Until consumers’ regain purchasing power, recession remains an issue—Guinness
Though Nigeria may have officially exited recession, the Managing Director and Chief Executive Officer of Guinness Nigeria Plc, Peter Ndegwa, has argued that “To consolidate on this, the country needs more quarters of positive GDP growth until consumers regain their purchasing power”.
Barring his mind in an interview, the mater brewer argued that “At the moment, the costs of buying commodities are still going up so we can see consumers holding back on spend, reducing frequency of purchases, or spending less anytime they purchase, or going for lower-priced brands. If you look at the other Key Performance Indices of the economy, one of which is inflation; it is in double digits; food inflation is about 20 per cent”.
According to him, “Consumers are not in great shape yet. From the manufacturing perspective, foreign currency still remains an issue as the Nigerian economy has big import content”. “Although we are sourcing 75 per cent of our raw materials locally, there is still 25 per cent which is a lot of money for our business. When you are importing and accessing foreign currency, the foreign exchange market is very important.
“The past 20 months when liquidity was a problem, it was a big issue for us, even though we were able to get $95m support from Diageo. The intervention of the Central Bank of Nigeria is quite laudable as it improved liquidity. This is one of the biggest positives that we have seen in the GDP. This has brought stability in terms of the company’s ability to access liquidity, and our concern is how sustainable is this.
“Also, the shocks in the economy, oil price, security, and policies are factors that need to be considered. The CBN has had different policies at different times but we hope that this one will continue to be stable because it provides the cover for companies to plan, and predict their expenses to suppliers.
On how Guinness Nigeria is buffering the challenges of the economic squeeze, Ndegwa revealed that his company is committed to driving productivity by way of improving business processes, significantly reducing waste and driving production simplification.