BusinessDay 23 Aug 2018

34 BUSINESS DAY
C002D5556
Thursday 23 August 2018
NEWS
Low consumer confidence hits Shoprite...
Continued from page 1
tional Bureau of Statistics (NBS)
as Nigerian consumers struggled to
keep up with rising expenses amid
an unfriendly economic environment
with double digit inflation and
unemployment.
Shoprite, Africa’s largest retailer,
blamed the slow pace of economic
growth in the country for the lacklustre
sales growth performance. Nigeria’s
economy expanded by only 0.8 percent
in 2017 and 1.9 percent in the first
quarter of 2018, meanwhile inflation
has remained at double digits since
2016 which has eroded the purchasing
power of consumers, thus, hurting
national consumer confidence.
The Central Bank of Nigeria
Consumer Survey Report for second
quarter 2018 showed that consumers’
overall confidence outlook worsened
in Q2 2018, as more consumers
were less optimistic in their outlook.
The index fell to -6.3 points which
was 10.7 points lower than the index
in second quarter 2017. The report
stated that consumers attributed
the moderation in their outlook to
worsening economic conditions.
Majority of consumers nationwide
expect inflation and exchange
rate to rise and don’t think that the
next 12 months would be an ideal
L-R: Felix Onwuchekwa Nwabuko, managing director/chief executive officer, Presco plc.; Godwin Obaseki, Edo
State governor, and his wife, Betsy Obaseki, at a Stakeholder Workshop on Sustainable palm oil development in
Edo State by Tropical Forest Alliance 2020 Africa Palm Oil Initiative (TFA2020 APOI) in Benin City.
How Federal Ministry of Health allows...
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The Audit team clearly established
a case of impunity against the Management
of the Federal Ministry of
Health over the manner Funds were
diverted and a wilful contravention
of Section 3 of the Appropriation Act,
2013 which provides that “Amounts
appropriated under this Act shall
be released from the Consolidated
Revenue Fund of the Federation and
applied only for the purpose specified
in the schedule to this Act” and
Financial Regulation 417 which states
that “Expenditure shall strictly be classified
in accordance with the Estimate
and votes must be applied only to
the purpose for which the money is
provided. Expenditure incorrectly
charged to a vote shall be disallowed”.
The condemnation was contained
in the most recent released
annual report of the Auditor-General
for the Federation on the accounts of
Nigerian agencies for the year ended
December 2016.
The Auditor General observed
that since the inception of the Ministry,
management has failed to carry
out one of its core responsibilities
towards safeguarding the assets of
the Ministry, namely maintaining
an up-to-date Fixed Assets register.
time to purchase big-ticket items like
motor vehicle and houses.
The Consumer Expectations Survey
(CES) for Q2 2018 was conducted
during the period May 28 to June 15
2018, covering a sample size of 2,070
households drawn from 207 Enumeration
Areas (EAs) across the country.
In line with the findings by CBN,
KASI Insight Consumer Confidence
for Nigeria dropped to 20 points last
month from 27 points the previous year.
In January, consumer confidence was
25 points, showing a continuous fall in
consumer confidence in the country.
The KASI Insight Consumer Confidence
Score (KIC Score) is a composite
index of 7 questions that runs monthly
via consumer polls in countries surveyed.
The data output is based on a
fresh, randomly selected representative
of city dwellers aged 18–64.
Since 2015, Shoprite has struggled
with foreign exchange restrictions,
rising food inflation and slow
economic growth in the country.
Amid such tight economic environment,
the company stalled in developing
new shopping centres in the
country. Import restrictions in 2016
forced the company to look inward
to source for locally made products
to retail. As a result, up to 80 percent
of sales in Shoprite Nigeria are locally
made products.
Shoprite projects that food inflation
will likely increase in the coming
year but appear to be more confident
in the economy going forward as the
company stated that “the Nigerian
economy is now beginning to show
signs of life”.
The company projects that any
increase in the minimum wage in
Nigeria will help boost sales and
profit growth next year. Shoprite announced
that it plans to open 88 new
supermarkets in 18 non-RSA countries.
It did state how many of those
shops will be opened in Nigeria.
The company recorded its first
annual earnings decline in 19 years
which it blamed on currency devaluation
in Angola and poor showing in
South Africa and Nigeria. Local currency
sales declined by 9.3 percent
in Angola, the second largest oil
producer after Nigeria in Africa. But
Shoprite recorded local currency sales
growth of 8.8 percent in Zambia.
Chief Executive of Shoprite, Pieter
Engelbrecht told analysts at the
company’s results presentation that
this year was probably its toughest.
Analysts note that the fact that
Shoprite which targets lower to middleincome
consumers in Nigeria is struggling
with sales is an indication that the
average Nigerian consumer purchasing
power has been badly hit by the triple
whammy of rising inflation, unemployment
and a weaker currency.
“The Register was not updated
for 2015 and 2016 to reflect the position
of the assets acquired, owned
or disposed of by the Ministry as the
absence of this record creates room
for pilferage, conversion, misplacement
or misapplication of valuable
government assets,” the report said.
Like other developing nations,
Nigeria had over the years received
foreign assistance in many areas,
especially in the Health Sector where
donors have provided assistance in
critical areas like provision of scarce
but highly needed drugs and equipment,
funds for training of Health
personnel, procurements and repairs
of health facilities and equipment.
Nigeria’s health agencies like National
Action for the Control of AIDs
(NACA), National Primary Health
Care Development Agency (NPHC-
DA), and National Programme on
Immunisation (NPI), Guinea Worm
Eradication Programme (GWRP),
Polio Eradication Programme and
others have always received assistance
from foreign donors in advancing
their nationwide activities.
Recently, assistance from some
of these donors was suspended due
to unsatisfactory reports emanating
from the country’s health agencies as
these reports border on lack of transparency
in the management of funds
released by the donors, failure to
keep to signed agreements between
the donors and Nigerian government
and non-adherence to standards
and procedures in procurements
and execution of contracts.
“My attention was drawn to these
anomalies in two agencies of the Federal
Ministry of Health,” Ayine said.
Switzerland based- Global Alliance
for Vaccines and Immunisation
(GAVI) accused Nigeria’s NPHCDA of
mis-management of funds released
by the organisation and invited the Nigeria’s
Auditor General to observe the
appointment of an audit firm to carry
out extended cash programme audit
of GAVI funds released to NPHCDA
from 2010 to 2015.
The audit of GAVI’s financial
assistance to NPHCDA carried out
by a Ugandan based audit firm with
branches in London and Abuja
revealed variances between Bank
Statement balances and balances in
Annual Progress Report submitted
by NPHCDA to GAVI.
The report revealed there was
non-adherence to procedures stipulated
in Public Procurement Act,
2007, in the procurement of goods,
services and works valued at N4.9
billion in NPHCDA.
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In Real Estate market, smaller is now...
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sion plans, seeking out strategically
located residential buildings or
vacant apartments in prime areas to
be converted into short-let apartments
to meet the flexible needs of
people who require such accommodation,”
explained Tayo Odunsi,
CEO, Northcourt Real Estate.
Besides security issues and the
strong desire by young professionals
who want to live in exclusive locations
to have a feel of luxury living,
Erejuwa Gbadebo, CEO, International
Real Estate Partners (IREP), notes
an upsurge in demand by corporates
who would rather pay for short-let
apartments for their expatriate staff,
who may be in the country for short
periods of time.
In line with the increased demand,
short-let apartments are
now popular in places like Ikeja
GRA, Victoria Island, Ikoyi, Osborne
Foreshore, Lekki, Festac Town, all in
Lagos. In Abuja, they could be found
in such expensive locations as Maitama,
Asokoro, Wuse, while in Port
Harcourt they are found in Old GRA
and Trans-Amadi.
“These are locations where house
prices are quite high and the young
professionals who cannot afford
such prices still want to have a feel of
such locations go for short-let apartments,”
explained Azubuike Unigwe,
Managing Partner, Unigwe and Co, a
firm of estate surveyors and valuers.
Most expatriates, top executives
and consultants to blue chip companies
who wish to stay in town for
a week or more, prefer these serviced
apartments because of the comfortable
ambience which most hotels
lack. These apartments also offer
some level of privacy which some
hotel brands don’t give.
Analysts point out that another
reason for the growth of shot-let market
is the flexibility enjoyed by guests
when compared to hotel rooms,
explaining that it accommodates client’s
guests, relatives, friends which
are not allowed in some hotel rooms.
Another major reason is the
affordability. BusinessDay checks
reveal that short-let apartments are
cheaper compared to hotel room
rates. A two-bedroom serviced
apartment in 1004 Estate in Victoria
Island, Lagos costs N35,000 per night
on short-let, while a standard hotel
Miyetti Allah denies threatening to unseat...
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kola Saraki, Nigeria’s Senate
president, by its state coordinator
for Benue.
In an interview on Tuesday, Garus
Gololo, the Benue state coordinator
of the association had warned the
Senate president, Bukola Saraki, to
resign or be forced to do so.
In a statement signed by Othman
Ngelzarma, the national secretary
on Wednesday, the association said
Gololo’s comments do not reflect the
position of the association.
The statement reads, “The attention
of Miyetti Allah Cattle Breeders
Association of Nigeria has been
drawn to an interview granted by one
Garus Gololo in Makurdi to Punch
Newspaper titled ‘Resign or we will
force you out’. Miyetti Allah to Saraki.
This statement is unfortunate.
“I will categorically state that Garos
Gololo spoke in his personal capacity
and has no mandate to speak on
behalf of the association. Miyetti Allah
is a non-partisan association with no
interest in the political terrain and we
couldn’t meddle into the affairs of
political actors thereby compounding
our already obvious challenges. I
room costs an average of N60,000 per
night within the same neighbourhood.
A two-bedroom apartment
at the estate sells for N45 million to
N50 million.
In Festac Town where UPDC offers
serviced short-let apartments at
its The Residences, a two-bedroom
apartment sells for N65 million,
but the short-let goes for N30,000
to N40,000 per night. Golden Tulip
Hotel, in the same ‘compound’ with
The Residences charges between
N50,000 and N60,000 per night.
In Ikoyi, a two-bedroom apartment
lets for average of N50,000
per night, while at Parkview estate,
Ikoyi it costs an average of N40,000
for same size apartment with clients
expected to pay a minimum of oneweek
duration. This is a location
where the minimum rent for a threebedroom
apartment is between N20
million and N25 million per annum.
In the commercial segment of the
market, developers are a lot more
innovative and creative. This is one
segment of the market where vacancy
rate has gone up significantly
because some corporate tenants
have changed office location. Some
that were in two to three floors have
now scaled down to one floor because
they have sent away a good
number of their staff due to reduced
business activities.
For retail, some retailers have had to
move out of the malls completely. Some
landlords have reduced rents. There are
cases where landlords have asked tenants
to stop paying rents altogether, but
to just pay the service charge to enable
them maintain the mall.
Gbenga Olaniyan, CEO, Estate
Links, confirmed BusinessDay that
some A-grade office buildings now
offer smaller spaces like 200-500
square metres where a minimum
of 1000 square metres were on offer
before now, stressing that this was
the only way to attract more tenants
to such buildings and to increase
occupancy level.
Tenants are also offered concessions
in form of quarterly instead
of yearly rents payment; reduced
service charge, energy efficiency
and reduced cost; and product
differentiation aimed at attracting
more tenants and increasing workers’
convenience and productivity
in the building.
therefore urge all and sundry to disregard
this statement. This statement
is not from MACBAN and should be
disregarded in its entirety.”
The People’s Democratic Party
(PDP) meanwhile has given President
Muhammadu Buhari 24 hours
ultimatum to arrest the leader of the
Miyetti Allah Cattle Breeders Association
that allegedly threatened to
force Senate President Bukola Saraki
from office if he failed to resign.
The Presidency and the All Progressives
Congress (APC), are yet to
respond to the controversy.
The PDP, in a statement Wednesday
by its National Publicity Secretary, Kola
Ologbondiyan, said Gololo’s statement
echoes threats by the APC and the
Buhari Presidency to force Saraki out of
office since his defection to PDP.
“If anything, this unguarded
statement by Miyetti Allah has exposed
the synergy between the ruling
party and some troublesome elements,
who are being used to stoke
division and create violent crisis that
had resulted into daily bloodlettings
in various parts of the country.
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