CBN’s PMI July Report shows contracting indices as Shoprite plans exit

Godwin Emefiele, Governor, Central Bank of Nigeria (CBN)

CBN PMI July Report shows contracting indices as Shoprite plans exit

Several indicators in the Nigeria’s Purchasing Managers’ Index (PMI) for the month of July, 2020 shows contraction in both manufacturing and Non-manufacturing sectors of the country’s economy.

This is contained in the PMI Survey report released recently on the website of the Central Bank of Nigeria (CBN)

The apex bank in Nigeria said the July 2020 PMI survey was conducted by its Statistics Department during the period July 13-17, 2020. “The respondents were purchasing and supply executives of manufacturing and non-manufacturing organizations in all 36 states in Nigeria and the Federal Capital Territory (FCT). The Bank makes no representation regarding the individual companies, other than the information they have provided. The data contained herein further provides input for policy decisions”

The report said Manufacturing PMI in the month of July stood at 44.9 index points, indicating contraction in the manufacturing sector for the third consecutive month. Of the 14 surveyed subsectors, transportation equipment subsector reported growth (above 50% threshold) in the review month while nonmetallic mineral products sector reported no change. However, the remaining 12 subsectors reported contraction in the following order printing & related support activities; primary metals; fabricated metal products; paper products; food, beverage & tobacco products; chemical & pharmaceutical products; furniture & related products; electrical equipment; plastics & rubber products; petroleum & coal products; textile, apparel, leather & footwear and cement”.

Meanwhile, leading retail store chain, Shoprite, has hinted that it could be exiting Nigerian market after 15 years of operations.

The South African owned grocery retailer made the disclosure in a trading statement for the year ended June released on Monday, August 3, saying it is leaving one of its largest markets.

The African biggest grocery retailer also announced that it has started a formal process to consider the potential sale of all or a majority stake in its supermarkets in Nigeria.

In the statement, Shoprite said the results for the year do not reflect any of their operations in Nigeria as it will be classified as a discontinued operation.

International supermarkets (excluding Nigeria) contributed 11.6 per cent to group sales and reported a 1.4 per cent decline in sales from 2018. South African operations contributed 78 per cent of overall sales and saw a 8.7 per cent rise for the year.

This can be attributed to the negative impact of the coronavirus pandemic which worsened demand due to lockdowns. As a result of lockdown, customer visits declined 7.4 per cent but the average basket spends increased by 18.4 per cent.

South African retailers have struggled in the Nigeria market and most recently in June, Business Post reported that Mr Price exited the market.

The clothing retailer joined other clothing retailers such as Woolworths and Truworths who also closed their Nigerian chapter in recent years. The retail group first announced in 2019 that it was revaluating its international strategy and that it had commissioned an external review of the Nigerian operations.

Launched in Lagos in December 2005, Shoprite has grown an additional 25 stores across eight states in the Federation including the Federal Capital Territory (FCT), Abuja. It employs more than 2000 people, of which 99 per cent are Nigerian citizens.