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FY'24 SSA Consumer Goods Outlook - Macro headwinds limit growth

The production of household brand products in the Sub-Saharan African (SSA) region faces a series of challenges within the fast-moving consumer goods (FMCG) sector. Despite encountering a challenging macroeconomic landscape, notable accomplishments were witnessed in the FMCG industry across SSA throughout 2023. The sector remains a cornerstone in propelling manufacturing and economic development, significantly contributing to job creation throughout the SSA region.

 

Recognizing the escalating macroeconomic challenges, the FMCG sector stands at a pivotal juncture as it approaches 2024. Persistent challenges from 2023, such as inflation and energy supply constraints, are anticipated to continue posing threats to industry performance. However, discernible trends and strategic opportunities offer glimpses of resilience and potential revitalization. The sector, adopting a defensive stance, aims to mitigate the impact of these challenges while strategically leveraging opportunities for sustained, albeit modest growth.

 

In summary, we anticipate inflation-induced price increments to drive marginal growth in most of the firms under our coverage. While sustained inflationary pressures across cost lines are expected, improved bottom-line results in 2024 are projected due to an anticipated deceleration in the growth pace of cost line items. Nonetheless, specific outcomes will hinge on the balance between essential and non-essential product lines, variability in operating expenses, and exposure to foreign exchange fluctuations and debt obligations. It is essential to note the potential industry-wide downside, particularly if inflation accelerates, global and regional interest rate hikes persist, and local currencies undergo heightened volatility.