Economy
Business Priorities Make 2019 Year of Africa’s Consumers
The latest Nielsen Africa Prospects Indicator (APi) Report reveals interesting shifts in African manufacturer and retailer business priorities and a growing appreciation for the fact that no one size fits all and no total continent, country, city, consumer or channel approach is enough to ensure ongoing success in Sub-Saharan Africa (SSA).
Nielsen Executive Director: Thought Leadership Global Markets Ailsa Wingfield reports; “In 2015, companies were primarily focused on the retail environment and growth could be achieved by making more, or new products available to consumers in the right stores. Three years on, and Route to Market/ Distribution is still the core focus, but four other areas are now present in the top five priorities
“Consumer Demand has risen rapidly through the ranks. It didn’t feature in the top five priorities in 2015 whereas it placed second in 2017 and 2018. This reinforces the necessity for comprehensive knowledge of consumer circumstances and needs in order to establish, generate and meet demand. In SSA the main drivers of product choice are trust, affordability and availability, but brand success factors and differentiators now extend beyond these attributes,” explains Wingfield.
Products for the people
She adds that Product Innovation has also risen through the ranks since 2015 when it didn’t place in the top five list of priorities, to where it featured in fifth place in 2017 and is now third in the rankings, highlighting the importance of qualities that meet Africa’s diverse consumer needs and aspirations.
It’s also no surprise that Marketing and Media has moved into fourth place given that awareness, consideration and trust from respected sources are important basics required to generate trial and repeat, especially for new products in increasingly competitive brand environments.
In addition, fifth placed Operations Optimisation is essential in light of tough trading conditions and volatile currencies, which means streamlined production processes can achieve cost savings enabling vital, lower product price points.
Regional nuances
Wingfield says that sub regional priorities also reveal nuanced differences. “In West Africa, where retail priorities were formerly at the forefront, companies can no longer focus predominantly on getting products into trade but need to get to grips with identifying different consumer preferences to regenerate demand.
“Similarly, consumer demand is the key focus in Southern Africa where economic headwinds have dampened consumer prospects. Emphasis on Operations Optimisation as well as Marketing and Media is particularly evident in South Africa, where sophisticated and competitive modern trade and digital media platforms exist, including a growing connected commerce environment.”
In comparison Route to Market and Distribution remain the key focus across Central and East Africa while businesses in Angola, Democratic Republic of Congo (DRC) and Ethiopia are faced with challenging governance and regulatory restrictions raising this as a critical business area.
The Year of the Consumer
Looking ahead, Wingfield says country-specific company priorities over the next twelve months, highlight a consistent spotlight on consumer demand, making it the main focus area in ten of the 17 countries within the study.
“The priorities by country reveal similarities but also distinct differences, depending on individual market factors. What is more common is the significance of having rich insights into consumer needs to better determine future demand. Retail proficiency will be the shared winning ground, once companies are equipped with consumer understanding, optimal products and meaningful media messages and moments, to connect with consumers.”
“Overall, Africa offers one of the greatest gifts of untapped consumer potential, but requires differentiation, individualisation, resilience and focused but adaptable strategies. It’s not enough to make products available that may have worked elsewhere – they need to be the right fit for Africa’s consumers and appeal to their diverse consumption ‘moods’ and mindsets.”
By Adedapo Adesanya
The Naira opened the new trading week on a negative note on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEX) and the black market.
At the parallel market, the Nigerian currency weakened against the US Dollar by N5 to sell for N1,380/$1 compared with the preceding session’s rate of N1,375/$1, and at the GTBank FX desk, it shed N1 to trade at N1,373/$1 versus N1,372/$1.
At the official market, it lost 63 Kobo or 0.05 per cent against the Dollar during the session to close at N1,362.84/$1, in contrast to last Friday’s value of N1,362.21/$1.
However, the Nigerian Naira gained N2.30 against the Pound Sterling at the spot market yesterday, quoting at N1,821.29/£1 compared with the previous rate of N1,823.59/£1, and improved against the Euro by 23 Kobo to settle at N1,574.35/€1 versus N1,574.58/€1.
Data from the Central Bank of Nigeria (CBN) showed that interbank forex turnover increased to $92.248 million across 90 deals, from $73.565 million last Friday.
On the policy front, participants believed that the application of the fourth edition of the Foreign Exchange Manual of the central bank, which introduces updated guidelines for foreign exchange transactions and tightening compliance requirements for authorised dealers and market participants, will enhance market flexibility and ease previous restrictions.
Meanwhile, the cryptocurrency market snapped from recent declines, jolted by Strategy’s purchase of 1,550 Bitcoin for approximately $101 million, increasing its total holdings to 845,256 BTC. The company raised $181 million through common stock sales, using the proceeds to fund the bitcoin purchase and increase its cash reserves to $1 billion, pushing the price of the coin higher by 3.2 per cent to $63,731.69.
Cardano (ADA) appreciated by 8.4 per cent to $0.1738, Ethereum (ETH) rose by 5.2 per cent to $1,711.54, Solana (SOL) expanded by 5.1 per cent to $67.82, and Ripple (XRP) improved by 4.9 per cent to $1.18.
Further, Dogecoin (DOGE) jumped by 4.3 per cent to $0.0873, Binance Coin (BNB) soared by 2.7 per cent to $609.50, and TRON (TRX) increased by 0.7 per cent to $0.3274, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $0.9997 and $0.9998, respectively.
By Aduragbemi Omiyale
The federal government has been advised to consider exploring other funding sources to finance its budget deficits.
Speaking with Punch recently, the chief executive of CSA Advisory, Mr Aliyu Ilias, said the current appetite for borrowing by the government cannot be sustained because it elevates debt-servicing costs.
The economist suggested the sale of some public assets and the involvement of the private sector in infrastructure financing for economic growth.
According to him, running to the debt markets to raise funds for the government is not the best route to take, as the reliance on borrowing always leads to higher debt-servicing obligations.
“The more you borrow, the more you are also incurring more debt services,” he said, tasking the government to also capitalise on increased oil revenues stemming from ongoing geopolitical tensions in the Middle East.
“The government can actually sell off some of their assets to raise more money. The government can also, if you look at the revenue we are getting from oil, it’s getting more, especially with this war. It’s another opportunity for us to actually not borrow again,” Mr Ilias submitted.
He also pointed to ongoing tax reforms as another avenue to improve government finances and narrow the fiscal gap.
“The government can also look at tax reform. The fact is that the government does not have money. The only chance for getting more money is to address the financial deficit,” he added.
By Adedapo Adesanya
Crude oil was up by $1 on Monday as Iran and Israel said they had halted attacks on each other following an appeal from US President Donald Trump.
Brent crude futures gained $1.16 or 1.3 per cent to trade at $94.25 a barrel, while the US West Texas Intermediate (WTI) crude futures were up 76 cents or 0.8 per cent to $91.30 per barrel.
Iran’s military said Monday it halted attacks on Israel after the two countries exchanged their most intense strikes in months, further straining an already shaky ceasefire as well as the US-Israeli relationship. Iran, however, said it would resume strikes if Israel continued to hit Hezbollah in Lebanon.
Israel also halted attacks on Iran, Israeli Prime Minister Benjamin Netanyahu said, stopping short of acknowledging a ceasefire that US President Donald Trump said the countries were aiming for.
President Trump said earlier that the US blockade, which was introduced in April, would remain in place “in full force” until a final peace agreement between the two warring nations is reached.
Prices gained more than 5 per cent earlier on Monday after renewed Israeli strikes on Iran and attacks on Lebanon had reduced hopes of an imminent end to the wider war.
Market analysts noted that because of the strikes, investors were concerned that flows through the Strait of Hormuz might remain restricted for longer. Roughly a fifth of the world’s daily supply of oil and liquefied natural gas passed through the waterway before US-Israeli airstrikes at the end of February unleashed the latest escalation of the Middle Eastern conflict.
Yemen’s Iran-aligned Houthis said on Monday they would ban ships linked to Israel from the Red Sea after Israel renewed its military attacks on Iran, adding to concerns about global shipping and energy flows.
In the face of the supply crisis, a sub-group under the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) on Sunday agreed on its fourth oil output target increase in four months. The seven members decided to increase targets by 188,000 barrels per day from July, the same as the June hike, which was adjusted down from monthly increases of 206,000 barrels per day in May and April to take into account the exit of the United Arab Emirates (UAE).
On paper, the sub-group has increased its output quotas from April to June by almost 600,000 barrels per day, but in reality, the group’s production has collapsed due to export cuts by Gulf members, averaging 33.19 million barrels per day in April compared with 42.77 million barrels per day in February.
Saudi Arabia has cut its official selling prices for crude oil to Asia in July for a second month.
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