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COVID-19: Impacts on Nigerian consumer packaged goods

The coronavirus disease (COVID-19) outbreak has become a global threat as it has led to shut down of economies around the world.

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The coronavirus disease (COVID-19) outbreak has become a global threat as it has led to shut down of economies around the world. Apart from the health crises caused by this disease, it has also led to lockdowns and travel restriction as one of the measures to contain its spread.

This has had a lot of effects on the global economy, consumer demand, businesses, revenue generation, employment and so on.

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A report from McKinsey & Company, which was seen by Nairametrics, looks at the impact of the coronavirus disease on consumer packaged goods (CPG) in Nigeria.

Consumer Packaged Goods are items that are used daily by average consumers that require routine replacement or replenishment such as food beverages, clothes, tobacco, household products and so on.

[READ MORE: COVID-19: SEC issues guidelines for AGMs, other measures)

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What McKinsey expects:

According to the report some major drivers in the COVID-19 pandemic will matter most for Nigeria’s economic growth.  These include oil prices, Consumer demand, Trade & Investment, Non-oil exports and Investment & Capital Inflow.

Experts believe that COVID-19 will have varied impacts across consumer goods segment. These include

  • Food items like staple products (flour, noodles, rice, pasta) and canned/frozen products is likely going to have increase in demand. Foodservice focused businesses are expected to have an 80% decrease in demand.
  • Beverages will experience limited impact on overall consumption, but there will be short-term increase in selected non-alcoholic beverages like water.
  • As for consumer health, there will be strong demand for over the counter (OTC) products.
  • In the household products segment, there will be increased demand in basic and essential products like tissues, toilet paper, soap. Reduction in discretionary spending especially for items with higher value is expected.
  • There should be limited impact on the demand for tobacco.

Emerging reality for CPG companies in Nigeria; expert’s opinion in the McKinsey & Company report, looked at the impact from the different subsets;

For local sourcing, businesses with dollar-based input costs are expected to experience pressure on their profits due to increase in Naira value of those goods and shrinking consumer wallets.

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Modern trade and e-commerce are already seeing huge increase in sales in urban areas. There is strong demand for shelf-life products like beverages, dry goods and reduction in spending on cosmetics and luxury items.

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[READ ALSO: Dangote, Otedola, Elumelu, Ovia, others donate N19.48 billion to COVID-19 relief fund)

As for trade downs from mainstream to value, the sales of mainstream portfolio are expected to decrease as value segment gains from trade downs (replacing an item which is larger and more expensive with one that is smaller and less expensive). This is expected to reshape the profit and loss accounts of many companies.

In addition, the traditional trade sales are expected to shift from open markets to neighbourhoods thereby creating new look at Contract Van Sales model. The branded items would experience decline in demand in favour of anything available as they will lose market share. The traditional distributors will struggle to meet new logistics challenges as joint venture with logistics providers keeps growing.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- chike.olisah@nairametrics.com.

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Economy & Politics

Lagos to shut down Marine Beach bridge for emergency repairs

The closure will allow the Federal Ministry of Works to carry out emergency repairs on the bridge, in line with the government’s vision of providing a better transportation system in the state.

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Lagos state government has announced that the Apapa Marine Beach bridge will be closed for five months, from Wednesday 27th May, to Wednesday 21st October, 2020.

The closure will allow the Federal Ministry of Works to carry out emergency repairs on the bridge, in line with the government’s vision of providing a better transportation system in the state.

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In a statement from the Lagos state Ministry of Transportation, the Commissioner, Dr. Frederic Oladeinde, noted that the repairs were long overdue, and necessary to ensure safety of Lagosians, given the number of motorists that use the route.

The Commissioner noted that the repairs included bearing and expansion joint replacement and would be executed in two phases, taking one lane of the bridge at a time.

The first phase will involve handling the lane inbound Apapa while the second phase will be designated to work on the lane that conveys vehicles outside the axis,” he said.

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Alternative routes

Oladeinde noted that alternative routes around the bridge had been improved to make them motorable, and ease movements for road users.

To manage the construction period, the statement noted that Traffic Management Authorities would be hard at work to ameliorate the expected traffic issues and supervise other arrangements.

“Motorists inwards Wharf road will be diverted to the other section of the bridge outwards Apapa, a contraflow of 200metres has been put in place for vehicles to realign with a proper direction inwards Ajegunle or Wharf road, Apapa, while Motorists descending to Total Gas under bridge will drive without any hindrance,” it read.

The Commissioner called for the understanding and cooperation of motorists and road users during the period to ensure a smooth flow of plans.

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Economy & Politics

Fayemi set to activate digital economy with N5billion broadband infrastructure

Governor Fayemi plans to activate Ekiti state’s digital economy, this would help generate healthy competition within the ICT sector

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Fayemi set to activate digital economy with N5billion broadband infrastructure in Ekiti state

Ekiti state government has concluded plans to create a digital hub, with the laying of a 606-kilometer broadband infrastructure.

The project is expected to lift the state from 16% internet penetration to 90% and is estimated to be worth N5 billion, with the Federal Government contributing N1.1 billion of the total sum.

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This plan is part of the memorandum of Understanding (MoU) which the state Governor signed with O’odua Infraco Resources Limited, a consortium that develops high speed and efficient Fibre Optic Cable (FOC) Open Access Network (OAN) across the South-West region of Nigeria.

According to the Managing Director of O’odua Infraco Resources Limited, Mr Sammy Adigun, the project will be officially flagged off in October and completed within 14 months.

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(READ MORE: What Nigeria stands to gain from new National Broadband Plan)

This decision is a follow-up to the recent crash of Right of Way charges from N4,500 to N145 per meter for broadband infrastructure, and in line with one of the five pillars of Governor Kayode Fayemi’s development plan for Ekiti state.

The Governor noted that these decisions would help generate healthy competition within the ICT sector, thus activating Ekiti state’s digital economy and digital education.

Fayemi noted that the project execution, as well as the broadband policy in the state would be coordinated and supervised by a Digital Infrastructural Committee, made up of various relevant government institutions critical to the implementation of the project.

“For us the roadmap is first the fibre connectivity itself, the second is the adequate data center infrastructure, the third is the e-learning programme which will cover our educational institutions, then our safe city, our security programme will also be included.

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“With our geographical land information system (GIS), we would digitalize all our land records, and of course, commercial investment as well as digitalisation of our government assets and our health education initiative,” Fayemi explained.

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Economy & Politics

NCC reacts to claims that minister chased Diaspora Commission’s staff from office complex

The NCC denies claims of the video on social media, pointing out that the staffs of NIDCOM were not sent packing from the digital economy complex

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NCC orders immediate suspension of USSD charges by telcos, 5G Network to undergo 3 months trial before approval - NCC , NCC licenses 20 new Internet service providers amidst challenges , 150 million Nigerians risk being defrauded – NCC , NCC warns telcos against cyber fraudsters , NCC rolls out new regulations on drone use, NCC licenses 10 new VAS providers as it projects market to hit $500 million , NCC, Infracos set to develop broadband infrastructure with N265 billion raise , Telecommunications: Broadband penetration set to grow, Telecoms operators fined N2.9 billion over infractions , NCC reacts to claims that minister chased away diaspora commission staff from office complex

The Nigerian Communications Commission (NCC) has reacted to claims by the Chief Executive of Nigeria Diaspora Commission (NIDCOM), Abike Dabiri-Erewa, that her staff members were chased out of its premises by armed men on the orders of the Minister for Communication and Digital Economy, Isa Pantami.

The NCC, through a press statement on May 24, 2020 signed by its Director, Public Affairs, Dr. Henry Nkemadu, has said that nothing of such happened as it denied claims in a video making rounds on social media that the staff of NIDCOM were sent packing from the digital economy complex.

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According to the press statement from NCC:

Following the completion of the NCC building at Mbora, Abuja designated as NCC Annex and the acute shortage of accommodation space for the staff of the commission in the NCC head office at Maitama, Abuja, the Board of the commission directed the decongestion of the Head office building. Some of the departments of the NCC had started moving to the new office complex of 5 floors when discussions were held between the NCC and the Diaspora Commission to enable the Diaspora Commission also utilize any free offices within the complex.

“The fifth floor allocated to them had to be used to accommodate other departments from the NCC headquarters to ease the congestion. NCC’s offer to house the Nigeria Diaspora Commission was predicated on the long held position of the NCC that agencies of government will achieve more through strategic collaboration, partnership, synergy and sharing to the extent allowed by relevant laws.”

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(READ MORE: PenCom dissolves interim management committee for First Guarantee Pension, appoints new board)

NCC disclosed that it had secured approval for the commissioning of the office complex by President Buhari, and also the launching of 4 important projects of NCC, together with the renamed Ministry of Federal Ministry of Communication and Digital Economy.

It also stated that the offer to NIDCOM had not been withdrawn, but had only hit a bump arising from the preparation for the visit of President Buhari to launch the projects and inaugurate the complex. It said that the Board and Management of NCC took a decision to ensure that every activity in the building was in line with the Federal Government’s agenda.

Going further, the statement reads:

“Incidentally, after the offer of the office spaces to the Diaspora Commission, the Director General, Mrs. Abike Dabiri-Erewa had not visited the complex to take possession of any of the offices and also the commission had not started using any of these spaces as offices.

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‘’As is usual in ensuring security and accountability before, during and after presidential visits, the building had to be cleared to allow for only known and identifiable persons to have access within the complex. Therefore, the Honourable Minister of the Federal Ministry of Communications and Digital Economy Dr. Isa Ali Ibrahim Pantami could not have sent armed men to drive the staff of the Diaspora Commission out of the Communication Economy Complex.”

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The statement also pointed out that as at that time, only NCC staff were accredited to have access within the premises and that all properties belonging to NIDCOM were safely warehoused in some of the offices within the complex.

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