Despite the downturn in the economy and the foreign exchange crisis that have crippled companies in most sector of the Nigerian economy, the food and accommodation sectors have again stood out as one of the country’s vibrant industries.
Recent data on job generation statistics from the National Bureau of Statistics (NBS) showed that accommodation and food created 1,190 jobs in the third quarter of 2015 (2.9 per cent of total formal jobs).
Last year the sector grew by 2.3 per cent year-on-year compared with 18 per cent in 2014.
Analysts said the slowdown in growth reflects the current macro challenges which have negatively impacted consumer spending.
Industry sources suggest that the food and accommodation sector accounts for about 5.0 per cent of the country’s labour force.
The inflation data for March this year showed that prices in the Restaurant and Hotel sector rose by 8.7 per cent compared with 9.0 per cent recorded in February this year. This component has a 1.2 per cent weighting in the index.
Also, a recent survey carried out by an indigenous credit rating and risk management company disclosed that close to 80 per cent of reservations are made by corporates.
Analysts at FBN Quest believe the fact that corporates are less sensitive to price movements than retail should provide some comfort for hotels.
According to the analysts, “Foreign exchange sourcing issues have contributed to the sector’s sluggish growth. The Central Bank of Nigeria (CBN) ban on 41 (imported) items from accessing the foreign exchange window is expected to ease pressure on Nigeria’s import bill over time.
“In the fourth quarter of 2015, food products accounted for 11 per cent of sectoral utilisation of foreign exchange compared with 13 per cent recorded in the previous quarter. The challenges faced with importing food inputs should drive restauranteurs to source inputs locally which could boost growth in the agriculture sector,” they stated.
THISDAY had recently reported that the persistent macro challenges have negatively affected the country’s real estate sector, resulting in a slowdown in activities.
Following the shocking inflation data for March released by the NBS, the Monetary Policy Committee (MPC) of the CBN resumed tightening by hiking its monetary policy rate.
The MPC had in its meeting in March, raised the Monetary Policy Rate (MPR) otherwise known as the interest rate, to 12 per cent from 11 per cent.
It had also increased bank’s Cash Reserve Ratio (CRR) to 22.5 per cent from 20 per cent, in a move aimed at tightening liquidity, which the central bank blamed for the current pressure in the foreign exchange market with a strong pass-through to consumer prices. Inflation in the country rose to 11.4 per cent last month, effectively exceeding the CBN’s inflationary ceiling by 240 basis points.
The MPC had also kept liquidity ratio unchanged at 30 per cent, and further resolved to narrow the asymmetric corridor around the MPR from +200 and -700 basis points to +200 and -500 basis points respectively.