Abuja, Nigeria – In February 2019, Eat’n’Go, the Nigerian franchisee of popular pizza maker Domino’s, introduced a miniature version of the pizza boxes the market was familiar with, for 550 naira ($1.50).
Smaller in size and far cheaper than the medium-sized pizza which costs N3,900 ($9), this new version was designed to be affordable for everyone.
It was a necessary decision given the economic instability at the time, CEO Patrick Michael told Al Jazeera.
“The Nigerian market is diverse, and the potential for profit remains high,” he said. “However, we can’t overlook the economic instability [which] has, in some way, affected purchasing power. At times like this, it becomes pertinent for industry players like ourselves to cushion the effect of this situation on customers.”
Two years earlier, StarTimes, a Chinese satellite TV provider with a strong presence in Nigeria, had added daily and weekly subscriptions – with fewer channels – at N60 (15 cents) and N300 (72 cents) respectively, to its existing monthly option.
Since 2015, Nigeria, Africa’s largest economy, has gone into recession twice and in that time, the naira has plummeted against the dollar, losing 70 percent of its value. That put the economy in a chokehold. But things could become even worse in the coming days.
According to a recent World Bank report [PDF], by 2022, the number of poor people in the country is projected to reach 95.1 million – more than 40 percent of the population. And even as the adverse economic effects of the COVID-19 pandemic linger, commodity prices are on the rise due to the effect of Russia’s invasion of Ukraine.
A 2022 report by the National Bureau of Statistics (NBS), shows that Nigeria’s annual inflation rate accelerated for the third straight month to 16.82% in April 2022, from 15.92% in March. It was the steepest rise in inflation since August 2021 and follows the trend of a global surge in commodity prices.
For Nigerians, the end result is a huge depletion of their purchasing power and ultimately, less money in their accounts.
Indeed, while there were 133.5 million active bank accounts in the country as of December 2021, 99% of those accounts had less than 500,000 naira ($1,200), according to the Nigeria Deposit Insurance Corporation.
A response to market reality
To cope with this reality, businesses like Eat’n’Go are turning to sachet marketing as a strategy to stay in business.
Scholars Rodolfo P. Ang and Joseph A. Sy-Changco of Ateneo de Manila University in The Philippines, define sachet marketing as “the effort to increase market penetration for one’s product by making it available in smaller, more affordable packs…a tool for penetrating the market at the bottom of the economic pyramid.”
Colloquially referred to as ‘sachetisation’, it has been around in Nigeria for decades and is prevalent in other emerging markets like The Phillippines and India.
Fast-moving consumer goods businesses (FMCGs) adopted it for items like “‘pure water”, powdered milk and instant noodle packs. This, Shakirudeen Taiwo, a Nigerian economist, told Al Jazeera, allowed the companies to cater to up to 80% of the market.
But in recent years, brands have ramped up the strategy, as a new economic reality set in. These products are now sold in even smaller sachets or small nylon bags.
“As at last count, we have over 75% of households in Nigeria living below $3-5 per day, which is huge,” Taiwo said. “So, companies start modelling their products to fit this income bracket of people since they make up the bulk of the population.”
Doing this helps businesses reach more customers and maximise profits as they can sell more products at a cumulatively higher price. But more importantly for buyers, it cushions the effects of inflation even if they have to sacrifice quantity and in some cases, quality, too.
How sachet marketing plays out in Nigeria’s tech industry
The trend is also playing out in Nigeria’s tech industry and influencing how more startups are thinking about product pricing.
The industry may still be in its infancy but is highly regarded around the world. In 2021, approximately 60 percent ($1.7bn) of the total amount ($2.9bn) raised by Africa-based tech startups went to Nigeria alone.
But even giants bow to market forces.
Many technology firms appeal to younger Nigerians because they ease bureaucratic and expensive processes of investing, saving, buying insurance, and accessing loans by introducing lower fees and cheaper payment plans, among other things.
Yanmo Omorogbe, co-founder and COO of investment platform Bamboo, says companies like hers must consider market realities to reach product-market-fit. Leveraging its partnership with a US broker-dealer, Bamboo allows Nigerians to participate in the US stock market with as little as $10.
“Here [in Nigeria], the majority of people are working hard to escape the trap of the poverty line,” Omorogbe told Al Jazeera. “A small middle class is being pulled in different directions, and then you have an equally small segment of high-net-worth individuals.
“Your strategies will need to account for the differences, but the core product should be able to accommodate everyone,” she said. “For us, it meant adding features like fractional shares that allow people to invest with what they have and also lowering the minimums so you can get more people in.”
Eke Urum, Lagos-based investor and financial analyst agrees, saying the strategy is “a response to a bad reality” as “demand backed by purchasing power is getting smaller.”
Rise, the fintech startup he runs, allows Nigerians to make dollar investments into real estate and the stock market in the United States, with as little as $1.
In Nigeria where insurance penetration is less than 2%, Reliance Health, a startup, created a system where people do not have to be formally employed to access health insurance. It introduced plans from 3,500 naira ($7) to 148,500 naira ($297) that allow users to pay monthly, quarterly, or annually.
A solution or a problem?
The Nigerian government seemed to understand this, too, when it launched a micro-pension scheme in 2019.
It expanded the country’s contributory pension scheme to allow individuals in the informal and semi-formal industries to create accounts without a plan sponsor – typically their employer – and save small amounts over a long period.
While the scheme has not fully caught on yet for various reasons, it illustrates the state of the market and how institutions operating here are adapting.
But experts and industry stakeholders say satchetisation is as much of an innovative solution as it is evidence of a large-scale problem.
“[It] can be a form of democratisation where companies desire to bring products to people who otherwise cannot afford them,” said Bamboo’s Omorogbe. “But a second perspective is that rapidly growing poverty, where most people in the economy can’t afford [a] product or service and are increasingly moving farther away from affording them.”
As inflation rises while purchasing power inversely declines, more companies in various sectors of the economy could turn to sachetisation, even service providers that previously served only the upper and middle class.
“A trip to the mall will show you that the concept of sachetisation is gaining more traction,” Taiwo said. “We might also start seeing it in terms of services. Companies offering integrated services might start offering specific services at lower prices [to] ensure affordability and business survival.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
