It's no news that the North is important to their business as the region accounts for more than 30% of the Nigerian Market Place.
Though the manufacturers see the market as huge, distribution of goods and services to this region is being hampered by security challenges in the affected states .
This setback has led to enormous reduction in turnover, reduction in sales force; unavoidable layoff of production staff by companies operating from other parts of the country due to high unsold inventory. From Multinationals to SME's, the story is the same.
Speaking on the issue, PZ Cusssons Plc., Chairman, Professor Emmanuel Edozien, said its sales dropped by 1 per cent from N72.2 billion to N71.3 billion. In a review of the company’s performance for the financial year ended 2013, he attributed the drop in the company’s revenue to: “The social unrest in the Northern part of the country and the impact on the consumers’ spending power subsequent to the reduction of the fuel subsidy which exerted considerable pressure on the top line throughout the year.” According to him, profitability however, increased with profit before tax growing by 78 per cent from N4.3 billion to N7.7 billion off the back of reduced raw material prices and manufacturing and supply chain efficiencies.
“The marketing of our products in the north is being hampered,” said Martin Woolnough, the immediate past Managing Director of Nestle Nigeria Plc. Describing the state of insecurity in some parts of northern Nigeria as “A stress on the economy”, he said: ”We can’t get our sales team up there. That’s likely to impact the middle to long term brand equity in the future. Nestle Nigeria’s first-quarter net income fell by 3.4 per cent to N5.99 billion ($38 million) from a year earlier. Revenue climbed 7 per cent to N30.7 billion.
Commenting on the impact of the state of insecurity in the North on his company, Keith Richards, Managing Director of Promasidor Nigeria Limited, said: “You know with the borders closed, a lot of formal and informal exports are not happening. People are not coming from Chad, Niger, Cameroon and Mali. So you see a downturn in demand. The North is important to us. A lot of our brands are doing very well here.
Procter & Gamble Nigeria Limited (P&G) which has an expansive distribution network in the north is affected by the shutting down of stores, stemming from the crisis. But Manoj Kumar, P&G chief for West Africa, says the company is up to the task. “We have been here for 20 years. All sorts of crisis have come and gone. We are therefore not worried like other companies which have spent a few years operating in the country,” he said.
The Lagos Chamber of Commerce and Industry (LCCI) in its Business Environment Report, said that many firms in the country have lost 30 per cent of their sales because of insecurity in the north, which denied them access to the region. The report, which was prepared in the second quarter of the year, also said manufacturing firms sourcing raw materials from the North are now facing serious challenges, while projects funded by banks in the affected states are at risk. According to the report, the hospitality industry in the affected states have been paralyzed just as many investors, especially SME's are relocating to other states.
“Many bank branches have been closed, while the working hours for others have been drastically reduced. Many projects under construction in the north have been abandoned while security budgets have been scaled up by many firms,” said LCCI. The survey also disclosed that expectations from the North which represent 30 per cent of total Nigerian market have shrunk considerably due to goods produced by these manufacturers are no longer sold out to the supposed buyers because of the flinch market volume.
LCCI furthermore noted that the scope of coverage for manufacturers in the northern part of the country is limited as investors could not set up factories in the north out of fear of being terrorized, bombed or shut down due to lack of or low sales .
On the effects of insecurity in the banking sector, the survey stated that increased lending to northern business was impossible as the possibility of paying back the loans were not visible .Consequently, banks saw it as a great risk to lend to an investor intending to invest in the north.
MANUFACTURERS in the country are licking their wounds over streams of loses as a result of built up finished inventories of goods in their warehouses they can not sell. This is as a result of the insecurity in the Northern part of the country - See more at: http://www.vanguardngr.com/2013/11/insecurity-banks-halt-lending-fund-business-operations-northern-states/#sthash.P2XpOyXK.dpuf
MANUFACTURERS
in the country are licking their wounds over streams of loses as a
result of built up finished inventories of goods in their warehouses
they can not sell. This is as a result of the insecurity in the Northern
part of the country - See more at:
http://www.vanguardngr.com/2013/11/insecurity-banks-halt-lending-fund-business-operations-northern-states/#sthash.P2XpOyXK.dpuf
MANUFACTURERS
in the country are licking their wounds over streams of loses as a
result of built up finished inventories of goods in their warehouses
they can not sell. This is as a result of the insecurity in the Northern
part of the country - See more at:
http://www.vanguardngr.com/2013/11/insecurity-banks-halt-lending-fund-business-operations-northern-states/#sthash.P2XpOyXK.dpuf
MANUFACTURERS in the country are licking their wounds over streams of loses as a result of built up finished inventories of goods in their warehouses they can not sell. This is as a result of the insecurity in the Northern part of the country - See more at: http://www.vanguardngr.com/2013/11/insecurity-banks-halt-lending-fund-business-operations-northern-states/#sthash.P2XpOyXK.dpuf
MANUFACTURERS
in the country are licking their wounds over streams of loses as a
result of built up finished inventories of goods in their warehouses
they can not sell. This is as a result of the insecurity in the Northern
part of the country - See more at:
http://www.vanguardngr.com/2013/11/insecurity-banks-halt-lending-fund-business-operations-northern-states/#sthash.P2XpOyXK.dpuf
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