AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Set up the naira account as a foreign currency bank account with NGN as its currency, record each transaction at the spot rate on its date, and revalue the closing naira balance to rand at the year-end (or month-end) closing rate, posting the difference to an unrealised exchange gain or loss account. IAS 21 sets the accounting; SARS's section 24I applies a similar year-end translation for tax, so keep the rates you used.
A South African business that pays Nigerian suppliers, holds a naira account in Lagos, or invoices Nigerian clients in naira needs those balances in its rand books. Done well, a naira ledger shows exactly what you hold in naira and what it is worth in rand; done badly, it becomes a single rand figure nobody can reconcile. This guide sets out the structure. It is not tied to one accounting package; check that your package lists NGN as a currency and supports multicurrency on your plan.
Start with functional currency
IAS 21 defines functional currency as the currency of the primary economic environment in which the entity operates, judged mainly by the currency of its sales prices and of its labour and material costs. For most South African companies that is the rand, and naira is a foreign currency. A Nigerian subsidiary will usually have naira as its own functional currency and keep its own books; this guide is about naira items inside the South African entity.
Set up the ledger
- Enable multicurrency in your package and add NGN (and USD if you hold dollars too).
- Create a separate bank account in the chart of accounts for each foreign account, with its currency set to NGN. Do not lump naira and dollars together.
- Create naira-currency contacts for Nigerian suppliers and customers so invoices carry their real currency.
- Add two accounts if your package does not: unrealised exchange gain/loss and realised exchange gain/loss.
- Choose and document your rate source, and use it consistently.
Recording transactions
IAS 21 (paragraph 21) records a foreign currency transaction at the spot rate on the transaction date, and allows an average rate for a period as a practical shortcut unless rates fluctuate significantly (paragraph 22). Naira has moved sharply at times, so a monthly average may not be acceptable in volatile months; ask your auditor. When you pay a naira invoice, the difference between the rand value at invoice date and at payment date is a realised exchange difference.
Revaluation at period end
Monetary items, such as cash, receivables and payables in naira, are translated at the closing rate at each reporting date, with differences taken to profit or loss (IAS 21 paragraphs 23 and 28). Non-monetary items carried at cost, such as prepaid equipment, stay at the historical rate.
Worked example (illustrative rates)
| Step | Naira | Rate (R per ₦1) | Rand |
|---|---|---|---|
| 1 Mar: transfer in to fund Lagos account | ₦20,000,000 | 0.0120 | R240,000 |
| 15 Apr: pay Lagos supplier | (₦8,000,000) | 0.0118 | (R94,400) |
| Book value before revaluation | ₦12,000,000 | R145,600 | |
| 28 Feb year end: revalue at closing rate | ₦12,000,000 | 0.0110 | R132,000 |
| Unrealised exchange loss | R13,600 |
R240,000 less R94,400 is R145,600. At the closing rate, ₦12,000,000 is worth R132,000, so the revaluation posts a R13,600 loss. Of that R13,600, R1,600 arises because the ₦8,000,000 paid out was valued at 0.0118 rather than the 0.0120 at which it came in (₦8,000,000 × 0.0002); some packages post that part as realised, leaving R12,000 unrealised on the ₦12,000,000 still held (₦12,000,000 × 0.0010). All rates are invented for illustration.
The tax side
SARS's Interpretation Note 101 (12 July 2023) says section 24I applies to any company and that units of foreign currency and foreign currency debts are exchange items, with exchange differences calculated each year whether realised or not, using the year-end rate for open items. SARS will generally accept the functional currency used for accounts if it is set under IAS 21. In practice your accounting revaluation and your tax computation will be close, but they are separate calculations; see section 24I.
Reconciliation habits
- Reconcile the naira bank ledger to the naira statement monthly, in naira, before you look at rand.
- Keep the statement and the rate source for each revaluation date.
- Record Nigerian bank charges and VAT on them as separate lines (Nigeria's NRS has said VAT applies to bank charges, not to the amount transferred).
- Match supplier payments to invoices in naira; see reconciling ZAR and NGN accounts.
For the wider set-up across three currencies, see multicurrency bookkeeping in ZAR, NGN and USD, and for the mechanics from the Nigerian side, foreign currency accounting: revaluation and realised gains.
Where Pryme fits
A Pryme Business multicurrency account holds NGN, USD, GBP and EUR with local details for each, and its statements show each currency separately, which makes the monthly naira reconciliation simpler. The Finance agent prepares reconciliations for a person to approve.
Questions people ask
Can I keep a naira account in South African accounting software?
Yes, if your package supports multicurrency and lists NGN. Set it up as a separate bank account with NGN as its currency.
Which exchange rate should I use for naira transactions?
IAS 21 uses the spot rate on the transaction date; an average is allowed only if rates do not fluctuate significantly. Choose one documented source and use it consistently.
Do I need to revalue naira balances every month?
IAS 21 requires translation at each reporting date. Many businesses revalue monthly so management accounts are accurate, and at least at year end.
Is the revaluation loss tax deductible in South Africa?
For a company, section 24I generally includes exchange gains and allows losses each year, realised or not. Check your position with a tax practitioner.
Sources
- IFRS Foundation: IAS 21 The Effects of Changes in Foreign Exchange Rates · accessed Oct 2026
- SARS Interpretation Note 101 (Issue 2, 12 Jul 2023): Gains or losses on foreign exchange transactions · accessed Oct 2026
- Daily Trust via AllAfrica: NRS on VAT on bank charges (21 Jan 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.