MultiChoice Group Limited has written off $21m deposited in Nigeria’s Heritage Bank following the financial institution’s liquidation earlier this year.
This disclosure was contained in the company’s interim financial statements for the half-year ending September 30, 2024.
The sum was classified as irrecoverable after the Central Bank of Nigeria revoked Heritage Bank’s operating licence, effectively shutting down the institution.
The financial statement document read, “Following the revocation of Heritage Bank’s banking licence by the Central Bank of Nigeria on 3 June 2024 and its subsequent liquidation, the group wrote-off its receivable relating to the cash held with the bank.”
MultiChoice’s decision to write off the funds underlines the difficulties faced by businesses navigating Nigeria’s financial sector, particularly amidst an unstable economic climate.
Nigeria remains a challenging terrain for MultiChoice, with the group grappling with soaring inflation, and a continuously depreciating naira.
The company also reported lower cash remittances from Nigeria, extracting only $65m during the period under review, compared to $91m in the same period last year.
Exchange rate losses further compounded the financial strain on the group’s operations in its largest African market.
It noted, “The further depreciation of the naira against the US dollar has resulted in further foreign exchange losses on non-quasi equity loans (on the USD-denominated intergroup loan from MultiChoice Africa Holdings B.V. to MultiChoice Nigeria Limited), contributing to the ZAR2.1bn (1H FY24: ZAR2.4bn) recognised in the condensed consolidated income statement.
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“The group extracted USD65m from Nigeria in the period (1H FY24: USD91m) at an average rate of NGN1,516:USD (1H FY24: NGN794:USD), incurring extraction losses of USD1m or ZAR20m (1H FY24: USD28m or ZAR518m) in the process.
“The group held USD11m in cash in Nigeria at period-end, down from USD39m at end FY24, a consequence of consistent focus on remitting cash, the impact of translating the balance at the weaker naira and the write-off of the USD21m receivable relating to the cash held with Heritage Bank before its license was revoked and the bank was liquidated.”
The firm also noted that Nigeria accounted for 63 per cent of the MultiChoice Group’s subscriber losses in its Rest of Africa segment since FY23.
The decline, largely driven by severe economic pressures including inflation and the weakening naira, highlights Nigeria’s substantial contribution to the overall reduction in the subscriber base.
From FY23 to 1H FY25, active subscribers in the Rest of Africa dropped significantly, with Nigeria showing a net loss of 1.1 million.
Multichoice Group, owners of DSTV, had earlier said that it had an account balance of N31.6bn with Heritage Bank, before the bank’s liquidation.
The PUNCH recently reported that the Nigeria Deposit Insurance Corporation announced plans to sell off properties and assets belonging to the defunct Heritage Bank in a bid to recover funds for uninsured depositors.
This move, which the NDIC describes as crucial, is part of its statutory mandate as the liquidator of failed banks under Section 62(1)(d) of the NDIC Act, 2023.
The exercise, scheduled to begin on December 4, 2024 will involve competitive bidding for the bank’s landed properties and chattels located at 36 sites nationwide.