Retailer Truworths Throws in Towel on Biggest African Economy

Buhari's Defense of Naira Chokes Imports, Spurs Black Market

The promise of Africa’s biggest economy has turned to peril.

Companies drawn to Nigeria by the prospect of a population bigger than Germany and Turkey’s combined are retreating; those staying have publicly criticized the president, a military strongman in the 1980s who came back to power via an election last year; and foreign investors are pulling their money out.

The corporate tribulations that began with a slide in oil prices and accelerated after the imposition of capital controls are also entangled in a global emerging-market slump.

In propping up the naira in a futile bid to contain inflation, officials have jacked up pressure on an economy running out of cash, deepening a black market in currency trading and causing shortages of imported goods from fuel to milk. U.S. officials said they will press their Nigerian counterparts to change tack during talks in Washington this week.

Frustration too.

After four years trying to gain traction, Truworths International Ltd., a South African clothing retailer, last month gave up. It closed its last two outlets in Nigeria, in the southeastern cities of Enugu and Warri.

Willing to tolerate dilapidated infrastructure, complicated red tape and expensive rent, the company said the import and foreign-exchange restrictions caused it to throw in the towel.

‘Impossible’

Nigeria’s appeal has faded as the price of oil, source of 90 percent of export earnings, has crashed. Growth slumped to 2.8 percent last year, the slowest since 1999, and will decelerate to 2 percent in 2016, according to Morgan Stanley.

In dollar terms, the economy in 2019 will still be 17 percent smaller than its 2014 peak of $542 billion. Only two years ago, McKinsey & Co. said Nigeria had the potential to grow 7.1 percent annually until 2030 and build a $1.6 trillion economy.

As Nigeria lags, other countries in sub-Saharan Africa have gotten more appealing. Last month, Nigeria fell from first to fourth, behind Ivory Coast, Kenya and Tanzania, in a ranking of business prospects by the research unit of Nielsen Holdings Plc.

Portfolio investors including Aberdeen Asset Management Plc and Ashmore Group Plc, which together oversee about $450 billion of assets, have retreated from Nigerian markets. The main stock index is down 10 percent this year, while the MSCI Frontier Markets Index has lost 2.8 percent.

Nigeria’s local-currency bonds are the only ones among 31 emerging markets tracked by Bloomberg to have generated aloss this year. Foreign direct investment this year is set to be the lowest since the 2008-09 global financial crisis, according to data from the central bank.

For now, President Muhammadu Buhari and Central Bank Governor Godwin Emefiele say they aren’t budging from their strong-naira policy. While both acknowledge that businesses are struggling to source enough dollars, Buhari says that a devaluation and easing of capital controls would be akin to “murdering” the naira and send prices up.

That’s already happening as manufacturers struggle to buy foreign inputs, with

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No economic policy on ground

Africa O Africa. everyone have to suffer till 2019, but guess what, 2019 zombies will still shout Sai baba till 2023. then the suffering continue.

Hmmmm.

This blind faith in an individual that these posters above me are displaying is the bane of Nigerian society. They lack the ability to reason on their own. Buhari that doesn't know there's no "West Germany" anymore (25 years late) has already given enough indication he has no clue how the contemporary world functions. Nigeria will NEVER make progress because we have an honest president or that every thief of Nigerian money is sent to prison. The leader must also know how to create new wealth. Buhari has only shown he can spend prudently. It's not enough. Nigeria does not and can not make anything. The model we've adopted is for presidents to junket all over the world asking other countries to come and "invest". So if the ones here are even pulling out, how come some people will then say we don't need them and they can go. Buhari wants $1=N1. It reflects in his utterances. The only effect of his interference and obstinacy in monetary policy has been round-tripping by a few privileged individuals(some even accuse his wife, though I doubt). The actual effect of inflation is alive and well and I'm crying about it everyday. Everybody besides privileged people buy foreign exchange at black market rates, including people like me who actually make payments from the banking system using my debit card when I do online shopping for my business. Jonathan might have mismanaged Nigeria, but if a better person had succeeded him Nigeria would be in a less-disastrous situation than she finds herself today. Everything has ground to a halt!

The wailing ekpas should just go with their money and investment ..


IPOB Yoots

Buhari's archaic policies are killing us but zombies will rather do this...

Let them go useless investors...they can go to Ethiopia to milk them.
Nonsense

"After four years trying to gain traction, Truworths International Ltd., a South African clothing retailer, last month gave up. It closed its last two outlets in Nigeria, in the southeastern cities of Enugu and Warri. Willing to tolerate dilapidated infrastructure, complicated red tape and expensive rent, the company said the import and foreign-exchange restrictions caused it to throw in the towel".

I would address these points one by one by stating the following:

1. Willing to tolerate dilapidated infrastructure

This infrastructure was there before they entered the market.

2. Complicated red tape

Which red-tape? Import through sea by container and clear through customs and pay duties. Where is the red-tape coming from?

3. Expensive rent

Who sent them to the malls? Cant they operate on high-streets with low rentals and low energy costs? They entered a mall built by their brothers from SA and they cant negotiate properly. Useless point.

4. Import and foreign-exchange

How much is trouser and shirt from China? Nonsense business model.

Let them go back to South Africa and reinvest ...they need them more there. One trouser at their closing stock sell-off in Ikeja Mall is N12,000.

Thunder fire your type of investment.

Listening to Prince Chijioke Mbanefo - A Chake Gom ( amazing song from the East)

Where is lalasticlala sef?

Jonathan never mismanaged Nigeria it is APC propaganda to deceive people the highest growth Nigeria ever had was in 2014. corrupt buhari cannot fidht corruption because his conscience will always remind him of his past petroleum minister ptf chairman aside the fact he has nothing to offer

This world is ruled by capitalists.

Wants to succeed? Learn the game and play with discretion.

It's not a matter of challenge but wisdom.

What can I say

Almost 200 million people.

I am am sure over 10 million Nigetians are intellectually sound. Some run businesses others are seasoned technocrats and administrators

We ignored everything right and opted for a 75 year old man who cannot start a computer to lead us in this jet age. Why are we surprised.

This man is totally clueless about national or global economy.

Since he was overthrown he never ventured into any fruitfulness business or went to school to improve self. He came out and some people repackaged him and organised a photo shoot with him wearing suit.

They placed a baby close to him to give him high five. The packaging no get part 2. He is seated there as commander in chief but totally clueless.

What is most worrisome is that he knows not and will not agree that he knows not and seek help from experts.
How do you help such people.

The president of Brasil Rousef called off her invitation to the Nuclear summit in Washington. .In her words, my country requires my attention now more than ever before.

We don't have food to eat, no fuel but our president has gone to Nuclear summit. What exactly are we Nuclearin?

We done enter