As the naira continues to fall against the dollar in the parallel market, it has no doubt put a strain on manufacturers who are faced with the difficulty of getting dollars from the official market to import their raw and packaging materials.
This has increased the prices of imported products and has led to the scarcity of goods in the country, which has made supermarkets and stores switch to locally made products.
According to a report by a supermarket, Euromonitor International, a London-based strategic market research firm, they disclosed that following the disruption of supply chains during the Covid-19 pandemic, inflationary pressures, and Naira depreciation, more supermarkets are likely to source products locally.
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See what the firm said; “This trend will also be supported by campaigns that seek to raise awareness and call for supermarkets to support products that are ‘Made in Nigeria’, as well as putting pressure on the government to reduce the reliance on imports for essential goods”.
With the high inflation rate ravaging the global economy, coupled with the devaluation of the Naira, a large percentage of people in Nigeria are now looking for alternatives in supermarkets and local stores. Despite the negative impact of the high inflation and the fall of the Naira, industry experts are looking at the positive side of supermarkets and stores switching to locally produced goods.
They disclosed that including and developing SMEs in the supply chain allows the nation to grow and diversify by providing various options and a continuous supply pipeline for products and services. A case study of South Africa, as local production, is one of the things that has enabled the country to thrive in retail which has boosted their economy.
Local procurement has been one of the key drivers of the Nation’s economic growth and job creation. The government of South Africa consistently encourages its citizens to prioritize locally made products over imports. Top supermarket stores like Hubmart, Sundry, and spar are already dealing in locally manufactured products.
Experts in Nigeria disclose that for some products there has been a 60 percent increase in prices in the last 12 months, while the price of products in the food category has increased by 27 percent. This significant increase has mounted pressure on supermarket/ store owners to not only stock goods that will sell but to make sure that they are getting the best possible prices for these products.
There have been concerns about the structural problems in Nigeria such as Inadequate power supply, insecurity issues, currency devaluation, and poor infrastructure, which has made foreign investors hesitant about entering the Nigerian market.
Reports have it that manufacturers in Nigeria are now beginning to source more inputs within the country, rather than going abroad in order to beat the FX scarcity. These uncertain times is indeed a period for the government of Nigeria to look inward by developing local manufacturing firms in the country.
Unless there is massive investment in local companies and also creating an enabling environment that will enable them to thrive, the development of modern retail formats will continue to operate below their potential. To further prevent the devaluation of the Naira, SMEs in Nigeria can resolve most of the country’s critical problems. SMEs have been described as the cornerstone of most economies.
The government of Nigeria should take a cue from that of South Africa by encouraging the citizens to buy locally made goods in order to boost the nation’s economy. Also, with the high level of unemployment in Nigeria, developing local industries as well as patronizing locally made products will reduce the high rate of unemployment in the country.