Why Is Nestle Getting Jittery Over Its West African Business?

Why Is Nestle Getting Jittery Over Its West African Business?

Nestle head of Asia and Africa, Nandu Nandkishore, told Bloomberg in an interview that the firm operation is west Africa was being weighed by currency volatility and rising inflation in its key markets in the region.

Africa’s largest economy, Nigeria, has come under heavy militant attacks in the northern part of the country, while the recent collapse in global crude prices has hurt the nation’s currency and foreign exchange reserves.

The second largest economy in the region, Ghana, has also been grappling with a high inflation and a rapidly weakening currency for most of this year.

The currencies of Nigeria and Ghana, the two largest economies in the region, have both weakened more than 10 percent this year against the dollar, while Ghana’s inflation rate accelerated to 16.9 percent in October.

Nandkishore forecast that the currency weakness and high inflation environment will persist into next year.

He said Islamist rebellions in Nigeria, Cameroon and some other countries in the region was undermining consumer confidence and affecting supply routes.

Militants linked to al-Qaeda have stepped up attacks against United Nations’ peacekeepers and French soldiers in northern Mali this year, while Nigeria’s government is struggling to contain a rebellion by Boko Haram, which has killed more than 13,000 since 2009, Bloomberg reported.

“The climate of fear immediately affects trade, which then slows down or tends to de-stock significantly and then affects consumers going out to shop,” Nandkishore said.

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Nestle Nigeria shares listed on the Nigerian Stock Exchange in Lagos have dropped by a third this year. Its nine-month profit dipped 1.4 percent to 16.9 billion naira ($92 million), despite revenue growing 7.6 percent to 102.7 billion naira.

Nestle has eight factories in West and Central Africa.