Experts Urge Companies To Hedge Against Nigeria’s Currency Depreciation

The Group chief operating officer of Waltersmith Group, Alex Osho, alongside other business leaders said, Nigeria’s economic environment has made it a tall order for firms to hedge against the continued depreciation of the local currency.
He spoke during a panel session at the Lagos Business School(LBS) Chief Financial Officer Conference held yesterday in Lagos.

According to him, even though firms usually have a number of tools to hedge against currency depreciation, these tools are often incongruent within the context of Nigeria’s economy.
Osho said, “even though the tools are there, there is no liquidity. All the companies that declared huge (forex) losses, it is not as if the CFOs did not 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, its difficult.”
On his part, the chief executive officer of Flour Mills of Nigeria Plc, Boye Olusanya noted that companies must explore business alternative business models such as import substitution to insulate themselves from forex-related shocks, adding that, ‘the biggest thing is sitting and looking at ways to manage your business by looking for divergent inflow that are non-FX driven.’

Representing the CEO of Stanbic IBTC Bank, Wole Adeniyi, the bank’s executive director, Personal and Private Banking Nigeria, Olu Delano advised firms to find ways to adapt to the currency devaluation and keep moving forward.

The dean of the Lagos Business School, Prof Chris Ogbechie stated that, in today’s rapidly evolving landscape, the role of a CFO has never been more pivotal especially because businesses were grappling with inconsistent government policy and a vast array of challenges in the macroeconomic environment.
The Group CEO of Dangote Industries Limited, Kunle Alake emphasised that the CFO has to be at the forefront of driving sustainable growth and managing risks such as currency risks, security risks, among others.

Speaking on the topic ‘Maximising Stakeholder Value through Strategic Synergy of the CEO and CFO’, the vice president of Financial Controls & Budget at Africa Finance Corporation, Yeside Onafuye noted that, when the CEO-CFO relationship is symbiotic, the organisation will have strong leaders capable of navigating through tough times.

According to her, the success recorded by some of the world’s most successful companies such as Amazon and Apple have been a function of seamless CFO-CEO relationships.
On his part, 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 FPI in Nigeria companies must incorporate sustainability reporting in their annual reporting.