In a bid to cope with the devastating effects of Covid-19, inflation, devaluation, rising operational costs and a tough business environment, an increasing number of Nigerian businesses are making the decision to carry out upward reviews of the prices of their products and services.
Latest in a long line of companies to adjust prices is MultiChoice Nigeria which informed customers on August 18, 2020 of the implementation of subscription price adjustments on some of its DStv and GOtv packages. For DStv, the adjustments which come into effect on September 1, 2020 will only affect the Premium, Compact Plus and Compact packages, changing the prices by about 13% . Lower priced packages Confam, Yanga and Padi will retain their normal prices.
In a message sent to customers, Multichoice said: “We periodically review our pricing, taking into consideration factors such as inflation and operational costs. We acknowledge that the people of Nigeria are living under increased economic pressure and we have made efforts to freeze the subscription prices in the last year, barring any extreme factors such as devaluation of currency and changes to VAT mandated by the government.
“We remain committed to delivering the best video entertainment experience, telling the best local and international stories, giving access to nail-biting sporting action and up-to-the-minute news, as well as leading international series, movies, documentaries and children’s entertainment,” the company added.
This comes on the heels of similar price adjustments announced by Startimes, the nation’s second biggest Pay TV operator, which also raised prices of its subscription plans by an average of 22% effective August 1, 2020.
In explaining their recent price increase, the Startime’s Brand and Marketing Manager, Viki Liu said the price increase is due to increased value-added tax (VAT) from 5% to 7.5% as well as the foreign exchange rate which has impacted its cost of operation.
“Our business is not exempted from the effect of the naira depreciation affecting all businesses in the country. All of our foreign content is bought in dollars and to continually serve our subscribers the best content, the subscription price has to be reviewed upwards,” Liu added.
These actions by Pay TV operators follow a trend that is being observed across various sectors of the economy, where consumers are observing increases in the prices of commodities, as businesses struggle to cope with tough economic conditions. Also in July 2020, the Lagos Bus Service Limited, operator of Marcopolo high-capacity buses got the approval of the Lagos State Government to effect a 46% increase on transport fares.
In June, The International Monetary Fund (IMF) in its World Economic Outlook announced that the Nigerian economy would witness a deeper contraction of 5.4% and not the 3.4% it projected in April 2020. Gita Gopinath, IMF Chief Economist said, “Our projection for Sub-Saharan Africa overall is a negative 3.2% in 2020 with a recovery in 2021 of 3.4%.”
According to the National Bureau of Statistics (NBS), the Consumer Price Index (CPI), which measures inflation increased to 12.82 per cent (year-on-year) in July compared to 12.56 per cent in the preceding month, representing the highest rate recorded in 27 months since March 2018 when headline inflation was 13.34%. The report also shows that Nigeria’s inflation has consistently increased for 11-months, rising from 11.02% in August 2019 to 12.82% in July 2020.
The composite food index rose by 15.48% in July 2020 compared to 15.18% in June 2020. This represents 0.34% increase compared to June figures. Also, on a month-on-month basis, the food sub-index increased by 1.52% in July 2020, up by 0.04% points from 1.48% recorded in June 2020.
The rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, oils and fats, and fish.