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COVID-19 Creates Fundamental Shifts in Africa’s Consumers

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COVID 19 Grocery Shopper
  • COVID-19 Creates Fundamental Shifts in Africa’s Consumers

Johannesburg, 26 May 2020 – The COVID-19 pandemic has given rise to a new kind of African consumer who is already displaying fundamental shifts in consumption and purchase behaviour driven by factors such as heightened health awareness, a focus on quality and safety, a renewed desire to stay at home and a tight wallet squeeze.

As a result of this, a recent Nielsen industry webinar ‘Navigating the New Normal’ discussed the realities and effects of this rapidly evolving outlook. Speaking during the webinar, Nielsen Africa MD Bryan Sun outlined the consumer evolution since the onset of the pandemic and the fact that crisis-buying patterns have accelerated the adoption of permanent behaviour change.

“As the prospect of looming lockdowns first hit, consumers realised they needed to stock up which saw a spike in store visits, stockpiling of shelf staples and growing basket sizes. However, as restricted living became more common place, there was a change in behaviour with consumers seeking out products without putting their health at risk.

“We have therefore seen growth in online shopping, declining store visits and a rise in out of stocks. Supply chain challenges have also driven consumers to be less price sensitive on high demand packaged goods or  those that guarantee hygiene standards,” explained Sun.

The expectation is that once restrictions are lifted and consumers return to “business as usual” they will continue to operate with a renewed consciousness about health, which will remain for a long time. There will also be shifts in the way consumers perceive products with the increased importance of safety and efficacy claims, and a willingness to spend more on hygiene needs and healthy foods.

Global perspective

The webinar also presented findings on Nielsen’s recent COVID-19 syndicated online survey which was conducted in over 70 countries across the globe and produced interesting comparative data and insights for Sub-Saharan Africa (Kenya, Nigeria & South Africa) as compared to the rest of the world.

The study revealed that 75% of SSA consumers are now more concerned about their families versus the global average of 48%. In addition, 83% said they were following information multiple times a day – significantly higher than the global average of 75%.

Looking at the impact of the severe limitations on out of home activities; 51% of SSA consumers said they were cooking more at home versus 39% globally, and significantly more said they worked more at home versus the global average.

In terms of the impact of the epidemic on their out of home and shopping activities, 46% SSA consumers said they are visiting malls less often versus the global average of 32%.

Despite perceptions that Africa lagged behind in terms of online behaviour it has in fact seen incredible behaviour changes with major increases in the use of social networking, online reading, listening to music and video streaming.

Future mindsets

As countries move from restricted living to precautionary living, Nielsen has also created an in-depth view of current and future SSA consumer mindset and purchase patterns based on learnings from other markets:

  • Heightened health awareness will drive consumers to be less price sensitive on high demand packaged goods or those that guarantee hygiene standards as food safety becomes paramount to consumers.
  • The renewed desire to stay at home and the preparation of home meals might require brand extensions and a need to address declining store visits, growth in online and proximity shopping.
  • As consumers are impacted by less income and smaller purchasing wallets, value for money offerings and more aggressive promotions – over that of just in-store promotions – are needed.
  • eCommerce growth has reached double digits in many countries with Italy at 82%, China 50%, and Korea 30% where older shoppers are trying eCommerce for the first time. Technology catalysts are driving behavioural change and will penetrate the market despite previous scepticism around this platform.

Looking to the future, Sun commented that the path to recovery means retailers must urgently look at factors such as pricing mechanisms and brand relationships in order to maintain and strengthen consumer trust in their brand.

“Successful retail regeneration across the continent, following the impact of COVID-19 on the African consumer and retail landscape, will rely on an agile and innovative response that sets the groundwork for a future unlike any we have ever known.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Dangote’s $20 Billion Refinery to Begin Petrol Sales Next Month

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Petrol - Investors King

Aliko Dangote announced on Monday that his long-awaited $20 billion refinery complex will commence petrol sales starting next month.

The announcement came during a press briefing held at the refinery site in Lagos, where Aliko Dangote, Africa’s richest man, detailed the project’s progress and future plans.

“We are proud to announce that the Dangote Refinery will begin selling petrol from August,” Dangote stated confidently.

“This milestone marks the culmination of years of meticulous planning, construction, and overcoming numerous challenges.”

Dangote’s refinery, touted as the largest single-train refinery in the world, is designed to process 650,000 barrels of crude oil per day once fully operational.

The facility aims to not only meet Nigeria’s domestic demand for refined petroleum products but also contribute significantly to export markets across West Africa.

“We have entered the steady-state production phase earlier this year, and now we are ready to begin commercial sales,” Dangote explained. “Initially, we will focus on petrol production, with plans to expand our product range as we ramp up to full capacity.”

The refinery’s launch is expected to alleviate Nigeria’s longstanding dependence on imported refined products, thereby boosting the country’s energy security and reducing foreign exchange outflows associated with fuel imports.

Beyond petrol sales, Dangote revealed ambitious plans to list both the refinery and its associated fertilizer plant on the Nigerian Exchange Group (NGX) by the first quarter of 2025.

This move aims to attract broader investor participation and unlock additional value for shareholders.

“We are committed to transparency and accountability in our operations,” Dangote emphasized. “Listing these subsidiaries on the NGX will not only strengthen our corporate governance framework but also enhance the refinery’s financial sustainability.”

Challenges and Future Prospects

Despite celebrating the imminent commencement of petrol sales, Dangote acknowledged challenges encountered during the project’s execution, including delays in securing land for a petrochemical facility in Ogun State, which incurred substantial costs.

“We faced bureaucratic hurdles that resulted in significant delays and financial losses,” Dangote lamented. “Nevertheless, we remain steadfast in our commitment to advancing Nigeria’s industrial capabilities and contributing to economic growth.”

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Dangote Refinery to Import First Brazilian Crude Oil Shipment Next Month

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Shipowners

The Dangote Refinery is set to receive its first shipment of Brazilian crude oil next month.

This is a pivotal moment in the country’s efforts to reduce its reliance on imported fuel and bolster its domestic refining capacity.

The purchase involves a one-million-barrel cargo of Brazil’s Tupi crude, scheduled for delivery in the latter half of August.

This is the first time Nigeria will be importing Brazilian crude, underscoring the Dangote Refinery’s commitment to diversifying its crude oil sources and ensuring a steady supply for its operations.

The Dangote Refinery, Africa’s largest, has been instrumental in Nigeria’s strategy to address the long-standing issue of fuel import dependency.

Despite being the continent’s leading oil producer, Nigeria has historically relied heavily on foreign fuel imports due to insufficient domestic refining capabilities.

The operationalization of the Dangote Refinery is expected to change this dynamic, enhancing the nation’s energy security and potentially lowering fuel prices for consumers.

Aliko Dangote, the CEO of Dangote Refinery, said “Importing crude and refining it locally will significantly enhance Nigeria’s energy security. Our ability to source crude oil from various global suppliers, including Brazil, is crucial for the refinery’s success and the broader energy strategy of the country.”

The Brazilian crude, sold by Petrobras, is among the most cost-effective and suitable oil grades available on the global market, making it an ideal choice for the refinery.

This strategic import is part of Nigeria’s broader efforts to secure a stable supply of crude for its refineries, ensuring that the country’s energy infrastructure is resilient and capable of meeting its needs without over-relying on any single source.

In a related development, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently reached an agreement with oil producers to supply crude oil to domestic refineries at market prices. This resolution came after a protracted supply dispute, which had strained relations with international oil companies.

The agreement ensures that Nigeria’s refineries, including the Dangote Refinery, have access to the necessary crude supplies at competitive prices.

This move is expected to end the challenges faced by local refineries, which have struggled to secure crude supplies due to excessive premiums demanded by international oil companies or claims of unavailability of crude.

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NNPC’s Stake in Dangote Refinery Drops to 7.2% Due to Unpaid Balance

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Dangote Refinery

Aliko Dangote, the Chief Executive Officer of Dangote Refinery, announced that the Nigerian National Petroleum Corporation (NNPC) Limited’s stake in the refinery has dropped from the previously held 20% to a mere 7.2%.

This reduction is attributed to NNPC’s failure to pay the balance of their shareholding dues, which was expected last month in June.

Dangote disclosed this during a media parley held at the refinery on Sunday, shedding light on the current ownership structure and the financial commitments made by the national oil company.

“The agreement was actually for 20%, but NNPC did not pay the balance of the money up till last year. We then gave them another extension up to June 2024, and they decided to remain at the 7.2% stake for which they had already paid,” Dangote stated.

This revelation has come as a surprise to many Nigerians who had been under the impression that the NNPC maintained a 20% stake in the refinery.

The reduction in ownership highlights the financial challenges faced by the state-owned oil company.

In 2021, the Group Managing Director of NNPC, Mele Kyari, had championed the decision to acquire a stake in the Dangote Refinery, citing the profit potential and the strategic importance of having a say in the refinery’s operations.

The investment was seen as critical to ensuring energy security for Nigeria and supporting the country’s fiscal stability.

Earlier this year, NNPC’s audited financial statements indicated that the corporation had acquired a 20% stake in Dangote Refinery for $2.76 billion.

This included a $1.036 billion funding from Lekki Refinery Funding Limited, of which $1 billion was paid to Dangote Refinery and $36 million covered transaction costs.

During the media parley, Dangote addressed various issues, including the challenges of supplying crude to the refinery.

He confirmed that the refinery has been sourcing crude from the United States and Brazil, while also noting the government’s intervention to resolve the supply issues.

The Dangote Refinery, located in the Lekki Free Zone, Lagos, is a massive project with a capacity of 650,000 barrels per day (BPD). Once fully operational, it aims to become Africa’s largest oil refinery and the world’s largest single-train facility.

The refinery is expected to generate approximately 9,500 direct jobs and an additional 25,000 indirect jobs, significantly boosting the local economy.

In addition to refining, the facility includes a fertiliser plant that will use by-products from the refinery as raw materials, further enhancing its economic and environmental impact.

The refinery is projected to produce around 50 million litres of petrol and 15 million litres of diesel daily, along with significant quantities of jet fuel and other petroleum products.

The reduction of NNPC’s stake underscores the financial complexities surrounding large-scale investments in Nigeria’s oil and gas sector.

As the Dangote Refinery nears full operation, the focus will be on how effectively it can address the country’s energy needs and contribute to economic growth, despite the challenges faced by its stakeholders.

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