The Nigerian-British Chamber of Commerce and United Africa Company of Nigeria (UAC) have highlighted the need to tackle the challenges facing the Fast-Moving Consumer Goods (FMCG) sector in the country.
They made the call at the NBCC May 2022 Breakfast Meeting with the theme: “Restructuring in FMCG sector” yesterday in Lagos.
Mrs Bisi Adeyemi, NBCC President, noting the significance of the FMCG as one of the largest sectors of the Nigerian economy, said it contributed about five per cent to Gross Domestic Product (GDP) in 2019.
Adeyemi added that the market capitalisation report of the Nigerian Exchange Group (NGX) for December 2019 also highlighted the importance of the sector with FMCG constituting 17 per cent of its total value.
She, however, noted that the sector had recently been affected by a number of factors ranging from the COVID-19 pandemic to technological, supply chain and distribution, power and security challenges.
She said Nigeria’s largest FMCGs companies were yet to recover from the blows of the 2020 pandemic as profits slowed last year.
Adeyemi stated that research showed that Nestle, Nigerian Breweries, Dangote Sugar, Cadbury, Unilever and Nascon recorded a combined profit of N81.9 billion in 2021; a two per cent decline from the N83.9 billion recorded in 2020.
This, she noted, signalled that inflationary pressures had weakened consumers’ wallets and constrained their purchasing power.
“Further analysis shows that the profits of the FMCG companies have been declining since 2017, even before the pandemic.
“According to the report, sustained deterioration in the country’s macroeconomic indicators have weakened consumers’ real income due to high inflation, weak economic growth, large-scale unemployment and increasing inequality.
“Our objective is to put these issues in context and hopefully make some
recommendations to tackle the challenges,” she said.
Mr Fola Aiyesimoju, Group Managing Director, UAC Plc, said recent performance in the FCMG sector was indictive of the need of further evolution to engender sustainability and growth.
Aiyesimoju said UAC had identified the importance of value creation with focus on the three pillars of people and governance, structure and growth and returns.
He added that the company’s aim was to generate attractive shareholder returns of 25 per cent per annum by growing a limited number of businesses, targeting market leadership among other parameters.
He revealed that UAC sold 35 million units of snacks, water and dairy in packaged food and beverages monthly.
“Our most impactful decisions will be around industry selection and capital allocation.
“Boards must be constructed with the right mix of skills, experience and independence to provide oversight, establish strong internal controls and shape strategy.
“The company’s culture is to focus on performance, accountability and policy adherence with zero tolerance for governance breaches.
“It also leverages thoughtful innovation and technology for a robust enterprise resource planning system with full suite of office applications for better efficiency, to enhance margins and Return on Invested Capital (ROIC),” he said.