By Cynthia Alo
Foremost economists and analysts including, former Director-General, Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf; founder, B. Adedipe Associates Limited, Dr. Biodun Adedipe, and Dr ‘Tunde Popoola, have outlined survival and growth strategies for businesses and organisations under the current harsh economic environment that has seen some companies close shop.
According to them the basic focus for businesses should include protection of their cash flow, investing in existing customers and continued marketing.
However, they called on economic policy executives to recreate the operating environment in such a way as to promote business confidence.
They were speaking at a seminar themed ‘Navigating Nigeria’s Macroeconomic Environment for Business Growth’ organized by the Savanah Business School and moderated by Head, Corporate Communications, TGI Group, Rafiat Gawat.
In his presentation, Popoola explained that a business cannot control the macro-economic environment but operates within it.
He decried the prevailing high inflation rate, inappropriate foreign exchange policy, high foreign and domestic debts that are hampering the growth of businesses.
He urged the economic policy drivers to pursue sound macroeconomic policies because the “extent to which policymakers can establish a track record of policy implementation will influence private sector confidence, which will, in turn, impact upon investment, economic growth, and individual prosperity.”
Adedipe, on his part, stressed the importance of entrepreneurs doing the right things and going digital. “There is no sector you operate in the Nigerian economy that there is no space for you to thrive if you do the right things at the right place and the right time for the right person, with most things now digital.”
He also decried the inconsistent fiscal and monetary policies, expressing worry over the country’s shrinking external reserves.
On what businesses can do to survive these turbulent times, Dr. Adedipe advised corporate leaders to always focus on people, strategy, execution, and cash.
Identifying sources of shocks to businesses, Dr. Muda Yusuf listed oil price volatility, exchange rate volatility, inflation and price volatility, regulatory shocks, policy shocks, tax policy, insecurity, technology, innovation, and the COVID-19 pandemic.
He added that the FOREX policy had caused severe shocks to businesses as those “with import exposure are under extreme pressure because of currency depreciation. Costs have gone up; demand remains weak. Margins are being rapidly eroded. Many businesses have lost foreign credit lines following defaults in foreign payment obligations, resulting from forex liquidity problems.
Businesses with offshore credit facilities faced a crisis because of challenges in servicing the facilities, especially where the investment is not generating. Contracts on projects that have high foreign exchange components are facing challenges as costs have gone up dramatically. This is a bigger issue if there are no provisions for variations in the contract.
The level of receivables has increased as many firms have frozen payments to contractors.”
Highlighting how businesses can navigate the constraints and build resilience, Dr. Yusuf said options include having “a flexible management approach to keep tight control on cost, review non-revenue generating areas of business, supply chain strategy, innovation and creativity, and risk management matrix.”
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