The amount of money owed by four listed Nigerian tech firms to their suppliers rose by 92 percent within one year.
The latest financial statements of CWG Plc, eTranzact International Plc, Chams Holdco Plc, and NCR Nigeria Plc showed that their trade and other payables rose to N52.3 billion in the first half of 2024 from N27.2 billion in the same period of last year.
Trade payable refers to a company’s short-term obligations owed to its creditors or suppliers, which have not yet been paid. Payables appear on a company’s balance sheet as a current liability.
They are important figures in a company’s balance sheet. If trade and other payables increase over a prior period, that means the company is buying more goods or services on credit, rather than paying cash.
For most companies operating in Africa’s fourth biggest economy, H1 was a tough period as double-digit inflation and naira devaluation ate deep into profit margins, leaving firms with little or no money to carry out their day-to-day obligations.
The rising cost of doing business is forcing these firms to make tough choices. Some firms are raising prices, which could lead to lower sales.
A breakdown of the tech firms’ results revealed that NCR Nigeria and eTranzact International reported a total decline in sales of 22.5 percent.
NCR Nigeria revenue fell to N791 million in H1 from N1.89 billion in H1 of last year and eTranzact International also fell to N14.04 billion from N17.3 billion.
CWG and Chams Holdco reported an increase in their sales, rising to N24 billion and N8.3 billion respectively.
According to the National Bureau of Statistics, inflation dropped for the first time in 19 months in July to 33.4 percent from 34.19 percent in June 2024.
“Core inflation, which excludes volatile agricultural produce and energy prices, stood at 27.47 percent in July, up from 27.40 percent in June 2024. Month-on-month, the Core Inflation rate rose to 2.16 percent in July 2024 from 2.06 percent in June 2024, marking a 0.10 percent increase,” analysts at Comercio Partners said in a recent note.
The fluctuation of the naira is not left out, this impacts foreign exchange availability in the economy causing the exchange rate to rise both in the official and parallel market.
The official exchange rate surged from N463.38/$ on June 9, 2023 to N1,564.48 on Thursday with the parallel market rate reaching N1,595/$.
Read also: Start-ups, tech firms show readiness to power Africa into global AI economy
Analysis of individual firms
CWG
The Pan-Africa ICT Solutions company’s trade and other payables rose to the highest of N20.8 billion in the first six months of 2024 from N9.18 billion in the same period of 2023.
This was driven by a 268.5 percent rise in trade creditors to N7.74 billion from N2.01 billion, followed by other payables and accruals which rose to N6.9 billion from N6.09 billion, respectively.
eTranzact International
This payment and switching company reported a 115.4 percent rise in its trade and other payables.
The firm’s unpaid bills to suppliers increased to N18.1 billion in the first six months from N8.4 billion in the same period of last year.
NCR Nigeria
NCR Nigeria reported a rise in its trade and other payables to N6.03 billion from N4.6 billion in the period under review.
This was significantly driven by the amount reported in the payables to the related party to N5.6 billion.
NCR Nigeria provides technology and services that help businesses connect, interact, and transact with customers.
Chams Holdco
Chams Holdco’s trade and other payables rose to N7.3 billion from N4.5 billion in the period under review.
Chams Holding Company, formerly Chams Plc, is a provider of integrated technology solutions. The principal activities of the company and its subsidiaries include identity management, payment collections, and transactional systems.
It has built platforms to drive identity management, transactions, and verification services for public/private businesses.
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