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 area has attracted 25 companies, including global brands, taking advantage of its state-of-the-art industrial and warehouse facilities.
Since its inception in 2002, LFZC has become a key player in the Nigerian industrial landscape. Initially licensed as an export processing zone, its status was upgraded to a free trade zone in 2006. The company now focuses on land development, building infrastructure and leasing facilities to registered companies. LFZC's operations are instrumental in boosting industrial activities in Nigeria, whose license is valid until 2067.
According to FSDH Capital, Dangote Cement Plc, the largest cement producer in sub-Saharan Africa, has launched its CP Series 17 and 18 issues, raising up to N50 billion under its N300 billion CP programme.
With operations in 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 offering, which closed on December 19, 2024, has attracted 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. The issue, which closed on December 12, 2024, aims to support the company's operations as the largest sugar refiner in sub-Saharan Africa, with a refining capacity of 1.49 million metric tons per year (MMT ).
DSR's medium-term goal includes producing an additional 1.5 million tonnes 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 skin care.
The recent CP issuances reflect a growing trend among Nigerian companies to leverage short-term debt instruments to address liquidity challenges posed by high interest rates.
For example, TrustBanc Holdings Limited announced in the third quarter of this year an innovative N20 billion interest-free commercial paper program (NICP) through Sultiva Wakalah SPV Limited. This Shariah-compliant investment option marks an important milestone in offering interest-free alternatives to investors.
Valency Agro Nigeria Limited earlier raised N20 billion through CP to fund short-term working capital, offering attractive returns of 28.5 per cent per annum for six months and 30.5 per cent per annum for nine months.
Analysts said CP issuances from Dangote Sugar, Dangote Cement and Lagos Free Zone provide attractive opportunities for investors seeking short-term investments in Nigeria's high-yield environment. With strong financial backing and a solid operational track record, these companies represent safe and lucrative investment avenues despite macroeconomic uncertainties.
In conclusion, the successful PP posits and underlines the resilience and adaptability of the Nigerian business sector amidst challenging economic conditions. As interest rates remain high, these issuances provide a model for other companies seeking to optimize liquidity and sustain growth.