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AMID Nigeria’s high interest rate environment, three major companies—Dangote Sugar Refinery Plc, Dangote Cement Plc, and Lagos Free Zone Company—have collectively raised N110.93 billion through commercial paper (CP) issuances.
These transactions highlight the companies’ innovative approaches to securing working capital and sustaining business operations despite economic challenges.
Lagos Free Zone Company (LFZC) successfully raised N10.93 billion through its Series 9 and 10 CP issuances under its N30 billion CP programme. Established as Nigeria’s first privately owned economic zone, LFZC operates an 850-hectare industrial hub integrated with the Lekki Deep Seaport. The zone has attracted 25 enterprises, including global brands, leveraging its state-of-the-art industrial and warehouse facilities.
Since its inception in 2002, LFZC has evolved into a key player in Nigeria’s industrial landscape. Initially licensed as an export processing zone, its status transitioned to a free trade zone in 2006. The company is now focused on land development, infrastructure construction, and leasing facilities to registered enterprises. LFZC’s operations are pivotal to boosting industrial activities in Nigeria, with its license valid until 2067.
According to FSDH Capital, Dangote Cement Plc, the largest cement producer in Sub-Saharan Africa, launched its Series 17 and 18 CP issuances, raising up to N50 billion under its N300 billion CP programme.
With operations across 10 African countries and a production capacity of 52 million metric tonnes per annum (Mta), Dangote Cement has transformed Nigeria from a cement importer to a net exporter.
The funds raised are expected to support the company’s extensive manufacturing, sales, and distribution network, ensuring operational efficiency in a competitive market. The offer, which closed on December 19, 2024, has drawn significant investor interest due to Dangote Cement’s reputation for operational excellence and market leadership.
Dangote Sugar Refinery Plc (DSR) also launched its Series 6 and 7 CP issuances, targeting up to N50 billion under its N150 billion CP programme. which closed on December 12, 2024, the issuance aims to support the company’s operations as Sub-Saharan Africa’s largest sugar refinery, with a refining capacity of 1.49 million metric tonnes per annum (MMT).
DSR’s medium-term goal includes producing an additional 1.5 MMT of refined sugar from locally grown sugarcane as part of its backward integration strategy. This initiative positions the company as a potential global leader in integrated sugar production, serving diverse industries such as food and beverage, pharmaceuticals, and skincare.
The recent CP issuances reflect a growing trend among Nigerian companies to leverage short-term debt instruments to navigate liquidity challenges posed by high interest rates.
For instance, TrustBanc Holdings Limited in the third quarter of this year announced a groundbreaking N20 billion Non-Interest Commercial Paper (NICP) Programme through Sultiva Wakalah SPV Limited. This Sharia-compliant investment option marks a significant milestone in offering non-interest-bearing alternatives to investors.
Valency Agro Nigeria Limited earlier raised N20 billion via CP to finance short-term working capital, offering attractive yields of 28.5 percent per annum for six months and 30.5 percent per annum for nine months.
Analysts said the CP issuances by Dangote Sugar, Dangote Cement, and Lagos Free Zone provide attractive opportunities for investors seeking short-term investments in Nigeria’s high-yield environment. With robust financial backing and strong operational track records, these companies represent safe and lucrative investment avenues despite macroeconomic uncertainties.
In conclusion, the successful CP raises and underscores the resilience and adaptability of Nigeria’s corporate sector amidst challenging economic conditions. As interest rates remain high, these issuances provide a blueprint for other companies looking to optimize liquidity and sustain growth.
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