Welcome to your weekly supply chain digest, where we break down the latest trends affecting businesses in Nigeria and across Africa. Brought to you by XNECT HUB – Your source for market and supply chain intelligence. We’re here to keep you informed, without the jargon. Let’s dive into the highlights for the first week of October ending Friday 6th October, 2023.
Assessing Impact: Green Zone, Yellow Zone, and Red Zone
We know that dealing with supply chain complexities can be tough. So, we’ve sorted the recent news and data into three zones – Green, Yellow, and Red, like traffic light colors. This system will help you see which trends could strongly affect your business and which ones are less likely to cause disruptions.
No.1 – In the Green Zone (Least Impact)
In this zone, we explore trends with the least impact on supply chains. They’re noteworthy but won’t shake things up significantly or affect the smooth functioning of supply chains.
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Arise IIP’s ‘Made in Africa’ Movement
Sector(s) Affected: Primarily affects the fashion and textile sectors, with minimal disruption to the broader supply chains.
Arise IIP aims to promote ‘Made in Africa’ fabrics to boost fashion, culture, and tradition on the continent. This initiative, supported by influential institutions, seeks to generate 1 million jobs continent-wide. By emphasizing African-made products, Arise IIP aims to enhance Africa’s global competitiveness. (Learn More)
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Niger’s Ban on LPG Exports
Sector(s) Affected: Primarily affects the energy sector, with minimal disruption to the broader supply chains.
Niger has banned all exports of liquefied petroleum gas (LPG) to prioritize domestic supply. This decision may impact neighboring Nigeria, which normally imports LPG from Niger. (Learn More)
No.2 – In the Yellow Zone (Moderate Impact)
Moving into the Yellow zone, we highlight economic indicators and industry trends that have a moderate impact on supply chains. These factors may cause some disruptions or challenges but are not severely detrimental to overall supply chain operations.
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Capsa Technology’s Supply Chain Empowerment Initiative
Sector(s) Affected: Primarily affects the financial and technology sectors, with potential medium disruption in the supply chain industry.
Capsa Technology, a prominent fintech company in Nigeria, has reaffirmed its commitment to enhancing the country’s supply chain and logistics sector. Through a partnership with Lagos Business School, they conducted the “Supply Chain 4.0: Technology, Factoring, and the Future of Supply Chain” executive course, engaging executives from various industries. Capsa’s focus is on providing alternative financing solutions that are affordable, quick, and convenient. (Learn More)
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Multigate’s Expansion and Licenses
Sector(s) Affected: Primarily affects the financial services and cross-border payment sectors, with potential medium disruption in the remittance and financial sectors.
Multigate, a financial services platform, has acquired licenses to operate in Uganda and Nigeria for money remittance and international money transfers. This expansion enables real-time international payments using local currencies, catering to both Banking Financial Institutions (BFIs) and Non-Banking Financial Institutions (NBFIs). (Learn More)
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Decline in South African Investment in Nigeria
Sector(s) Affected: Affects various sectors such as banking, media, energy, telecommunications, and infrastructure, with medium disruption in foreign investment.
South African investment in Nigeria has declined significantly in recent years, with capital importation dropping by over 80%. Several factors have contributed to this decline, including regulatory uncertainty, economic downturn, currency volatility, competition, and market dynamics. While some South African businesses have exited Nigeria, others continue to operate successfully in various sectors. (Learn More)
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Nigerian Manufacturers’ Investment in Alternative Energy
Sector(s) Affected: Primarily affects the manufacturing sector and energy-related industries, with medium disruption in the adoption of alternative energy sources.
Manufacturers’ investment in alternative energy sources in Nigeria decreased by 21.1% during the first half of 2023, compared to the second half of 2022. This decline represents a shift in spending habits in the manufacturing sector. The electricity supply to industries from the national grid saw a slight improvement, with a daily average of 11.3 hours. However, there was a minor increase in the average daily number of power outages. (Learn More)
No.3 – The Red Zone (Severe Impact)
And now to the red hot zone where we highlight economic indicators and industry trends that have a severe impact on supply chains. These are factors that can cause significant disruptions, delays, or challenges in supply chain activities and require immediate attention and mitigation efforts.
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World Bank’s Economic Growth Forecast for Nigeria and Sub-Saharan Africa
Sector(s) Affected: Significant disruption expected across various sectors due to economic slowdown and reduced consumer spending.
The World Bank has forecasted a deceleration in Nigeria’s economic growth, affecting Sub-Saharan Africa’s overall economic growth. High inflation rates, supply chain disruptions, and weaker currencies have impacted private consumption negatively. The service sector remains the main driver of growth, with limited contributions from agriculture and industry. (Learn More)
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Nigeria’s Natural Gas Supply Challenges
Sector(s) Affected: Significant disruption is anticipated in the energy sector, affecting various industries reliant on natural gas.
Nigeria possesses substantial natural gas reserves, making it a key player in Africa’s energy sector. However, a report from the African Energy Chamber highlights concerns about short-term output plateauing and the failure of Nigeria’s ‘Decade of Gas’ policy to meet targets. The critical gas supply deficit poses severe national risks if not addressed promptly. (Learn More)
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Soaring Food Prices in Nigeria
Sector(s) Affected: Significant disruption in the food supply chain, affecting both food production and distribution sectors.
The prices of essential food items like maize, milk, and plantains in Nigeria have nearly doubled within a year, according to the National Bureau of Statistics (NBS). The NBS reports that food inflation has risen to 29.34 percent, the highest in 18 years. This surge in food prices is attributed to factors like increased oil and fat prices, conflicts in the Northern region, and the pass-through effect of elevated petrol prices. Additionally, the closure of the Niger Republic border has added pressure to food supplies, particularly during the lean season. (Learn More)
Conclusion
In summary, the trends for Week 1 of October 2023 reveal a spectrum of impacts, ranging from contained developments in the cultural and energy sectors to moderate disruptions in finance, investment patterns, and manufacturing. However, the overarching challenges in economic growth, energy supply, and food security are alarming, demanding immediate attention and comprehensive mitigation strategies. Stay tuned for our next digest to stay ahead of the evolving supply chain landscape in Nigeria and Sub-Saharan Africa.
