Tuesday, August 23

Another foreign company departs Nigeria due to naira devaluation

Sun International, a South African company with 49 percent stake in Federal Palace Hotel and Casino, says it is leaving Nigeria, owing to “challenging financial devaluation and regulatory dispute”.

The hospitality and gaming company, which becomes the fourth major South African company to exit Nigeria in 2016, said the controversial detention of five of its staff by the Economic and Financial Crimes Commission (EFCC) and the current naira drop has added to its decision to exit Nigeria.

“Five of our staff members who were detained by the Economic and Financial Crimes Commission earlier in the year have still not had their passports returned to them despite no charges being laid against the individuals, the company or Sun International. As a result of the current environment and issues facing the company the board has taken the decision to exit our investment in Nigeria.”

It said the exit is however expected to be a protracted process given the challenges we are facing and to ensure we receive fair value for our investment.

The company said it also recorded “an unrealised foreign exchange loss of $15.2 million or R207 million (R102 million attributed to Sun International) incurred on the group’s Nigerian subsidiary’s US dollar denominated shareholder loans”.

“The Federal Palace continues to operate in a difficult environment with the Nigerian economy facing a number of crises including the low oil price, Boko Haram and a weakening naira and it has still not recovered from the significant impact that the Ebola epidemic had on the business.

“Occupancy at 41.6% was 6.8% below last year with the average room rate up 3.8%. Despite all efforts to keep costs as low as possible. UK Company – Truworths also announced its exit from Nigeria back in February, due to the same issues, while Clover left about two weeks later.

Tiger Brands also sold off its stake in Nigeria-based Dangote Flour, following challenging economic environment in the second largest economy in Africa.

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