Business

Banks halt lending to fund business operation in Northern East states

Published

12 years ago

November 25, 2013

MANUFACTURERS in the country are licking their wounds over streams of loses as a result of built up finished inventories of goods in their warehouses they can not sell. This is as a result of the insecurity in the Northern part of the country that has taken away part of their market. Many company chief executives who spoke to Vanguard said the North is important to their business as the region accounts for more than 30 per cent of the Nigerian market.
Though the manufacturers see the market as huge distribution of goods and services to this region is being hampered by security challenges in the affected states.
This has led to significant reduction in turnover, reduction in sales force/ sales outlets; layoff of production staff by companies operating from other parts of the country due to high unsold inventory. From multinationals to small and medium size firms, the story is the same.
Speaking on the issue PZ Cusssons Plc Chairman Professor Emmanuel Edozien, said its sales dropped by 1 per cent from N72.2 billion to N71.3 billion,. In a review of the company’s performance for financial year ended 2013, he attributed the drop in the company’s revenue to: “The social unrest in the Northern part of the country and the impact on the consumers’ spending power subsequent to the reduction of the fuel subsidy which exerted considerable pressure on the top line throughout the year.” According to him, however, profitability increased with profit before tax growing by 78 per cent from N4.3 billion to N7.7 billion off the back of reduced raw material prices and manufacturing and supply chain efficiencies.
“In addition, net profit after tax and minority interests increased by 102 percent from N2.4 billion to N 4.9 billion. “Though the top line results are not in line with our projections, the choice of investing in volume growth and improving the cost structure during the year, gives us the confidence that this will put our company on the right footing for profitable growth in the future.
Our Focus during the year was to drive shareholder value through management of the cost base, and driving economies of scale from our suppliers through our procurement division. We leveraged our investments in supply chain and manufacturing to improve margins while maintaining the quality of our products,” he said.
The marketing of our products in the north is being hampered,” said Martin Woolnough, the immediate past Managing Director of Nestle Nigeria Plc. Describing the state of insecurity in some part of northern Nigeria as “A stress on the economy, he said: “We can’t get our sales team up there. That’s likely to impact the middle to long term brand equity in the future. Nestle Nigeria’s first-quarter net income fell 3.4 per cent to N5.99 billion naira ($38 million) from a year earlier. Revenue climbed 7 per cent to N30.7 billion. Distribution, administration and other costs rose 5 percent from a year earlier to N17.5 billion because of an increase in marketing spend,” Woolnough said.
Woolnough, who noted that the company has about 140 sales staff in the country, said Nestle, the largest food company in Nigeria, temporarily withdrew about 10 of its sales staff from the three states for a week, the second time in four years it has evacuated employees since the insurgency began.
“People still need to eat food and cook their stews, so fortunately we are less affected in the north than other products would be,” said Woolnough, referring partly to the company’s food seasoning Maggi, which he said was a “very strong brand” in some areas affected by the fighting. Woolnough retired recently after five years as head of the Nigerian unit of Vevey, Switzerland-based Nestle SA (NESN.
He handed over to Dharnesh Gordhon, Nestle’s former sales director in southern Africa.
Nestle has invested 500 million Swiss francs ($524 million) over the past decade in Nigeria, building a second factory in Agbara, Ogun state which opened in 2011. The company also produces Milo chocolate malt and Golden Morn cereal.
Commenting on the impact of the state of insecurity in the North on his company, Keith Richards, Managing Director of Promasidor Nigeria Limited, said: “You know with the borders closed, a lot of formal and informal exports are not happening. People are not coming from Chad, Niger, Cameroon and Mali. So you see a downturn in demand. The North is important to us. A lot of our brands are doing very well here.
“Now consumption is plummeting. In 1st Quarter 2012, our milk sales volume declined by 14.3 per cent, powdered beverage sales by 3.7 per cent and tea by 9.1 per cent. But our seasoning products sales grew by 7.1 per cent. And I know all the businesses in the Fast Moving Consumer Goods FMCG, are affected too, especially with products like beer, soft drinks and tobacco.”
Procter & Gamble Nigeria Limited (P&G) which has an expansive distribution network in the North is affected by the shutting down of stores, stemming from the crisis.
But Manoj Kumar, P&G chief for West Africa, says the company is up to the task. “We have been here for 20 years. All sorts of crisis have come and gone. We are therefore not worried like other companies which have spent a few years operating in the country,” he said.
The Lagos Chamber of Commerce and Industry (LCCI) in its Business Environment Report, said that many firms in the country have lost 30 per cent of their sales because of insecurity in the North, which denied them access to the region. The report, which was prepared in the second quarter of the year, also said manufacturing firms sourcing raw materials from the North are now facing serious challenges, while projects funded by banks in the affected states are at risk.
According to the report, the hospitality industry in the affected states has been paralysed just as many investors, especially small and medium enterprises are relocating to other states.
“Many bank branches have been closed, while the working hours for others have been drastically reduced. Sales representatives of many companies have fled the affected states. Many projects under construction in the North have been abandoned while security budgets have been scaled up by many firms,” said LCCI. The survey also disclosed that expectations from the North which represent 30 per cent of total Nigerian market have shrunk considerably due to goods produced by these manufacturers are no longer sold out to the supposed buyers because of the flinch market volume.
LCCI furthermore noted that the scope of coverage for manufacturers in the northern part of the country is limited as investors could not set up factories in the North out of fear of being terrorized, bombed or shut down due to lack of low sales and that manufacturers who had their companies in the north and those who distributed to the north all had a loss of market share and revenue derivable from the North.
The survey also disclosed that marketing and distribution activities of many companies in the North have been brought to a standstill especially in the manufacturing sector, adding that most investors and workers had to flee the state(s) to avoid being killed by terrorists.
On the effects of insecurity in the banking sector, the survey stated that increased lending to Northern business was impossible by banks as the possibility of paying back the loans were not visible and saw it as a great risk to lend to an investor intending to invest in the north.

Business

FG earned N2.78trn from Company Income Tax in second quarter 2025—NBS

Published

1 week ago

November 28, 2025

Business News Report

National Bureau of Statistics has said that Nigeria’s Company Income Tax rose sharply in the second quarter of 2025, hitting N2.78 trillion.

The figure represents a significant 40.27 per cent increase compared to the N1.98 trillion recorded in the first quarter of the year, reflecting both improved tax compliance and stronger corporate performance across key economic sectors.

The NBS report said that domestic company income tax payments accounted for the bulk of the revenue, contributing N2.31 trillion, while offshore collections stood at N469.36 billion during the period under review.

According to the NBS, the financial and insurance sector recorded the highest quarter-on-quarter growth, rising by an astonishing 772.29 per cent, driven by improved profitability among banks, fintechs, and insurance firms following robust half-year earnings.

This, according to NBS, was followed by wholesale and retail trade, as well as motor vehicle repair activities, which grew by 538.38%.

Activities of households as employers also surged by 526.79%, although their overall contribution to total company income tax remained negligible.

On the flip side, some sectors experienced sharp declines in company income tax remittances.

Activities of extraterritorial organizations and bodies dropped by –45.01%, while education, public administration, defence, and compulsory social security recorded declines of –26.61% and –18.17% respectively.

The contraction in these sectors, particularly education and public administration, highlights persistent structural and fiscal challenges confronting government-funded institutions.

In terms of contribution to total tax revenue, financial and insurance activities led with a dominant 44.13%, reflecting the sector’s continuing expansion and strong capital flows.

Manufacturing followed with 15.57%, bolstered by increased production output and improved supply chain activity.

Mining and quarrying ranked third, contributing 9.18%, supported by higher commodity prices and renewed interest in solid mineral development.

At the bottom of the contribution chart were activities of households as employers, which accounted for just 0.01%, as well as activities of extraterritorial organizations and bodies, and water supply, sewerage, waste management, and remediation services, each contributing 0.04%. Despite economic headwinds, year-on-year company income tax collection still rose by 12.66% when compared to Q2 2024, underscoring moderate but steady improvement in government revenue mobilisation.

Company income tax collection in the same period of 2024 rose by 150.83 per cent N2.47 trillion. In the first three months of the year, company income tax collection stood at N984.61 billion. According to the report, local payments in the period under review amounted to N1.35 trillion, while foreign CIT payments contributed N1.12 trillion. On a quarter-on-quarter basis, the agriculture, forestry, and fishing sectors exhibited the highest growth rate at 474.50%, followed by financial and insurance activities at 429.76%, and manufacturing at 414.15%.

Business

Lagos govt promises MSMEs continued visibility, market access

Published

3 weeks ago

November 16, 2025

Business News Report

Lagos State government has reaffirmed its unwavering commitment to supporting micro, small, and medium enterprises (MSMEs) across the state through visibility, capacity building, and market access. Commissioner for Commerce, Cooperatives, Trade, and Investment, Folashade Ambrose-Medebem, made the pledge on Sunday at the closing ceremony of the 2025 Lagos International Trade Fair (LITF). The 38th edition of the event, organised by the Lagos Chamber of Commerce and Industry (LCCI), had its theme as “Connecting Business, Creating Value.”

Ms Ambrose-Medebem said every entrepreneur, regardless of scale, deserves an enabling environment to thrive and contribute meaningfully to the state’s economic prosperity. She said the state, through strategic investments in infrastructure, institutional reforms, and continuous engagement with the private sector, was building a Lagos that worked for business. The commissioner added that the state would continue to foster innovation, competitiveness, and sustainability.

“As a government, we remain steadfast in our commitment to making Lagos the preferred destination for commerce and enterprise. This fair has once again demonstrated the power of connection: connection between producers and consumers, investors and innovators, the government and the private sector, and local entrepreneurs and global brands. Every handshake, every conversation, every business card exchanged here is a building block toward the future we are creating, a future of prosperity that leaves no one behind,” she said.

The commissioner urged businesses to continue to connect, collaborate, and create value, saying, “In Lagos, we do not just trade goods; we trade ideas, build futures, and transform lives. “Together, let us continue to make Lagos not just a place of commerce, but a symbol of progress, innovation, and endless opportunity.” Gabriel Idahosa, president of LCCI, urged governments at all levels to continue addressing the issues of creating an enabling environment in the country.Mr Idahosa said focus should be on infrastructure, security, and implementing the right policies to address the key drivers of high inflation.

This, he said, was needed to fully harness the vast enterprising resources of domestic and foreign investors for the diversification of our economy and the welfare of our people. He pledged the commitment of the organised private sector to stand solidly behind the state in its quest to actualise its innovative initiatives on all fronts. NAN

Business

Jumia posts $17.7m pre-tax loss in Q3, down 1% in 12 Months

Published

3 weeks ago

November 12, 2025

Business News Report

Jumia Technologies AG posts a $17.7 million loss before income tax in the third quarter of 2025, down 1% year-on-year from $17.8 million in the third quarter of 2024. The road to profitability has remained long as ecommerce continues to face uncertainties, including widening competition with rivals in the same industry. The e-commerce company revenue came in at $45.6 million compared to $36.4 million in the third quarter of 2024, representing a 25% year-over-year surge in the period. The company reported gross merchandise value of $197.2 million compared to $162.9 million in the third quarter of 2024, up 21% year-over-year. Excluding South Africa and Tunisia, physical goods GMV grew 26% year-over-year, Jumia revealed in the unaudited financials.

Jumia said in its report that the GMV growth was driven by supply and strong marketing execution, partially offset by lower corporate sales in Egypt. Excluding corporate sales, GMV in reported currency grew 37% year-over-year. Nigeria’s momentum accelerated, with order growth up 30% and GMV up 43% year-over-year, Jumia said. The e-commerce giant’s operating loss reduced by 13% year-over-year to $17.4 million compared to $20.1 million in the third quarter of 2024. The company’s adjusted earnings before interest tax depreciation and amortisation loss dropped by 17% to $14.0 million compared to $17.0 million in the third quarter of 2024.

Jumia reported a loss before income tax of $17.7 million, a slight reduction of 1% compared to $17.8 million in the third quarter of 2024. Liquidity printed at $82.5 million, a decrease of $15.8 million in the third quarter of 2025, compared to an increase of $71.8 million in the third quarter of 2024, which included the net proceeds from the August 2024 At-the-Market (ATM) offering, and a decrease of $12.4 million in the second quarter of 2025.

Its net cash flow used in operating activities settled at $12.4 million compared to net cash flow used in operating activities of $26.8 million in the third quarter of 2024 and $12.7 million used in the second quarter of 2025. The result includes a positive working capital contribution of $0.4 million.

Jumia reported that customers’ orders grew 34% year-over-year, driven by strong execution, enhanced product assortment, and healthy consumer demand across key categories. It said quarterly active customers ordering physical goods grew by 23% year-over-year, highlighting continued engagement and customer loyalty. As of September 30, 2025, the Company’s liquidity position was $82.5 million, comprised of $81.5 million in cash and cash equivalents and $1.0 million in term deposits and other financial assets, it said in the report Jumia’s liquidity position decreased by $15.8 million in the third quarter of 2025, compared to an increase of $71.8 million in the third quarter of 2024, which included net proceeds from the August 2024 At-the-Market (ATM) offering, and a decrease of $12.4 million in the second quarter of 2025.

Net cash used in operating activities was $12.4 million in the third quarter of 2025, compared to a net cash used of $26.8 million in the third quarter of 2024 and $12.7 million used in the second quarter of 2025. The result includes a positive working capital contribution of $0.4 million in the third quarter of 2025, compared to a negative working capital contribution of $9.1 million in the third quarter of 2024, primarily reflecting improvements in operating performance.

In addition, the Company reported $1.4 million in capital expenditures in the third quarter of 2025, compared to $0.9 million in the third quarter of 2024, primarily reflecting investments in infrastructure and facility enhancements to support business growth. “This quarter marks a significant acceleration in customer demand and order growth, driven by strong execution across our markets and growing consumer trust in the Jumia brand. We believe Jumia has reached an inflection point as our compelling value proposition, and improved operational discipline position us for sustainable, profitable growth.

“We continue to strengthen our cost structure and sharpen operational discipline, reinforcing our path toward profitability. Our focus remains on execution and customer engagement as we build a more efficient business.
“We believe that we are on track to reach breakeven on a Loss before Income tax basis in Q4 2026 and achieve full-year profitability in 2027, positioning Jumia for long-term growth and value creation.”