Africa’s Richest, Dangote, Nigeria’s Most Capitalised Brand, NB Plc and Top Brands in Early Loses
Alhaji Aliko Dangote, President, Dangote Group and Africa’s richest man
The volume of equities traded on the floor of the Nigeria stock exchange market in the first week of the year reports more negatives in the first five days of trading resulting in a negative 13.03% year to date (YTD) while all share index (ALSI) decline from 34,657.15 to 30,145.02.
Top ten Nigerian brands ranging from banking, fast moving consumer goods, breweries, conglomerates, food and beverages, healthcare and others are affected. Brands like Zenith, FirstBank Holdings, Dangote Cement, Nigerian Breweries, UAC Nigeria, Flour Mills, Unilever, GlaxoSmithKline, Access bank and Guinness all suffer different degrees of the bearish weather.
MarketingEdge investigations reveal that the losses are generally not due to the fundamentals of those big brands but due to general feelings of insecurity arising from the 2015 general elections, central bank of Nigeria mop-up of cash in the economy to control perennial inflation during election period, activities of insurgency in the north west region of the country and the grandstanding and threats of regional political warlords.
Nigerian Breweries PLC, with its wide variety of products, remains the most capitalised stock on the NSE
“Although, the business environment have always had the challenges of infrastructure, energy and the perennial macroeconomic challenges, this particular one is due to investors selling and not buying due to general political environment”, says the managing director of an Ikoyi, Lagos, Nigeria based investment company.
Dr. Bolakale Ishola-Ahmed, an international marketing consultant based in East Asia, agreed with the top broker and added by saying, “There is insurgency everywhere, in Europe, Middle-East and so on, but the authorities do in those places do not allow those skirmishes to halt the running the economy.
“The worrisome aspect is the market shrinking going on, you know the north-east of Nigeria through Maiduguri serves Chad, Niger and Cameroun with various fast moving consumer goods, those routes are shut right now and so there is a shrink. Kano serves even some parts of Middle East, several of the operatives of that market value chain are holding on and so on and so forth. This has been on since October 2014 and the cumulative effect is on”, Ishola-Ahmed asserts.
The cumulative effect on markets and marketing may not be manifesting yet, but eagle eyed technocrats are already looking at the short term and medium term implications and have begun to make provisions or rather precautions for them. The implication includes cost cutting and cost counting.
In an effort to cut costs and improve the bottom line, marketers are careful in procurement of production inputs like new equipment, they restrict research and development activities and some have stopped or scaled down new product rollouts (a factor in the growth of revenue and market share.
Expenditures for marketing and advertising may also be reduced. These cost-cutting efforts will also impact other businesses, both big and small, which provide the goods and services used by the big manufacturer.
Dividends may also slump now or in the immediate future, or disappear entirely. Shareholders may become upset. They and the marketers advertising agency may be dumped and a new agency hired. The internal advertising and marketing departments may also face a personnel shakeup.
Interacting with colleagues in the capital market says, “When the manufacturer’s stock falls and the dividends decline or stop, institutional investors who hold that stock may sell and reinvest the proceeds into better-performing stocks. This will further depress the company’s stock price”.
“The irony of our situation is the ‘dump and hold’ phenomena in Nigeria. People are not selling one and buy another to take position. People are scared” says Akanghan Jude a stock trader based in Ikeja, Lagos.
An online stock writer says that businesses may cut employees, and more work will have to be done by fewer people. Productivity per employee may increase, but morale will suffer as hours become longer, work becomes harder, wage increases are stopped and fear of further layoffs persists.
Ultimately, the stock market may utterly become volatile and swings up and down wildly every day. One of the most common mistakes some investors make is freaking out when some of the first few stocks they’ve purchased suddenly fall in price one day for no reason.
There are no drastic changes or horrible business news concerning these top brand marketers has no bad news. Instead, they have amazing sales reports and billions of dollars in the bank, although many shareholders are worried, and some have lost billions of Naira in fortunes within the first one week under review.
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