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Foreign suppliers shut credit lines to Nigerian businesses, CBN accuses operators of round-tripping

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10 years ago

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By Omoh Gabriel, Business Editor
*Hotels saddled with large amounts of idle foreign cash
*Quality of loan assets in banking system at risk
*Export proceeds idle
*Tyre prices up by 25%

The organised private sector weekend said that members are finding it difficult to pay foreign creditors for goods imported before the CBN restriction on 41 items access to foreign exchange market in Nigeria. They also said that many hotels in the country are saddled with large amounts of cash, foreign currency which they could not lodge into their domiciliary accounts or do business with.
According to a survey report of members of Lagos Chamber of Commerce and Industry and other operators in the private sector sighted by Vanguard, there is growing inability of Nigeria businesses to pay foreign creditors on account of items imported prior to the CBN policy. It also said that some manufacturers are unable to manufacture due to lack of foreign exchange to import raw materials.
According to the survey, there is now delay in the processing of Form ‘M’ to import and meet demands. This has led to loss of market share and slower consumer demand and lower profits. But an official of the CBN who would for now want to maintain silence on this issue accused leaders of the organised private sector of speculative demand for foreign exchange and the unpatriotic act of round-tripping. He said that some of these private sector leaders have been doing round-tripping of foreign exchange, thus putting undue pressure on the naira. He challenged the members to come out with the list of items that are input to their productions that are not available locally for the authorities to see.
But the operators said that Palm oil for instance, is needed for production of some consumer goods and since local supply cannot meet industrial usage, the inability to import it has caused some difficulties for manufacturers in such sectors. Prices of such products have to increase at least marginally. They claimed that there is a supply gap of about 600,000 metric tonnes of palm oil annually in Nigeria.
According to them, “Form M opened for items on the list prior to the CBN policy are not processed for payment leading to credit defaults with foreign suppliers. They equally said that vegetables and processed vegetable products used by Quick Service Restaurants are included in the list and this has affected negatively the availability of forex to import these materials. Sourcing locally will mean lower standards than international levels. Operators in their response to the survey said “Sourcing of foreign exchange at exorbitant rates from alternative sources is eroding already thin margins and that job losses are inevitable as the bottom line is being adversely affected.
A respondent to the survey report said “Export proceeds have become idle while in need of forex to import through other banks. Companies in the Fast Moving Consumer Goods sector are unable to settle outstanding obligations to foreign suppliers which has slowed down their ability to get fresh supplies for production. It further said that export business is hugely affected as they are unable to sponsor and pay marketing activities outside the country and that they are also experiencing payment delays.
The survey also discovered that there are now “delays in sourcing forex to import spare parts to meet breakdown of production machinery. Spares that were picked off the shelves before will now need to undergo series of processing before forex is made available to import them. It said that for suppliers that need to be paid in advance to arrange for supplies, it has become impossible to do so under the current regime.
According to the survey report, there is now “Default in repayment agreements with foreign suppliers and banks. The Bills for Collection opened in respect of the 41 items prior to the CBN policy have suffered non-performance.’
It said that “Tyre is a composite product of more than 200 raw materials. It is therefore technically wrong to classify tyre as rubber instead of being termed an automotive part. Tyre business operators cannot source for forex to remain in operation. As a result, the prices of tyre have increased by 25 per cent since July 2015. This, they said, has led to increased spate of smuggling into the country with implications for loss of revenue from import duty and risk of increased road accident from fake vehicle tyres”.
Private sector operators in their complaint said that “some raw and packaging materials that are required in manufacturing process are on the exclusive list. These materials are not available locally and have to be imported. There are issues with the ambiguous classification of the items on the list. For instance, glassware and glass bottles, especially different small sizes needed for packaging of medicines; the glass bottles have been classified as glassware and as such, cannot access foreign exchange to import them. Local bottlers do not produce the small sizes as local requirements are not large enough to attract them into producing small glass sizes”.
In the Pharmaceutical sector, they said: “There is now “Scarcity of Pharmaceutical package materials such as glass and plastic bottles. Industry operators have almost run out of key packaging input with implications of shut down and job losses in near term”.
They further complained: “It takes up to two months to get foreign exchange for even products that are not in the prohibited list. This is waste of time and leads to loss of opportunities. There is about 10 to 15 per cent increase in the cost of transfers and there are also security issues with such transfers”.
According to the survey report, “Companies operating in Free Trade Zones operate under statutes that exclude them from CBN Foreign Exchange regulations. The CBN has disregarded these provisions as companies operating in Free Trade Zones are meant to comply with foreign exchange restrictions. Operators at free trade zones are now regulated/legislated out of business; this they claim is a breach of the law/status that established the free trade zone as a country within a country.”
They also argued that restriction of key input/raw materials such as wood particle boards and panels; wood fibre boards and panels; plywood boards and panels; woven fabrics has constrained those operating in the sector saying “there are no local producers of these basic raw materials that could have served as alternative to the import. Capacity utilisation now stand at 50 per cent from 70 per cent in December 2014 as a result of non-availability of these basic raw materials. Many of the products on the list of the 41 products are intermediate goods which are critical inputs for many manufacturing firms as well as other critical sectors of the economy.
They stated: “The list is prone to multiple definitions and discretionary interpretations by agencies and institutions responsible for implementation. The HS codes of the items are not indicated in the CBN circular. Discretionary interpretations create room for corruption.
It said that there is a “Breach of right of the entrepreneur to utilise export proceed on legitimate goods/services which falls within the 41 banned items. Many SMEs are now forced to wire their transactions from neighbouring countries. This, they say, poses Sovereign risk and poor perception of the country which could lead to closure of credit lines as a result of credibility crisis by foreign partners.
They also said that this could lead to loss of confidence on Nigerian business operators by their foreign partners due to their inability to fulfill their obligations especially in ongoing transactions before the new forex policy. There is anxiety among foreign investors as repatriation of investment proceeds may not be guaranteed and there is also now the Challenges of foreign banks honouring letters of credit from Nigerian banks and long delay of banks in Nigeria before honouring their obligations relating to letters of credit even after the goods have been delivered.
“The quality of loan assets in the banking system and sustainability of many enterprises are now at risk. Many parents are currently faced with the predicament of how to remit funds for the upkeep of their children abroad, especially those in schools. Only fees paid directly to the schools can be remitted under the present regulation”.

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FG earned N2.78trn from Company Income Tax in second quarter 2025—NBS

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1 week ago

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November 28, 2025

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National Bureau of Statistics has said that Nigeria’s Company Income Tax rose sharply in the second quarter of 2025, hitting N2.78 trillion.

The figure represents a significant 40.27 per cent increase compared to the N1.98 trillion recorded in the first quarter of the year, reflecting both improved tax compliance and stronger corporate performance across key economic sectors.

The NBS report said that domestic company income tax payments accounted for the bulk of the revenue, contributing N2.31 trillion, while offshore collections stood at N469.36 billion during the period under review.

According to the NBS, the financial and insurance sector recorded the highest quarter-on-quarter growth, rising by an astonishing 772.29 per cent, driven by improved profitability among banks, fintechs, and insurance firms following robust half-year earnings.

This, according to NBS, was followed by wholesale and retail trade, as well as motor vehicle repair activities, which grew by 538.38%.

Activities of households as employers also surged by 526.79%, although their overall contribution to total company income tax remained negligible.

On the flip side, some sectors experienced sharp declines in company income tax remittances.

Activities of extraterritorial organizations and bodies dropped by –45.01%, while education, public administration, defence, and compulsory social security recorded declines of –26.61% and –18.17% respectively.

The contraction in these sectors, particularly education and public administration, highlights persistent structural and fiscal challenges confronting government-funded institutions.

In terms of contribution to total tax revenue, financial and insurance activities led with a dominant 44.13%, reflecting the sector’s continuing expansion and strong capital flows.

Manufacturing followed with 15.57%, bolstered by increased production output and improved supply chain activity.

Mining and quarrying ranked third, contributing 9.18%, supported by higher commodity prices and renewed interest in solid mineral development.

At the bottom of the contribution chart were activities of households as employers, which accounted for just 0.01%, as well as activities of extraterritorial organizations and bodies, and water supply, sewerage, waste management, and remediation services, each contributing 0.04%. Despite economic headwinds, year-on-year company income tax collection still rose by 12.66% when compared to Q2 2024, underscoring moderate but steady improvement in government revenue mobilisation.

Company income tax collection in the same period of 2024 rose by 150.83 per cent N2.47 trillion. In the first three months of the year, company income tax collection stood at N984.61 billion. According to the report, local payments in the period under review amounted to N1.35 trillion, while foreign CIT payments contributed N1.12 trillion. On a quarter-on-quarter basis, the agriculture, forestry, and fishing sectors exhibited the highest growth rate at 474.50%, followed by financial and insurance activities at 429.76%, and manufacturing at 414.15%.

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Lagos govt promises MSMEs continued visibility, market access

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3 weeks ago

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November 16, 2025

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Lagos State government has reaffirmed its unwavering commitment to supporting micro, small, and medium enterprises (MSMEs) across the state through visibility, capacity building, and market access. Commissioner for Commerce, Cooperatives, Trade, and Investment, Folashade Ambrose-Medebem, made the pledge on Sunday at the closing ceremony of the 2025 Lagos International Trade Fair (LITF). The 38th edition of the event, organised by the Lagos Chamber of Commerce and Industry (LCCI), had its theme as “Connecting Business, Creating Value.”

Ms Ambrose-Medebem said every entrepreneur, regardless of scale, deserves an enabling environment to thrive and contribute meaningfully to the state’s economic prosperity. She said the state, through strategic investments in infrastructure, institutional reforms, and continuous engagement with the private sector, was building a Lagos that worked for business. The commissioner added that the state would continue to foster innovation, competitiveness, and sustainability.

“As a government, we remain steadfast in our commitment to making Lagos the preferred destination for commerce and enterprise. This fair has once again demonstrated the power of connection: connection between producers and consumers, investors and innovators, the government and the private sector, and local entrepreneurs and global brands. Every handshake, every conversation, every business card exchanged here is a building block toward the future we are creating, a future of prosperity that leaves no one behind,” she said.

The commissioner urged businesses to continue to connect, collaborate, and create value, saying, “In Lagos, we do not just trade goods; we trade ideas, build futures, and transform lives. “Together, let us continue to make Lagos not just a place of commerce, but a symbol of progress, innovation, and endless opportunity.” Gabriel Idahosa, president of LCCI, urged governments at all levels to continue addressing the issues of creating an enabling environment in the country.Mr Idahosa said focus should be on infrastructure, security, and implementing the right policies to address the key drivers of high inflation.

This, he said, was needed to fully harness the vast enterprising resources of domestic and foreign investors for the diversification of our economy and the welfare of our people. He pledged the commitment of the organised private sector to stand solidly behind the state in its quest to actualise its innovative initiatives on all fronts. NAN

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Jumia posts $17.7m pre-tax loss in Q3, down 1% in 12 Months

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3 weeks ago

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November 12, 2025

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Jumia Technologies AG posts a $17.7 million loss before income tax in the third quarter of 2025, down 1% year-on-year from $17.8 million in the third quarter of 2024. The road to profitability has remained long as ecommerce continues to face uncertainties, including widening competition with rivals in the same industry. The e-commerce company revenue came in at $45.6 million compared to $36.4 million in the third quarter of 2024, representing a 25% year-over-year surge in the period. The company reported gross merchandise value of $197.2 million compared to $162.9 million in the third quarter of 2024, up 21% year-over-year. Excluding South Africa and Tunisia, physical goods GMV grew 26% year-over-year, Jumia revealed in the unaudited financials.

Jumia said in its report that the GMV growth was driven by supply and strong marketing execution, partially offset by lower corporate sales in Egypt. Excluding corporate sales, GMV in reported currency grew 37% year-over-year. Nigeria’s momentum accelerated, with order growth up 30% and GMV up 43% year-over-year, Jumia said. The e-commerce giant’s operating loss reduced by 13% year-over-year to $17.4 million compared to $20.1 million in the third quarter of 2024. The company’s adjusted earnings before interest tax depreciation and amortisation loss dropped by 17% to $14.0 million compared to $17.0 million in the third quarter of 2024.

Jumia reported a loss before income tax of $17.7 million, a slight reduction of 1% compared to $17.8 million in the third quarter of 2024. Liquidity printed at $82.5 million, a decrease of $15.8 million in the third quarter of 2025, compared to an increase of $71.8 million in the third quarter of 2024, which included the net proceeds from the August 2024 At-the-Market (ATM) offering, and a decrease of $12.4 million in the second quarter of 2025.

Its net cash flow used in operating activities settled at $12.4 million compared to net cash flow used in operating activities of $26.8 million in the third quarter of 2024 and $12.7 million used in the second quarter of 2025. The result includes a positive working capital contribution of $0.4 million.

Jumia reported that customers’ orders grew 34% year-over-year, driven by strong execution, enhanced product assortment, and healthy consumer demand across key categories. It said quarterly active customers ordering physical goods grew by 23% year-over-year, highlighting continued engagement and customer loyalty. As of September 30, 2025, the Company’s liquidity position was $82.5 million, comprised of $81.5 million in cash and cash equivalents and $1.0 million in term deposits and other financial assets, it said in the report Jumia’s liquidity position decreased by $15.8 million in the third quarter of 2025, compared to an increase of $71.8 million in the third quarter of 2024, which included net proceeds from the August 2024 At-the-Market (ATM) offering, and a decrease of $12.4 million in the second quarter of 2025.

Net cash used in operating activities was $12.4 million in the third quarter of 2025, compared to a net cash used of $26.8 million in the third quarter of 2024 and $12.7 million used in the second quarter of 2025. The result includes a positive working capital contribution of $0.4 million in the third quarter of 2025, compared to a negative working capital contribution of $9.1 million in the third quarter of 2024, primarily reflecting improvements in operating performance.

 In addition, the Company reported $1.4 million in capital expenditures in the third quarter of 2025, compared to $0.9 million in the third quarter of 2024, primarily reflecting investments in infrastructure and facility enhancements to support business growth. “This quarter marks a significant acceleration in customer demand and order growth, driven by strong execution across our markets and growing consumer trust in the Jumia brand. We believe Jumia has reached an inflection point as our compelling value proposition, and improved operational discipline position us for sustainable, profitable growth.

“We continue to strengthen our cost structure and sharpen operational discipline, reinforcing our path toward profitability. Our focus remains on execution and customer engagement as we build a more efficient business.
“We believe that we are on track to reach breakeven on a Loss before Income tax basis in Q4 2026 and achieve full-year profitability in 2027, positioning Jumia for long-term growth and value creation.”

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