Militant insurgencies across West Africa are weighing on Nestle SA (NESN)’s business in the region, adding to the pressures of currency depreciation, high inflation and the Ebola outbreak, the food maker’s regional head said.
Islamist rebellions in some countries are undermining consumer confidence, Nandu Nandkishore, Nestle’s 56-year-old head of Asia, Africa and Oceania, said in a Nov. 28 interview at the Swiss company’s factory in Agbara, southwest Nigeria. 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.
“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.
Conditions from Africa to Asia are deteriorating for Nestle, which has forecast a challenging fourth quarter after nine-month sales missed estimates. The Vevey, Switzerland-based company is struggling to lift prices in Europe, and wrestling a decline in its frozen-food business in North America.
In West Africa, currency weakness and high inflation will probably persist into 2015, Nandkishore said. The currencies of Nigeria and Ghana, the two largest economies in the region, are Africa’s worst performers this year against the dollar, while Ghana’s inflation rate accelerated to 16.9 percent in October.
“The inflation is because of currency devaluation and particularly when you have oil prices dropping,” he said.
To contact the reporter on this story: Chris Kay in Agbara at firstname.lastname@example.org