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Currency crisis, inflation could impact Nigeria’s consumer goods sector in 2024– Report

Published

11 months ago

January 2, 2024

Predictions have continued for the Nigerian economy for the new year, as a recent report by Meristem Securities Limited suggested that continued inflation rates and foreign exchange challenges could affect the prices of consumer goods.

According to the report, the industry’s leading players lost N472.35 billion in foreign exchange during the first nine months of 2023, “further underscoring the magnitude of the challenge posed by the Naira’s depreciation on the financial health of consumer goods companies.”

“Therefore, our outlook for the consumer goods sector in Q4:2023 is mixed. While positive signs, such as anticipated price hikes and robust sales during the festive season, are set to drive increased revenue, several concerns cast shadows over this outlook. The ongoing inflation surge, the naira’s continued depreciation, and challenges in foreign exchange liquidity are expected to weigh on companies’ profitability.”

As at November, Nigeria’s inflation rate was 28.20 percent. Businesses that owed money in foreign currencies, such as Nigerian Breweries Plc, Nestle Nigeria Plc, Guinness Nigeria Plc, and Cadbury Nigeria Plc, have also had to deal with increased debt loads, more costly credit letters, and significant foreign exchange losses as a result of the debt revaluation.

The report added that in 2024, “we anticipate more players in the industry to engage in business restructuring, strategic acquisitions, and expansions to sustain profitability and navigate the challenging operating conditions in the Nigerian market.

“Despite ongoing struggles with rising costs due to inflation and substantial FX losses affecting their bottom line, we foresee consumer goods companies adapting their product categories to remain relevant and innovative, aiming to stay ahead of the curve in serving evolving consumer needs”.

Nigeria’s infrastructural challenges, characterized by an underdeveloped power sector and hampered access to market, make it difficult for the country to attract and retain investors, thereby undercutting widespread economic development.

Related Topics:Consumer goods Featured Nigeria

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Food prices drive second straight monthly hike in Nigeria’s inflation

Published

2 days ago

November 17, 2024

Ifeoluwa Dada

According to official statistics released on Friday, Nigeria’s inflation rate increased for the second consecutive month in October, rising to 33.88% in annual terms from 32.70% in September, mostly as a result of increasing food costs.

In an attempt to boost economic development and strengthen public finances, President Bola Tinubu devalued the naira and reduced subsidies, which caused inflation to spike in the second half of last year.

As the effects of the naira devaluation started to lessen in July of this year, a slew of hikes in the price of petroleum and devastating floods that destroyed crops once again exacerbated pricing pressures, making the greatest cost-of-living crisis in decades worse in Africa’s most populous country.

According to the National Bureau of Statistics, price increases for basics such as rice, maize, bread, potatoes, and cooking oil prompted food inflation to surge from 37.77% in October to 39.16% year over year.

This year, more than 1.5 million hectares of agriculture have been damaged by torrential rain and floods in 29 of Nigeria’s 36 states, leaving millions hungry and displacing large numbers of people.

In an effort to curb inflation, the central bank has raised interest rates five times this year. On November 26, it is expected to make its final rate decision of the year.

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MTN financial report reveals drop in group service revenue

Published

2 days ago

November 17, 2024

Ifeoluwa Dada

Due to operational difficulties in Sudan and the depreciation of the Nigerian naira, MTN Group, Africa’s largest telecom provider, announced on Thursday an 18.5% decline in service revenue for the third quarter that concluded on September 30.

With 288 million users in 17 African regions, MTN said that its group service revenue dropped from 156.3 billion rand ($6.99 billion) in the same quarter of the previous year to 127.4 billion rand.

Despite stating that “the naira was less volatile on a sequential basis in Q3 than in preceding quarters,” the business reported a 48.7% decline in MTN Nigeria’s income due to the currency’s depreciation.

Due to a stronger Ugandan shilling than the previous year, Uganda’s largest contributor, MTN South Africa (MTN SA), expanded by a meagre 3.3%.

Due to “subscriber registration regulations in Nigeria and a decline in users in Sudan, where the conflict has displaced millions of people,” the business reported that its subscriber base increased by 1.6% to 288 million.

Given the higher demand in Nigeria despite the legal obstacles, MTN plans to increase its capital expenditures, which it expects would total between 28 and 33 billion rand for the entire year.