatar, UK and Singapore even more than the way people go to Europe; it is because there is easier access. So, creating the right framework and having that benchmark that will be competitive, and comparable with the best in the world is exactly what we aim to achieve.

“We want to assure Nigerians that this is not just a workshop, neither are we just here to talk but to actualise it,” the Minister asserted.

On his part, the Permanent Secretary of the Ministry of Interior, Aishetu Ndayako, noted that the review has become necessary given the importance of visas to the overall development of any country.

Ndayako stated, “We are here today to discuss the significance of our collective efforts in shaping the future of visa regulations and procedures that have a profound impact on individuals, businesses and the nation as a whole.”