By Modupe Gbadeyanka
A new report by the Boston Consulting Group (BCG) has revealed that the retail sales landscape in Nigeria is dominated by open-air markets despite an increase in supermarkets, convenience stores, and other modern formats.
In the survey, it was disclosed that over 600,000 small shops and open-air markets are in the country’s retail space, accounting for 97 per cent of national sales of food, beverages, and personal care products.
The report The Future of Traditional Retail in Africa showed that African consumers on average continue to buy more than 70 per cent of their food, beverages, and personal care products from the continent’s more than 2.5 million small, independent shops despite the rise in e-commerce and changes in consumer behaviour accelerated by the COVID-19 pandemic.
“The willingness of traditional retailers to diversify, and embrace digital solutions coupled with the growing interest of investors to provide digital solutions show they will find opportunities to grow and remain the cornerstones of African economies in the future,” said, Stefano Niavas, Managing Partner in BCG Nigeria, and co-author of the report.
The report noted that modern retail remains very fragmented and is led by international hypermarket brands. Modern chains are struggling to expand due to currency devaluation, underdeveloped and inefficient transportation infrastructure, poor logistics capabilities, inadequate electrical power, and other complex challenges.
More importantly, the digital maturity of shop proprietors is also substantially higher than the national average. The level of financial inclusion varies widely across the region and is generally in line with the general population. While 85 per cent of Kenyan shop managers have a bank account, only 40% of their counterparts in Nigeria have one.
High numbers of African retailers also reported that they feel under pressure from modern retailers. In response to such challenges, traditional shops are diversifying well beyond daily essentials, such as fresh and packaged foods and home cleaning and personal hygiene products. Many small retailers now sell telecom products, such as prepaid cards and SIM cards.
New Digital Solutions
Several digital technology providers are addressing inefficient distribution systems that often force retailers to close their shops for several hours so they can go purchase goods from wholesalers.
The Nigerian B2B digital marketplace Alerzo, for example, enables more than 100,000 users—90 per cent of whom are women—to purchase inventory directly from manufacturers, receive and make cashless payments, and better track their revenues.
Digital marketplace in Nigeria such as Alerzo also facilitates a portfolio of digital services, including airtime purchases, bill payments, and peer-to-peer transfers. In the long run, such platforms aim to provide super apps with a large selection of services.
This would enable them to totally digitize traditional retailers and integrate them into the formal economy. Start-ups are also providing working capital and financial management systems to help traditional retailers grow and run their businesses more efficiently; however, they must overcome a lack of awareness and training among retailers.
The Future of Retail in Africa
The study found that traditional retailers will continue to dominate. But to thrive, they must modernize by offering new services and leveraging opportunities offered by digital solutions.
Niavas added, “Based on our analysis, many small retailers are already aware of the evolving retail landscape and are ready to improve their business premises, quality of products and expand across the country.”
Based on current trends, the modern retail sector in Nigeria, even though it is growing fast, is likely to remain small, and still may not account for more than 5 per cent of retail sales by 2030. Due to structural problems in Nigeria mentioned earlier, foreign investors are likely to remain hesitant about entering the market.
Given the central role that traditional shops will continue to play in Africa’s retail landscape, there will be a number of opportunities for various players in the ecosystem as the environment evolves.
Investment funds can find opportunities to provide capital and management expertise that will enable local modern retail chains to scale up in new cities.
An active start-up ecosystem is interested in providing digital solutions that will solidify the role of traditional retail in Africa and enable the sector to become the commercial interface across the continent.
Digital solutions can help manufacturers of fast-moving consumer foods improve their control over go-to-market strategies and provide data to better understand retailers.
Banks and telecom providers can achieve growth by developing new business models and offers that are adapted to traditional retailers’ needs.
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Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN’s Richard Quest and Christiane Amanpour.
CBN Okays Special Forex For Airlines
By Dipo Olowookere
Currency speculators seem to have finally taken full control of the foreign exchange (FX) market in Nigeria as the exchange rate of the Naira to the Dollar in the black market has further depreciated.
Over the weekend, currency traders sold the local currency at N654/$1 but at about 2:00 pm on Monday, July 25, 2022, it crashed to N660/$1 after losing N6 or 0.92 per cent.
A few forex traders who chatted with Business Post today at the popular Olugbede Model Market in Egbeda, Lagos explained that the fall today was because of hoarding, which is causing an artificial scarcity in the market.
“Those who have the Dollar do not want to sell because they foresee it getting closer to N750 very soon and they want to make more gains,” one of the sellers, Alhaji Adamu, claimed.
Nigeria has been having a serious battle with earning more forex despite the price of crude oil rising in the global market. The country, which has black gold in abundance, has failed to meet its production quota. This has put a strain on the revenue it generates from the sale of oil. Another issue is crude oil theft as most of the commodity produced is stolen and unaccounted for.
Also, efforts by the monetary authorities led by the Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, who recently had a botched presidential ambition under the ruling All Progressives Congress (APC), to salvage the situation have failed.
Some business owners and individuals, who need forex to complete their transactions abroad usually go to the parallel market to buy the Dollar and other foreign currencies when they cannot get them via their authorised platforms like the banks.
This newspaper gathered that for those who have the Dollar but want to convert to Naira, the FX traders, as of the time of filing this report, buy from them at N655/$1 compared with N650/$1 it was exchanged last Friday on the streets.
By Aduragbemi Omiyale
The Executive Principal in charge of Debt Capital Markets at Standard Chartered, Ms Amaka Nsofor, has said the company will continue to leverage its position to drive capital market development in Africa.
Ms Nsofor said this while reacting to the role played by the organisation in the N187.6 billion series 1 bond issuance by Dangote Industries recently.
Standard Chartered was the lead issue house of the exercise, which was well received by the market and recorded participation from a wide range of investors including domestic pension funds, asset managers, insurance companies and high net-worth investors.
The conglomerate sold the papers to fund the Dangote Petroleum Refinery in Lekki, Lagos. The oil facility is the largest single train petroleum refinery in the world and is expected to commence operations in the first half of 2023.
Dangote approached the market for a 7-year 12.75 per cent Tranche-A and a 10-year 13.50 per cent Tranche-B senior unsecured bond under its newly established N300 billion debt issuance programme.
“We are very pleased with this remarkable feat. Standard Chartered continues to be a leading debt capital markets house both in the domestic and international markets.
“In line with our mandate, we will continue to work with our clients across Africa to deliver on their growth aspirations and use our market leading position in the capital market to drive development on the continent,” Ms Nsofor stated.
Also speaking, the Executive Director in charge of Corporate, Commercial and Institutional Banking, Nigeria & West Africa, at Standard Chartered, Mr Olukorede Adenowo, expressed the delight of the firm to be part of the “historic transaction which marks the largest corporate bond ever issued in the Nigerian capital markets, reflecting the strong credit quality of the issuer as well as the resilience of the Nigerian domestic markets, despite the current global market volatility.”
By Dipo Olowookere
The share price of Nigerian Aviation Handling Company (NAHCO) Plc depreciated by 33.73 per cent last after the qualification date for the 41 Kobo dividend payment and bonus share of one to five proposed by the board.
Business Post reports that in the five-day trading week, the value of the company’s equities declined to N5.50 per unit compared with the preceding week’s N8.30 per unit.
It was one of the 36 stocks that depreciated in price in the week, higher than the 32 stocks of the previous week as Caverton lost 16.79 per cent to trade at N1.14. Honeywell Flour crashed by 14.55 per cent to N2.35, FTN Cocoa depleted by 14.29 per cent to 30 Kobo, while Nigerian Breweries went down by 10.92 per cent to N49.75.
In the week, prices of 19 equities appreciated, lower than 20 equities of the earlier week. Cornerstone Insurance gained 26.32 per cent to settle at 72 Kobo, Seplat rose by 10.00 per cent to N1430.50, Linkage Assurance grew by 9.43 per cent to 58 Kobo, The Initiates expanded by 9.09 per cent to 48 Kobo, while RT Briscoe increased by 8.11 per cent to 40 Kobo.
The selling pressure affected the outcome of the Nigerian Exchange (NGX) Limited in the week as the All-Share Index (ASI) and the market capitalisation shed 0.45 per cent week-on-week to close at 51,979.92 points and N28.031 trillion respectively.
Similarly, all other indices finished lower with the exception of the insurance, MERI growth, oil/gas, growth and sovereign bond indices which appreciated by 1.81 per cent, 1.01 per cent, 3.80 per cent, 0.41 per cent and 0.15 per cent, while the ASeM index remained unchanged.
Last week, traders bought and sold 917.190 million shares worth N14.803 billion in 19,513 deals, higher than the 504.322 million shares valued at N7.517 billion transacted a week earlier in 12,393 deals.
A breakdown showed that financial stocks accounted for 70.63 per cent and 42.27 per cent of the total trading volume and value after recording the sale of 648.207 million units valued at N6.258 billion in 9,293.
Consumer goods stocks traded 102.605 million units worth N3.211 billion in 3,016 deals, while conglomerates equities recorded the sale of 36.218 million units worth N193.474 million in 562 deals.
UBA, GTCO and Access Holdings were the busiest stocks with a turnover of 355.624 million units valued at N4.120 billion traded in 3,486 deals, accounting for 38.77 per cent and 27.83 per cent of the total trading volume and value respectively.
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Open-Air Markets Account for 97% of Nigeria’s Retail Sales – Business Post Nigeria
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