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Local demand makes investments in the FMCG sector attractive

Strong domestic demand for locally produced goods positions the food and beverage sector as an attractive investment target.

This is despite economic problems such as the devaluation of the naira, high inflation rates and rising energy costs that are driving some multinationals out of the market.

Modupe Simon, CFO of Krones West Africa, a packaging company, said now is the best time to invest in Nigeria despite the country’s challenging situation such as the negative impact of NGN currency devaluation, high inflation and rising energy costs, resulting in several international companies recorded billions of dollars in losses and withdrew from operations.

“If we consider the overall performance of the Nigerian markets, it is actually the right time to increase investment in the country. Now, more than ever, is the right time. I say this because mainstream consumers want to buy local products that are of good quality but cheaper than imported products,” she said.

She said this on Tuesday at the Krones Investment Summit in Lagos. Nigeria is currently grappling with a high inflation rate of 33.2 percent in March, the increase in petrol prices and foreign exchange valuation have caused industry giants such as Procter and Gamble, GSK, Pernod Ricard and Unilever to leave the country.

Simon said there are many investment opportunities in the food and beverage industry value chains.

“From investing in the development of high-quality and sustainable supply sources that will provide raw materials, semi-processed materials and packaging materials for food and beverage producers; to invest in recycling opportunities. “The investment opportunities in the food and beverage industry are endless,” she said.

Simon said food and beverage manufacturers can engage in backward integration with their key suppliers to increase investment in these areas and realize the benefits of these opportunities.

They want to source raw materials or semi-processed materials here in Nigeria for investment. And if you’re talking about the food and beverage industry, we need to have a value chain and those opportunities that come from investing in the development of high-quality and sustainable supply sources that will provide raw materials, semi-processed materials and packaging materials for food and beverage producers.

She said the goal of the event is to provide a forum where we can exchange ideas with our current and potential customers; about the various financing options available to turn your investment ideas into reality. With Krones as your business partner, we are here to act as a bridge that connects your investment proposals with tailored financing package offers.

Ankit Doshi, deputy general representative of LBBW Universal Bank in the Middle East and Africa, said it offers structuring of customized and long-term financing solutions for periods of up to 10 years and beyond for amounts ranging from $5 million to $400 million.

He said that for exporters, the benefits of such financing include improving liquidity, relieving the balance sheet, minimizing economic risks, outsourcing receivables management and increasing competitiveness by offering attractive financing – an alternative to local financing.

Doshi said the risks of offering service businesses in Africa are cash flow and currency risks.

He said to reduce risk, they lend to local banks, then lend to businesses in Naira.