One of the leading cement makers in Nigeria, Lafarge Africa Plc, has said the 2023 general elections and the cash crunch negatively impacted its financial performance in the first quarter of this year.
Prior to the polls, the country’s economy was almost brought to its knees over the decision of the Central Bank of Nigeria (CBN) to redesign the N200, N500, and N1,000 denominations.
The apex bank announced the currency redesign policy in October 2022 and gave Nigerians till January 31, 2023, to swap the old banknotes with the new ones.
However, this deadline was extended to February 10, but before the expiration, three state governments, Kaduna, Kogi, and Zamfara States, filed a suit at the Supreme Court to stop the implementation of the policy.
When the central bank announced the new policy, it explained that it was to stop vote-buying, currency counterfeiting and kidnapping.
The state governors said the Naira redesign policy was a tool used by the CBN chief, Mr Godwin Emefiele, to get back at the candidate of the ruling All Progressives Congress (APC) in the election, who was later declared as the winner of the exercise by the Independent National Electoral Commission (INEC).
Mr Emefiele had wanted to partake in the election under the APC but was stopped by the court, which held that he must resign as CBN Governor before joining the political race. He opted to remain in office.
In the first quarter of 2023, cash transactions shrank, and many Nigerians could not transact businesses because of a shortage of cash and issues with electronic transfers.
Lafarge Africa said this also affected its performance in the first three months of the year.
In its financial statements for the period ended March 31, 2023, the cement firm suffered a 14.9 per cent decline in its net profit as it stood at N4.7 billion compared with the N5.1 billion recorded in the same period of last year.
“Q1 2023 was a challenging first quarter due to the economic impact of the general elections and shortage of cash in circulation following the currency redesign policy. These constrained our financial performance,” the chief executive of the company, Mr Khaled El Dokani, said.
But he emphasised that Lafarge Africa remains “focused on delivering sustainable value to all stakeholders as the market recovers post-election and through the rest of the year. Lafarge Africa remains committed to accelerating green growth in line with our sustainability ambitions and targets.”
A brief look into the results showed that despite the headwinds, the organisation witnessed a 1.3 per cent jump in its net sales to N91.8 billion from N90.6 billion in Q1 2022, while the recurring EBIT stood at N22.2 billion versus N22.1 billion in the corresponding period of 2022, with the free cash flow at N4.7 billion versus the N5.1 billion loss in Q1 of 2022.