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High interest rate, major killer of Nigeria retail sector

The President/Chairman of Council, Chartered Institute of Bankers of Nigeria (CIBN) Prof. Segun Ajibola, while speaking on the topic ”Enhancing Retail: Bank Synergy for Greater Value Maximisation”, identified high interest rate as the major killer of the Nigeria retail sector.

Ajibola said that the current interest rate regime in the country is not in supportive of the growth of the retail sector adding that banks now lend at the rate between 26 to 28 percent. He urged the federal government to look into this issue and find a lasting solution that will benefit both the retail sector and the banks.

According to him, the concept of retailing started through street hacker, saying that street trading promotes retailing in Nigeria. Nigeria, according to him is now transiting from traditional retail setting to a mega malls with South Africa Shoprite setting the pace.

Ajibola said Africa continues to establish itself as the new retail frontier with a population of over 1.03 billion (15 percent of global population ), retail spending of almost $0.9 trillion (N144trillion) in 2013 and $1.8trillion economy which is expected to grow by 5.3 percent in 2014. He further noted that that Africa is gradually becoming a retail force to reckon with in global retailing.

He identified poor infrastructure base, forex instability, legal system and inadequate security as the other factors militating against retail sector Nigeria. “For the efficient and functioning of the retail market in Nigeria, stakeholders support is essential. Banking sector being the lifeblood of any economy has a central role to play. Public and private partnership arrangement in infrastructural development is needed,” he said.

Ajibola noted that there is a need for funding support for Nigerian retailers, particularly made in Nigeria product. According to him, “the retail market holds great potentials to address the high employment rate in the country. These potentials would only be realised if all stakeholders, public and private provide the right and supportive environment for this sector. For instance, a win-win situation is achievable between the banking industry and the retail sector through the development of tailor-made products and serviceable banking solutions for the retail sector. Regular knowledge sharing platforms should be created between the banking industry and the retail sector for stakeholders to understand each party with a view to jointly work out modalities for addressing them.” He therefore called on the banking sector to do more in supporting retail as a key partner in progress.

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