Nigeria's leading finance and market intelligence news report.

Nigeria drops three places in global retail ranking as economic woes bite

…industry sales down by $20bn in 3yrs

Nigeria moved three places downwards in the newly released global retail development index (GRDI), indicating that the woes facing players in the retail space is not yet over. Of the 30 countries surveyed by A.T. Kearney, an American-based management consulting firm, Nigeria ranked 30th, falling steadily from 19th and 27th position in 2016 and 2017 respectively.

“The consistent drop in Nigeria’s rating is an affirmation of weak purchasing power. Our growth of about two percent did almost nothing to spur aggregate demand,” said Damilola Adewale, a Lagos-based economist. Adewale noted that the high vacancy rate in Nigeria’s malls is another contributory factor. “You cannot expect a super performance in empty halls.

Vacancy rate in Palms mall and Atlantic mall, for instance, is over 70%.” Aggregate sales revenue in Nigeria’s retail space has headed south at least in the last threeyears, dropping by $4 billion to $105 billion in 2019, from $109 billion and $125 billion in 2017 and 2016 respectively.

The GRDI ranks 30 developing countries on a scale of zero to 100, the higher the ranking, the more urgency to enter a country. Countries are selected from 200 nations based on three criteria which are country risk, population size and wealth. Out of a total score of 100, the country dropped to 35.6 in 2019 from 39.9 and 43.8 in 2017 and 2016 respectively. In 2015, it ranked 23rd position but it improved to 19th position in 2016.

Nigeria was in recession for five consecutive quarters but returned to a positive growth territory of 0.72 percent in the second quarter (Q2) 2017 from -0.67 percent in Q1 2016. Also, the Nigeria’s per capita income declined to $2,049 in 2018 from $3,268 in 2014, according to the International Monetary Fund (IMF).

Read Also: Global informal economy declining, but large in sub-Saharan Africa, says IMF

According to Ayorinde Akinloye, a consumer analyst at CSL Stockbrokers, the fundamentals of the consumer goods and retail industry which are job creation, poor income growth and unemployment has been very weak and weak job creation and unemployment has led to pressured consumers' income and ultimately weakened demand.
“Most companies implemented significant price hikes in 2016 which has impacted volume growth. Furthermore, while we have the population, the poor income characteristics have ensured the quality of consumers in the Nigerian market remains poor,”

So really, while the consumer space has grown horizontally, vertical growth has been absent and that basically describes why retail sales in Nigeria is dwindling and why the market is becoming unattractive,” Akinloye further explained. Data from the National Bureau of Statistics on Gross Domestic Product (GDP) by Income and Expenditure approach at 2010 purchaser's values show that consumption expenditure of households has been declining at varying pace since it rose by 1.5 per cent in 2015.

“This just shows that other countries’ GDP per capita is rising faster than Nigeria’s own. And moreover, our GDP per capita has been shrinking since 2014 because our population is growing but GDP per capita is relatively slow,” Eronmosele Aziba, Consumer analyst, Tellimer Group, said. Aziba further said that the retail segment of Nigeria, which is the bulk, is still facing economic pressures because people don’t have enough to spend.

According to data from National Bureau of Statistics, Nigeria’s trade sector which comprises of wholesale and retail trade is the second largest sector after agriculture, accounting for up to 16 percent of GDP and since 2016; the country has witnessed negative growth in 8 of the last 12 quarters. Ghana was ranked the fourth country on a list of 30 countries making it the top African country based on the potential for strength and investment in their domestic retail markets.

Whatsapp mobile

Get real time updates directly on you device, subscribe now.