Nigerian Corporates Face the ‘Pay More, Owe Less’ Debt Paradox
Nigeria’s biggest listed companies are navigating a strange and costly reality: their debt loads are shrinking, but their interest bills are soaring.
The Painful Numbers
An analysis of 10 large companies in cement, oil & gas, and consumer goods sectors shows:
• Interest expenses jumped 31% in the first half of 2025 — from ₦411bn to ₦538.5bn.
• Total borrowings fell nearly 10% — from ₦7.21tn to ₦6.49tn.
• Translation: companies are paying more for less debt.
This is largely due to the Central Bank of Nigeria’s (CBN) aggressive interest rate hikes, with the Monetary Policy Rate (MPR) at 27.5% — a multi-decade high — in its fight against stubborn inflation still hovering in the high 20s.
Sector Highlights — Who’s Hurting Most?
• BUA Cement: Interest costs surged +250% despite slightly lower borrowings.
• Seplat Energy: Finance costs up +141% after cutting debt by 20%.
• Dangote Cement: Still the most indebted, with ₦2.4tn in loans; interest costs rose nearly 65%.
• Lafarge: Interest bill more than tripled.
• Aradel Holdings: +49% increase due to upstream oil investment financing.
Not all were hit —
• BUA Foods: Finance costs nearly halved after cutting borrowings by ~20%.
• Nigerian Breweries & Nestlé: Posted double-digit declines in finance costs thanks to strategic repayments and stronger cash flows.
Interest Coverage — The True Stress Test
The interest coverage ratio (profits ÷ interest costs) reveals how easily companies can pay interest:
• Overall, coverage fell from 24x to 17x — still safe but hiding trouble for some.
• Dangote Cement: Dropped to 3.78x (close to caution level).
• BUA Cement: Fell to 6.44x.
• Nigerian Breweries: Slid below safety, from 3.57x to 2.39x.
• Dangote Sugar: In distress at just 0.59x — earnings can’t cover even half its annual interest bill.
• Nestlé: Improved from 1.16x to 2.82x.
• Cadbury: Huge recovery — from 1.77x to 7.63x.
Bright Spots — Strong Cash Flow
Despite higher interest costs, some firms posted impressive turnarounds in cash generation:
• MTN Nigeria: From ₦518bn loss in H1 2024 to ₦415bn profit; cash flow jumped from ₦533bn to ₦956bn.
• Dangote Cement: Profits more than doubled to ₦520bn; cash flow up to ₦874bn.
• Seplat Energy: Cash generation soared from ₦235bn to ₦755bn despite lower profits.
• Nestlé: From ₦177bn loss to ₦51bn profit; cash flow turned positive at ₦188bn.
• BUA Cement: Profits quintupled to ₦181bn.
⚠ The Big Picture — “Expensive Money” is Here to Stay
The CBN is not signalling any rate cuts soon, meaning borrowing will stay costly through 2025. While FX market stability has reduced currency losses, the cost of naira debt remains punishing.
For capital-intensive companies, debt efficiency, disciplined capital spending, and robust cash flow generation will be critical to surviving — and thriving — in this high-rate environment.
Bottom line: In Nigeria’s current economy, high interest rates aren’t just an economic backdrop — they’re a competitive battlefield.
Nigeria’s biggest listed companies are navigating a strange and costly reality: their debt loads are shrinking, but their interest bills are soaring.
The Painful Numbers
An analysis of 10 large companies in cement, oil & gas, and consumer goods sectors shows:
• Interest expenses jumped 31% in the first half of 2025 — from ₦411bn to ₦538.5bn.
• Total borrowings fell nearly 10% — from ₦7.21tn to ₦6.49tn.
• Translation: companies are paying more for less debt.
This is largely due to the Central Bank of Nigeria’s (CBN) aggressive interest rate hikes, with the Monetary Policy Rate (MPR) at 27.5% — a multi-decade high — in its fight against stubborn inflation still hovering in the high 20s.
Sector Highlights — Who’s Hurting Most?
• BUA Cement: Interest costs surged +250% despite slightly lower borrowings.
• Seplat Energy: Finance costs up +141% after cutting debt by 20%.
• Dangote Cement: Still the most indebted, with ₦2.4tn in loans; interest costs rose nearly 65%.
• Lafarge: Interest bill more than tripled.
• Aradel Holdings: +49% increase due to upstream oil investment financing.
Not all were hit —
• BUA Foods: Finance costs nearly halved after cutting borrowings by ~20%.
• Nigerian Breweries & Nestlé: Posted double-digit declines in finance costs thanks to strategic repayments and stronger cash flows.
Interest Coverage — The True Stress Test
The interest coverage ratio (profits ÷ interest costs) reveals how easily companies can pay interest:
• Overall, coverage fell from 24x to 17x — still safe but hiding trouble for some.
• Dangote Cement: Dropped to 3.78x (close to caution level).
• BUA Cement: Fell to 6.44x.
• Nigerian Breweries: Slid below safety, from 3.57x to 2.39x.
• Dangote Sugar: In distress at just 0.59x — earnings can’t cover even half its annual interest bill.
• Nestlé: Improved from 1.16x to 2.82x.
• Cadbury: Huge recovery — from 1.77x to 7.63x.
Bright Spots — Strong Cash Flow
Despite higher interest costs, some firms posted impressive turnarounds in cash generation:
• MTN Nigeria: From ₦518bn loss in H1 2024 to ₦415bn profit; cash flow jumped from ₦533bn to ₦956bn.
• Dangote Cement: Profits more than doubled to ₦520bn; cash flow up to ₦874bn.
• Seplat Energy: Cash generation soared from ₦235bn to ₦755bn despite lower profits.
• Nestlé: From ₦177bn loss to ₦51bn profit; cash flow turned positive at ₦188bn.
• BUA Cement: Profits quintupled to ₦181bn.
⚠ The Big Picture — “Expensive Money” is Here to Stay
The CBN is not signalling any rate cuts soon, meaning borrowing will stay costly through 2025. While FX market stability has reduced currency losses, the cost of naira debt remains punishing.
For capital-intensive companies, debt efficiency, disciplined capital spending, and robust cash flow generation will be critical to surviving — and thriving — in this high-rate environment.
Bottom line: In Nigeria’s current economy, high interest rates aren’t just an economic backdrop — they’re a competitive battlefield.