Recession weakens purchasing power of Nigerians
Published August 3, 2017

According to businessDay, This is not the best times for retailers and shopping mall owners, as they continue to grapple with dropping sales revenue due to the weakening purchasing power of Nigerians.

‘‘We have been recording very low sales for months now and it is not enough to pay staff salaries, or even foot our bills. I hear we might close some of our shops if there is no improvement,’’ a staff of clothing retailer PEP, who spoke on the condition of anonymity told Business Day yesterday.

Data seen by BusinessDay shows that Financial Transaction volumes fell in July, a further sign that Nigeria’s recovery from her worst recession in 30 years will be painful, weak and slow.

Point of sale transactions fell by 3.60 percent, while transactions by cheque fell 9.97 percent and transfers by NEFT fell 3.96 percent for the month.

However, manufacturing activity rose slightly, as optimistic manufacturers with improved access to foreign exchange meet resistance from weary consumers.

Traffic to malls however fell in July, especially on weekdays, which retailers blamed on the rains and the weak disposal income of Nigerians.

Household Final Consumption Expenditure, including imputed expenditure, incurred by resident households on individual consumption goods and services has been falling since 2015.

“In the third quarter of 2016, real year on year growth in household consumption deteriorated, from a (revised) decline of -0.7%, to a decline of -2.0%. This reflects the continuing difficulties that consumers have faced in recent quarters, with rising unemployment, and high inflation eroding purchasing power,” the National Bureau of Statistics (NBS) said in its latest GDP by expenditure report for third quarter 2016, released in June.

Nigeria’s unemployment rate rose to 13.9 percent in the third quarter of 2016, and by June, 2017 year on year inflation in the Consumer Price Index was 16.1 percent.

‘‘We usually make more sales during the weekends than weekdays because a lot of people will be out of the office but sales are dropping. I think the rain is responsible and more importantly, our loyal customers complain they don’t have money to shop as before,’’ a manager in one of the shops in Apapa Mall, in Lagos state told BusinessDay.

Investigations show that as a result of the difficult retail environment, some of the retail shops commenced a gradual exit from the malls to stem the mounting indebtedness to the mall owners and employees.

Retailers who have closed some outlets include Busen, Mr Price, Lifemate, Samsung and Ruff ‘n’ tumble.

Nigeria’s economy has recorded four straight quarters of negative growth to the end of March 2017 for which data is available.

Average incomes in the country fell by about 18 percent in 2015 to $2,550 per annum, from over $3,000 in 2014, according to World Bank estimates.

Adenike Ogunlesi, founder & CRO of Ruff ‘n’ Tumble said late last year, ‘‘we have closed some of our outlets. We are facing a market with diminishing buying power and malls that are dollar-denominated in a country where we sell in naira.’’

Retailers told BusinessDay that with the huge crowds that visit Lagos malls at weekends, one would think that they were recording impressive sales but that was far from the case.

‘‘Most of these people hardly come into our store. Those that do, leave without buying anything. The rains have been more this year, than was the case last year. We made more sales this time last year than now,” an attendant in Swatch store at Ikeja City Mall, told BusinessDay.

Michael Mark, CEO, Truworths International Limited, said after the brand’s exit from the country, that its stores in countries bordering South Africa and in Ghana were doing fine except in Nigeria.

“It is just Nigeria that is not and we would go back there if everything changes,” Mark said.