BrandArena: NIGERIA: Reflection on 2014 and Projection for 2015

Monday 19 January 2015

NIGERIA: Reflection on 2014 and Projection for 2015

Nigeria economy decline at its lowest rate in recent time in the third quarter of 2014, but Nigerians still think the country could still have a great 2015 and beyond. While some experts expressed fears that the multiplier effect of the crisis last year would cause hardship and sluggish growth in the first quarter of 2015, others advised the Federal Government to reduce the cost of governance in order to reduce wastage in the system.

As we are approaching 2015 election the mouth of major advertising practitioners in Nigeria has started to salivate. Like in most countries where elections hold at an interval, the advertising industry in Nigeria is planning on how to maximize the billions of Naira that will be spend by political office holders or seekers during the period. Already political maneuverings have become intense, a major opposition political party with the power to rival the ruling party (APC) have shown they are into the race for change. Like in the US the prospect of having two near equal major political parties is good for the advertising industry, as it will means piece competition in placing of advert not like before when the weaker parties cannot march what PDP (the ruling party) normally spend on advert.

As one of the important dynamics that will determine the future direction of this industry, there is currently a squabble going on between the major players in the industry. One of the main issues at stake is that of allowing foreign advertising agencies to invest their capital in the Nigerian advertising industry.

It could be recalled that the outgoing board of advertising practitioners’ council of Nigeria (APCON) has instituted a law banning foreign advertising agencies from owning more than 25% stake in any advertising agency in the country. This single move no matter on whose side you are will have a profound effect on the future direction of the industry. There are those that belief the move will help protect local advertising industry by protecting it from the predatory practices of global advert agencies, thereby, allowing it to grow to a level where it will compete with bigger global brands not only on Nigerian soil but on the global scene.

As the economy continue to grow so doe’s major companies’ effort to boost their image through branding. Already major brands in the country in telecoms, FMCGs and banking sectors have been spending billions of Naira in order to increase the strength of their brand, what branding experts called ‘Brand Equity’.

Much of the fear surrounding the economy is hinged on the outcome of the general election, billed to take place in Nigeria on February 14 and 28, 2015. Its impact will dwarf that of any other event as far as 2015 is concerned. This is because the outcome of the elections and the immediate aftermath will determine what will become of Nigeria and if any other issue or event will even matter.

News of defections were widespread last year and has also continued even when the election is around the corner. The defections are sure to continue after the elections, should they be held successfully, as politicians lobby to be appointed into public offices at different levels of government. Regardless of who or which party emerges victorious in the elections, there will be changes in several key positions across the three arms of government.

The elections (especially the presidency) will be the most closely fought in the country's democratic history, but the power of incumbency, wrangling in the opposition and the fact that it remains the only truly national party means that the PDP is likely to win.

In 2015, regulators in the Information and Communications Technology (ICT) have the huge tasks to implement policies that would yield the dividends of technology and bridge the digital divide among the citizenry.

A lot is expected from the National Information Technology Development Agency (NITDA), Nigerian Communications Commission (NCC), Universal Service Provision Fund (USPF), Broadband Council, Ministry of Communications Technology as well as Computer Professionals Registration Council of Nigeria (CPN) to drive Nigeria’s ICT development beyond the realm of paperwork.

Issues of multiple taxations, multiple regulation, right of way (RoW) for telecom infrastructure, inadequate environment for telecommunication operators and value added service (VAS) providers to operate, local content, software development funding, quality of service by telecom service providers, auction of telecom licences, etc, will dominate discourse in 2015.

Experts said that in 2015, the NCC should pay more attention to quality of service (QoS) of voice and internet data services provided by telecom operators across the country. While voice tariffs have come down over the years, internet data tariffs fluctuates depending on the service provider. With sale of mobile towers by MTN, Airtel and Etisalat, telecom consumers said the NCC should monitor the QoS provided by the telcos to ensure they meet approved key performance indicators (KPIs).

Though the telecom sector has attracted over $32 billion investment in the past 13 years of the launch of the Global System for Mobile Communications (GSM) in Nigeria, the market still operates below potential. While strong, Nigeria’s mobile penetration is still lower than a number of other African markets. Broadband penetration remains low at less than 10 per cent, with the government setting a target of 30 per cent by 2017.

Another issue that may dominate discourse this year is the power supply situation and its cost implications. With the recent privatisation of the power sector, there seemed to be light at the end of the tunnel towards the end of last year.

If the energy situation does not eventually improve, production cost will remain high (or higher in situations of worsening gas supplies). Before now, experts too had advised Nigerians to not expect regular power supply till 2016 or 2017, but many Nigerians are yet to come to terms with this. However, if something beyond the ordinary happens, resulting in improved power supply, manufacturers will have cause to smile.

Apart from energy costs, the issue of smuggling and influx of fake and substandard goods may also dominate industrial debates within the year. Manufacturers are insistent that unbridled imports are stifling the growth of their firms, especially infant ones. They also complain that some of their products which compete in African markets are cloned by Asian importers, in collaboration with their Nigerian counterparts.

However, no matter the direction of developments in Nigeria’s manufacturing industry, in 2015, it is certain that Nigeria’s aspiration to be one of the top 20 economies by the close of this decade will remain a mere dream if this critical industry remains in doldrums.

To address the uncertainties around the prices of oil, stakeholders, investors, service firms (especially local firms) might need to adjust offerings to the new realities but craft agreements that are flexible enough to benefit from the possibility of price upsides or gyrations. We might still get $70/barrel in 2015, though that might be too optimistic given the current situation.

A reduction of 10 Naira from fuel price in the country and expected reduction in the cost of kerosine in the country come as a sigh of relief to the people at the beginning of a new year.

Market observers believes the poor performance of the 2014 financial year is as a result of the outbreak of Ebola disease, unemployment, the devaluation of the Naira coupled with the fall in crude oil prices and security challenges led to the decline of the financial sector in the country.

In the banking sector, the large gap between the lending and saving rates is indicative of inefficiency in the money market. It is noteworthy that government borrowing from the market increased immediately after the global crisis while credit to the private sector declined.

The implication is that government public domestic debt was increasing while the credit for production was not forthcoming. Part of the borrowed money was used as intervention fund to prop up businesses that were affected by the global crisis. These include the textile industry and aviation sector.

The Nigerian Stock Market in 2014 closed negative with the key market indicators, NSE All Share Index, far below what was expected at the beginning of the year. The NSE market capitalisation as at Dec. 30, 2014, closed at N11.49 trillion from the N13.20 trillion in the corresponding period of 2013. The decrease of N1.71 trillion represented 12.95 per cent decrease already.

The Nigerian economy thus entered 2015 on unstable economic conditions. The conditions are falling price of crude oil and consequently falling revenue into the federation account; the domestic currency is depreciating fast at $1 to over N180; the foreign reserve hovering around $40 billion or less than six months import bill at the current level; high cost of borrowing for investments; falling demand for Nigeria’s oil in the international market; unbridled appetite for corruptive activities; the bearish hold on the stock market, the declining capacity utilisation in industries and the continued rising youth and adult unemployment.

In general, the Nigerian macroeconomic environment is expected to be mixed and highly influenced by developments in the global oil and financial markets. However, the medium and long term prospects of the Nigerian economy depend on developments in the oil section, political events as well as enforcement of tax compliance to boost revenue.

Consumer Trends
Industry experts projected that consumers are becoming more comfortable with ideas that once seemed beyond imagination – like robots in the home and mind sharing. In 2015, consumers will watch streamed video more often than broadcast television.

Mrs Anurika Azubuike
According to the fourth edition of Ericsson ConsumerLab’s annual report released recently, top 10 consumer trends to watch out for in 2015 and beyond include Streamed future; Helpful homes; Mind sharing; Smart citizens; Sharing economy; Digital purse; Information; Longer life; Domestic robots; and Children connect.

Mrs Anurika Azubuike of Terragon Group Marketing & Corporate Communications, stated that the concept of Mobile-first will be amplified as more people are spending their time on their mobile more than any other device, and also access the internet via that channel.

"Key to the coming year also is that Content will continue to be king. Even more with how hard it is to produce quality content in quantity. Content must be relevant, meaningful, engaging and informative. 2014 witnessed a rise in viral videos and the magic of using videos as a viable content marketing tool. Facebook announced that it had more video views than YouTube this year. In 2015, marketers need to be smart about how content can be leveraged and repurposed. Find ways to use videos to tell the story. Social audiences themselves can be a source of inspiration for authentic content when moderated and presented in a creative way".

No comments:

Post a Comment