The Nigerian Stock Exchange (NSE) held an interactive session with operators in the consumer goods sector on how the capital market can unlock their potentials.
The interactive session, which held in Lagos on Friday and attended by Nairametrics, was designed for the bourse’s Chief Executive Officer (CEO), and other related regulators to address the challenges facing listed companies in the sector.
At the event tagged, ‘NSE CEO Interactive Session for Consumer Goods Sector’, CEO, NSE, Oscar Onyema, explained that this is the time for the exchange to organize the session as most of the companies in the sector are presently going through challenges that have been clogs in the wheel of their production.
In an interview with Nairametrics, NSE boss explained that Nigeria’s consumer market is one of the fastest-growing markets in Africa and that as far back as 2013, the market was valued at about $377 billion and is now expected to reach about $454 billion by 2025.
He said, “This growth is driven by three major factors – population, urbanisation and increased spending power. The country’s estimated population of over 200 million, with 72% under the age of 30, presents a huge potential for future investment in consumption activity.
“The manufacturing sector remains a critical segment and plays an integral role in the development and advancement of the Nigerian economy. With a nominal GDP expansion of about 40% (year-on-year) recorded in the third quarter of 2019, which is much higher than its performance in corresponding period of 2018, the manufacturing sector has contributed significantly to the nation’s economic diversification strategy.”
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Making reference to the National Bureau of Statistics (NBS), he added that the manufacturing activity accounted for about 12% of GDP in Q3-2019 compared to 10% of GDP in the same period last year. Of specific mention is the Food, Beverage and Tobacco subsector, which accounts for 41% of overall manufacturing activity and grew by 2.98% in Q3 2019 versus 1.22% in Q2 2019.
Although these numbers may reflect steady growth in this sector, Onyema added that the reality and headwinds faced by operators in the sector are quite daunting.
He said, “Over the last few years, Nigeria’s economic landscape has been particularly challenging for the manufacturing sector and particularly the consumer goods industry. Despite the implementation of different industrial policies and industrialization strategies among others, the sector has experienced policy reforms and directives that have negatively impacted on the performance of the sector’s value chain.
“The sector has also suffered a declining productivity rate largely caused by inadequate and epileptic power supply; substandard trade facilitation infrastructure; high cost of natural gas; multiplicity of taxes/levies/fees; high excise duties on imported raw materials; congestion at the Lagos seaports; and most recently the border closure; all of which have resulted in the reduction in capacity utilization and output of operators in the sector.”
Minister of Industry, Trade and Investment, Niyi Adebayo, agreed with the NSE boss that the event was timely, especially at this stage of the nation’s economic development, particularly with the rapid growing population and the need to create effective linkages between and amongst sectors.
According to him, there is no doubt that the consumer goods sector remains a critical segment and plays an integral role in the development and advancement of the Nigerian economy.
He said, “Statistics show that Nigeria’s GDP grew 1.94% (year on year) in real terms in the second quarter of 2019, with the Manufacturing sector contributing 11.49% to Nominal GDP. The sector has nonetheless experienced various economic turmoil in recent years, as witnessed in areas like foreign exchange challenges between 2014 and 2017.
“Immediate steps were taken to redress the problems as in the ban of 41 items in 2015. We also can recall currency depreciation which triggered higher cost of production, Insecurity in the Country leading to reduced sales, high excise duties on importation of raw materials and multiple taxations, just to mention but a few.”
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He assured that the Federal Government remains committed to improving the business environment towards Industrialization and Economic prosperity.