Recent World Bank report has shown that Nigeria’s economy has plunged into recession for the second time in five years.
From 6.0 percent projected, the report shows Nigeria recording a second consecutive negative growth, contracting by 3.62% in the third quarter of 2020.
This week’s edition of “My Business” looks at the effects of the recession on businesses and how the country can work its way out of this terrible decline in economic activities.
Our senior correspondent, Lilian Peters, had a chat with some financial experts and business men in Port Harcourt, who bared their minds on the current situation. Read on.
A chartered accountant and the Managing Consultant of S.O Igwe & Co., Ambassador Silas Igwe, said the major factor that led Nigerian economy to contract was the fall in the price of oil, which is the major source of revenue of the nation.
Igwe who operates a professional auditing and tax management firm noted that oil “in fact generates about 80 percent of our country’s revenue”.
He also said that the effects of COVID-19 made many establishments to shut down operations, thereby denying them cash inflow.
This, he said, also impacted on the country at large, reducing the revenue the country would have generated.
“The truth is that the pandemic affected the economy of many countries including the developed countries and therefore threw them into recession. Some of the affected countries are: Britain, France, Italy, Canada, Germany, United States of America. Britain was the worst hit because their economy contracted by 20.4 percent.
“The recession could not have been prevented by the Nigerian government due to the natural causes but the right action by government can chat a way out.
“Government should adopt bail out to some selected and essential companies. Grant soft loans to the real sectors of the economy, empower households to enable them spend more, thereby stimulating the economy, as well as tackle corruption headlong”, he said.
Amb. Igwe further noted that the way forward for big and small companies would be “diversification of goods and services tendered so as to increase sources of revenue, adopt a competitive pricing policy in their businesses and a good customer relationships.
“There is also the need to reduce cost as much as possible, including overhead cost. Adopt marginal costing approach”.
The Managing Director, Integrated Oil Shore Services Nigerian Limited, Mr Chijioke Samuel Ekeke, in his own view, said the effects of the recession on businesses would be worse than imagined.
“I do not even know when we came out from the first recession. We are confused and business operations had declined due to scarcity of dollar and bit by bit remittance.
“To remit money for purchased tools and equipment, the bank will say only $10 would be paid at a time, even with N470 per dollar”, he said.
Ekeke urged the present administration in the country to fulfill its promises to the nation.
He said the Federal Government’s assurance that the country would exit recession by the first quarter of 2021 was not sacrosanct, explaining that the situation on ground has many unanswered questions.
“The only way forward is for the government to be committed to the masses and work with experts who know what to do in different situations”, he said.
The Managing Director, Isumana Nigerian Limited, Amb. Umana Idongesit Sunday, said the recession affected import, export and currency flow in the country.
Sunday, whose company deals on science and hospital equipments, noted that businesses were passing through harsh economic situation which in turn affected the country’s revenue generation.
He noted that, “Businesses are facing serious challenges under the present economic recession in the country caused by Coronavirus and other unmanageable issues.
“No currency flow, no foreign reserve, to boost the economy and no free flow of businesses.
“We import at a very high cost, supply at a high cost to the hospitals who in turn demand the recovery of their money from their patients”.
He commended the Federal Government’s initiative in the area of agriculture, especially the production and packaging of local rice to compete with foreign ones, he said more needs to be done in the area of infrastructural development and power supply.
“Without good road network and power supply, the cost of finished products would still be high. The rail system needs to work and the price of fuel has to come down to reduce transportation”, he said.
For a quick recovery from recession, Sunday urged the government to stimulate the informal sector to generate more jobs, while interest free loans are given to boost small and medium enterprises.
“Government should put round pegs in round holes. The use of experts in their respective fields would go a long way in helping us exit the situation we find ourselves.
“If government would leave party sentiment, tribalism, and pick qualified economic experts, then our recovery would be near”, he added.
Entrepreneur Charges Corps Members On Entrepreneurial Skills
An entrepreneur, Mr Emmanuel Aondoakaa has advised youth corps members to strive to acquire entrepreneurial skills in order to be self-reliant instead of waiting for white-collar jobs.
Aondoakaa, the Chief Executive Officer of Own Your Enterprise Campaign (OYEC), gave the advice when he delivered a lecture held for 2021 Batch ‘B’ Stream 2 corps members posted to Wanune in Tarka Local Government Area of Benue State.
According to him, there are no jobs in Nigeria to fall back to after the service year, as business is the key to financial independence.
“Unemployment rate is increasing among Nigerian graduates every year and the only panacea is business, so that you can be financially independent and even become employers of labour,’’ he said.
Aondoakaa pointed out that the best time to venture into business was at this period of insecurity, saying that all they needed to do was to look for the needs of their environments and venture into it.
Fielding questions from youth corps members after the lecture, he noted that the capital to kick start a business had always been the discouraging factor among young graduates.
However, he said there were many foundations such as Tony Elumelu Foundation and the likes giving grants to young entrepreneurs to encourage self-reliance in Nigeria.
He noted that applying and getting the grant might be difficult but promised to train interested persons on how to apply and get it.
Also speaking, Mrs Ann Adogah, one of the resource persons, advised the Youth Corps members to take the entrepreneurship development lecture seriously, as it would be “Plan B’’ for self-reliance after their service year.
Rivers Farmers Hail Wike On Anti-Grazing Law
All Farmers Association of Nigeria (AFAN), Rivers State branch has hailed Governor Ezenwo Nyesom Wike for the signing of the anti-open grazing bill into law.
State chairman of the association, Comrade Ofimaobari Igwe who said this in an interview with newsmen in port Harcourt said the law will ensure peace in the state.
Igwe said the development will also lead to massive food production in the state.
According to him, the law will boost the confidence of Rivers farmers as their security is now guaranteed.
He also stressed the need for the government to set up a committee to ensure the implementation of the law.
Comrade Igwe also called on the government to look at the possibility of assisting farmers who lost their crops to flooding last year in the state.
He said farmers in the state will continue to support all efforts by government to restore security to the state.
The Afan boss also called on farmers to take advantage of the gesture by the government to improve their farming activities.
Igwe also called on them to visit the association office for registration.
Open grazing of cattle has been a source of conflict between herders and farmers across the country.
It was against this backdrop that governors of the 17 Southern States met at Asaba, Delta State to unanimously banned open grazing in the zone.
The anti-grazing law in Rivers State was a follow-up to the Asaba meeting.
The AFAN chairman said the situation would bring peace and boost food production in the state.
By: John Bibor
FCMB’s CEO Advises SMEs On Corporate Governance
The Managing Director of First City Monument Bank, Mrs Yemisi Edun, has advised corporate organisations, particularly micro-businesses, to adopt sound corporate governance practices in order to stand the test of time.
A statement from the bank, titled ‘Adopt Corporate Governance, Yemisi Edun charges SMEs’, said she made the call as the guest speaker at the inaugural corporate governance and enterprise development conference organised by H. Michael & Co in Lagos, with the theme ‘Corporate governance best practices: Imperatives for business sustainability’.
Addressing the conference’s physical and online audience, the bank’s chief noted that no business could stand the test of time without sound corporate governance practices.
She said that micro-businesses also required the same to achieve optimum performance and sustainable growth, urging small businesses to imbibe corporate governance practices.
Edun listed the long-term benefits of sound corporate governance practice as strong brand equity, decreasing risks, reducing capital cost, and enhanced performance.
She added that only businesses with solid corporate governance practices could stimulate economic growth and enhance innovation while protecting communities and the environment in their daily activities.
In his keynote address, a former Deputy Vice-Chancellor, Babcock University, Prof. Sunday Owolabi, described corporate governance as “doing the right when no one is looking”.
Owolabi urged businesses to self-regulate and embrace full disclosure and accountability.
He also advised the Financial Reporting Council of Nigeria to consolidate the country’s multi-sector codes of corporate governance into a single omnibus document for corporations in the country.
The conference convener, Dr Adeyinka Hassan, a notable enterprise governance advocate, noted that more than 100 companies in Nigeria had fizzled out due to corporate failure
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