Declining GDP: Recession looms amid poor consumer purchasing power, say IMC Experts
Stakeholders in the Integrated Marketing Communications, IMC, have expressed fear that Nigeria may plunge into a second recession in 2019 which would further affect consumer purchasing power in the country.
This is coming as a result of the recent decline to 2.01% growth in the country’s Gross Domestic Product, GDP.
Expressing fears over the possibility of a second recession in the country, the Managing Director, BrandEye Media, Femi Adelusi, attributed his fears to the information from the Central Bank of Nigeria. He noted that the situation was so because Nigeria’s population continues to grow ahead of the GDP that keeps dropping on constant basis.
“There is a fear based on the information we are getting from CBN that we might get into another recession. We are hope it won’t happen, but currently, we have been growing at about 2% on GDP and that is not good at all. The continual drop should be an area of concern and the rate of population growth is compounding the development.”
“As long as you have a population growth that is ahead of the GDP, it is almost inevitable and the cost of borrowing and a lot of things are high. More so, the government investment is low; Foreign Direct Investment is reducing while our debt profile is rising. So, all of these factors are impacting negatively on the state of the economy and if we are not careful, unfortunately, we might get into another recession,” Mr. Adelusi warned.
Also speaking, the Managing Director, X3M Ideas, Steve Babaeko, said that if Nigeria plunges into a second recession, the country would be in serious economic crisis.
Mr. Babaeko said: “If that happens again, you know that we would be in serious trouble. I mean it because even when we are not in recession, it is just as if we are in a recession. So going back to recession now will be one pain too much for Nigerians to bear.”
On her part, the Founder/Chief Executive Officer, CEO, Neukleos Bukola Akingbade, stressed that the economy was not stable at the moment, noting that consumers are trading down and it was affecting businesses in the country.
According to Mrs. Akingbade such scenario has made most manufacturing companies to introduce new Stock Keeping Unit, SKUs in smaller sachets. Asked how the drop in GDP would affect the consumers, she had this to say:
”Consumer purchasing power does not come from the moon; it is about what is in the environment. What do you have to recreate wealth? How much do you have extra at the moment that the economy is pretty tight? A lot of people are trading down, for example, if I have N10 000 I will not spend it the same way I spent it two years ago.”
“I will say instead of buying this expensive toilet roll, let me buy a cheaper one. I will still do what I want to do by spending less. A lot of the FMCG brands have gotten new SKUs, because the tough times are real. People used to buy smaller portions before they buy monthly supply. But now they buy per time or per week and those are the things that we have been seeing and it is going to continue.”
Corroborating Akingbade’s assertion, the Group Managing Director, Verdant Zeal Group, Tunji Olugbodi, hinted that the drop in the GDP would affect not just the consumer purchasing power but also the consumer confidence and interest.
He, however, called on the government to diversify its interest to non-oil sectors, stressing that the creative industry could generate a lot of revenue to the government if they focus on it.
“The drop in GDP will definitely affect the consumer purchasing power. Not just consumer purchasing power but also consumer confidence and interest and once that happens, we need to be very careful. That is why we are saying that number one, let’s move totally away from oil. Let’s start looking out for those things that make us who we are, so we use what we have to get what we want. Obviously, we are very good when it comes to creative stuffs; we are very good when it comes to looking at our God-given endorsement in the creative arts would be able to entertain people.”
“Contrary to what you will find is that the institutions of government are actually been used to bring down that same interest, that same industry so when you see somebody with a dreadlock, you think the person is irresponsible. I think it is a very myopic attitude. So, when you have a government that is not tolerant, that does not even understand the dynamics of the creative industry, then things like GDP will be a child’s play,” Mr. Olugbodi opined.
Meanwhile, the Lead Strategist and Chairman of TPT International Limited, Adetokunbo Modupe, held that the fall or rise of GDP does not have anything to do with the consumers.
“Look at the United States of America, its GDP is in deficit but look at the average lifestyle of an American citizen, is it not better than the lifestyles of countries who have better GDP?”
“I think we should look at the economy from the bottom of the pyramid rather than looking at all these figures that won’t take us anywhere,” he asserted.
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