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Nigeria’s Retail Sector Faces Headwinds

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  • Nigeria’s Retail Sector Faces Headwinds

Amid slowing economic growth, forex shortages and currency depreciation, retail rentals have doubled in naira terms since December 2014.

To retain tenants, retail landlords have had to offer significant rental concessions which include rent free periods, fit out allowances, pegged exchange rates, concessions on rents for limited periods and step-up lease agreements stipulating that the rental rate will increase by predetermined amounts at various points in the future.

“Local developers have taken a more flexible approach on accepting naira based rentals to retain tenants, meanwhile, landlords are actively looking at individual tenants whether in a new or established mall in order to accommodate their tenants’ cash-flow constraints. Not all tenants have been affected to the same degree,” says Bolaji Edu, Broll Nigeria CEO.

He points out that as a result of slow economic growth and shortage of foreign currency, local retail brands are starting to take-up space at shopping centres especially outside prime locations in Lagos. These retailers require smaller spaces and often struggle to pay the high rents being charged in malls located within prime nodes.

Broll Nigeria manages seven shopping centres countrywide including Ikeja City Mall and Circle Mall in Lagos. Some of our upcoming retail developments include Asaba Mall with a GLA of 9,300m2 and located in Delta State. This mall is scheduled for opening in December 2016 anchored by Shoprite. Twin Lakes anchored by Carrefour is expected to open in July 2018 in Lagos. Others include Royal Gardens Mall in Lagos, Silver Valley Mall in Port Harcourt and further afield in Cameroon, Douala Mall in Douala.

According to the Nigerian Retail Market Update Q2 2016 report, despite the economic challenges, a total of 19,000m2 of retail space was added to the core and secondary markets during the second quarter with the opening of centres including Onitsha Mall and Maryland Mall.

Other investors continue to see opportunities in the Nigerian retail sector with South African retailer Pick n Pay announcing their entry into the market through a joint venture with Lagos-based AG Leventis, an established local retailer.

“Local and international investors into Nigeria have typically always taken a long-term view and they are being realistic to the current economic climate and adapting their business and operating models.”

Although risks are still abundant with barriers to entry remaining high, Edu says it is fair to say that Nigeria still has specific political and economic risks and outside of Lagos it is difficult to develop without the support of the State Government.

Developers and investors now see the benefit of having a strong local partner rather than trying to enter the market by themselves, examples of these retailers include the likes of Pick n Pay and Leventis and Carrefour and CFAO. Investors are more cautious about their expansion plans and some may look at limited entry rollout or smaller developments, he points out.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Tanker Drivers Suspend Strike as NNPC and DSS Intervene

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NUPENG called off strike

NARTO Called Off Strike as NNPC and DSS Intervene

The Nigerian Association of Road Transport Owners (NARTO) on Tuesday said it has called off its two-day warning strike that began on Tuesday.

On Monday NARTO had directed all its members to halt operations following the new policy of the federal government that restricted truck above 45,000 litres from plying Nigerian road.

The National President of the association, Yusuf Othman, said the directive was sudden with little to no time for affected tanker drivers to make adjustments.

However, on Tuesday in Abuja, Othman said the association had to call off the strike following the intervention of the Nigerian National Petroleum Corporation and the Department of State Services.

He said “Yesterday (Monday), following an emergency meeting of the National Executive Council of our association, it was resolved that transport owners would park their trucks from 22nd to 23rd September, 2020.

“This was in protest of the Federal Government’s decision to ban all trucks of over 45,000 litres capacity from loading petroleum products from all depots throughout the country.”

He added, “However, following the intervention of the Group Managing Director of NNPC and the Director-General of the DSS, we are hereby directing all our members to resume operation nationwide.

“This is a directive that we revert to status quo until January 2021 to allow for wider consultation.”

NARTO president said the association now await peaceful resolution and hope that the agreed time would be enough for affected members to re-engineer their trucks in accordance with the 45,000 litres directive.

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FG to Boost Foreign Revenue Through Methylformate Production

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FG to Enhance Methylformate Production

The Federal Government has started unlocking domestic capacity to up foreign revenue generation and deepen domestic productions through various means including enhancing the production of methylformate.

The Minister of Environment, Dr. Mohammad Abubakar, disclosed this during the inauguration of Systems House of Vitapur Nigeria Limited on Tuesday in Ikeja.

He said the Federal Government was committed to improving the nation’s foreign reserves by unlocking domestic capacity in methylformate productions.

Speaking further he said domestic capacity in methylformate would help in phasing out ozone depleting substances and mitigate climate change, adding that such technological innovation also has potential to enhance Nigeria’s foreign revenue generation, among others.

According to him, such domestic production have advantages, including availability of ozone-friendly and low global potential blowing agents in the production of rigid foam, generation of forex for the country from export of methylformate and forex savings from local production, building of local capacity in the formulation of methylformate-based systems and consequently generation of employment and wealth.

The methylformate systems will serve as source of raw material to ice making machine manufacturers. The project will lead to increased capacity utilisation in enterprises that will be using the methylformate being produced by Vitapur,” Abubakar said.

He reiterated the commitment of the government towards creating enabling environment that will enhance the global competitiveness of manufacturers, especially through fiscal incentives.

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N-Power Beneficiaries Receives N13.3bn in Kwara State

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NPower Beneficiaries in Kwara States Received N13.3bn

The National Social Investment Programme (NSIP) has said N-power beneficiaries in Kwara State received a total sum of N13.3 billion.

The amount was paid to 15,246 beneficiaries from both batches A and B that exited the programme.

Hajia Bashirah Abdulrazaq, the Focal Person of the programme in the state, said batch A beneficiaries were paid N7.4 billion for the 42 months period they were engaged.

She said batch B beneficiaries who were engaged for about 24 months received a total sum of N5.7 billion.

Non-graduates received the sum of N10,000 every month and were engaged for a period of 24 months with a total sum of over N24 million spent,” she added.

Abdulrazaq also said Kwara state government had created a replica of the empowerment programme, codenamed K-power, in order to support beneficiaries after exiting the N-power programme.

She said around 10,000 of N-power beneficiaries benefited from “trader moni’ programme in the state with over N1.3 billion disbursed to them.

She, however, said the people are not willing to repay the loan.

Said she: “Poor masses are not ready to repay the loan after collection because of the attitude of Nigerian to anything from the government thinking it is national cake. Also, those that disbursed the money do not have records of beneficiaries like phone numbers and addresses. Thus, making it difficult to track them for repayment.

“The programme is designed to provide soft loans to boost small scale businesses in the markets which Vice President Yemi Osinbajo flagged off sometime last year to support women with N10,000 as soft loans to
be paid back and then enjoy the next stage of N50,000.

“Unfortunately, many beneficiaries didn’t pay back or the channel for payment was not identified, therefore, beneficiaries could not fulfill their pledges. Though, the component is going through restructuring to
seeing it achieves its objectives,” she said.

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