Gov Uzodimma with Army Chief Taoreed Lagbaja I’m Owerri on Thursday
A new report by a financial solutions firm, Cardinal Stone says multinational firms in the Fast Moving Consumer Goods subsector may exit the country this year if the operating environment does not improve,
According to the report titled ‘Strategic Resilience: Sailing through Business Disruptions’, the high operating costs would persist for firms operating in the Fast Moving Consumer Goods sector.
The report noted that the FMCG sector remains heavily exposed to changes in commodity prices, exchange rates, import and clearing duties, and freight costs.
It noted that FMCGs might not benefit from the moderation in global commodity prices because of the significant depreciation of naira, which weakened from N422.00/$ in June 2023 to N951.94/$ in December 2023, after the Central Bank of Nigeria floated the country’s exchange rate.
The CBN floated the exchange rate in June 2023 to bridge the gap between the official rate and the alternative market and address the challenge of forex scarcity that the country has been grappling with.
The alternative path may eventually degenerate to exit from the operating environment or high-cost segments, similar to the cases with Procter and Gamble, GSK, Pernord Ricord, and Unilever.”
The report further tipped the drag from higher energy costs to extend into 2024, barring a shock in naira appreciation.
“The knock-on effect of these changes could translate to an increase in effective interest rates,” the report added.
