Seven foreign-owned companies on the Nigerian Exchange paid N129.4 billion in royalties, licence, technical and management fees to their parent groups during the nine months through September, according to their unaudited third-quarter filings. The amount represented a 7.7% increase from N120.1 billion in the same period a year earlier.
At three of the companies - HBM Nigeria, International Breweries and Nigerian Breweries - the fees grew faster than revenue. At Nestlé Nigeria, the fees plus interest on a loan from its Swiss parent exceeded the profit left for all shareholders. The payments are legal and approved by Nigeria's technology-transfer regulator, NOTAP, which typically caps such fees as a share of net sales.
Nestlé Nigeria, which is 70.81% owned by Switzerland's Société des Produits Nestlé SA, charged N34.8 billion in general licence fees in the nine months, up from N32.3 billion a year earlier. The company also booked N16.5 billion in shared-service costs from Nestlé Central and West Africa, bringing the total to N51.2 billion, or approximately 5.2% of revenue - the highest ratio among the companies studied. The company's shareholders' equity recovered to N116.3 billion from N12.9 billion in December, though it had been negative N112.1 billion two years prior after naira devaluation inflated foreign-currency loans. At HBM Nigeria, controlled by China's Huaxin Building Materials, technical service fees rose 28% to N21.7 billion while revenue increased 19%.
The rise in fees follows substantial spending by parent companies to repair their subsidiaries' balance sheets after the naira's collapse in 2023 and 2024 swelled foreign-currency debts. Nestlé Nigeria, Nigerian Breweries, Guinness Nigeria and MTN Nigeria were pushed into negative equity during that period. International Breweries has since eliminated its bank debt and used its share premium to erase accumulated losses, then returned N84 billion of capital to shareholders in September, with about N82 billion going to AB InBev group companies, which own 97.42% of the brewer.
Guinness Nigeria, acquired by Singapore's Tolaram Group from Diageo in 2024, saw its royalty and technical fees fall 15% to N9.8 billion despite revenue rising 20.4%. The company still pays Diageo to use the Guinness brand under licence and royalty agreements struck at the sale. Nestlé Nigeria remains the most indebted of the group, with borrowings of N426.3 billion in September, down from N476 billion in December and approximately N685 billion in September 2024, though the lender is mostly its own parent, which collects the interest.