Sluggish trend in food and accommodation

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Friday, November 27, 2015 09:20AM / FBNQuest Research        

Previously classified as the ‘Hotels and Restaurant’ sector by the National Bureau of Statistics, the food and accommodation sector is one of Nigeria’s vibrant industries.

The industry is almost entirely corporate driven as the country’s holiday tourism segment is still in its infancy.

In Q3 2015, the sector contracted by - 5% y/y compared with a contraction of -9% recorded in the previous quarter. GDP growth (at constant prices) picked up slightly from 2.4% y/y to 2.8% y/y in the same quarter.

On the basis of the forthcoming seasonal festivities, we expect firmer household demand to lead to a pick-up to around 4.0% y/y in Q4.

In view of the lingering macro challenges, there has been a squeeze on purchasing power of consumers across the country.


Similar to Nigeria, Kenya’s hospitality industry has experienced a slowdown due to insurgency.


However, in Mauritius, tourism has seen a boost, and is expected to increase hotel room revenue from US$535m in 2014 to US$639m over the next three years.


Challenges in accessing fx has contributed to the weakness the sector is experiencing. In the first quarter of the year, food products accounted for 17% of sectoral utilisation of fx.


To ease pressure on the import bill, the CBN placed a ban on 41 (imported) items as far as access to the fx window is concerned.



Food products such as rice, poultry and fish were included on the list. This put some strain on fast food operators, particularly the small- to medium-sized indigenous brand.

Industry sources suggest that the fast food industry generates over N1bn annually for the FGN through taxes and levies.

The accommodation and food services sector created 1,190 jobs in Q3 2015 (3% of total formal jobs generated).

The ripple effect expected from the boost in local production as promised by the new administration should assist in expanding this sector.

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