Chief financial officers (CFO) and economic experts in the business space have posited marginal economic growth in the country for 2019 which will hinder prospects of grater profits for companies as well as the possibilities of a prosperous economy in 2019.
According to a survey conducted by prime auditing company KPMG Nigeria among chief financial officers, the survey highlights that CFOs are less optimistic about the prospects of growth for the Nigerian economy as only 17 percent of the respondents were confident about the prospects of the Nigerian economy representing a 29 percent decline from 2018.
It also showed that on the ease of doing business policy,“84% of CFOs agreed that the focus is right, however execution is currently weak and can be improved upon. They are of the opinion that the efforts aimed at the ease of doing business are yet to have an appreciable impact on the majority of businesses”.
“Regulatory Uncertainties, Fiscal Policy and Talent were identified by CFOs as part of the top five impediments to organizational growth. 67% of the respondents consider regulatory uncertainties as the highest impediment to organisational growth.”
Tola Adeyemi, head Audit services KPMG mentioned that “Over the last twelve months, the Nigerian economy has experienced some relative stability with a deceleration in the rate of inflation and stable foreign exchange rates.”
“This is largely due to stable oil prices, stability in domestic oil production and improvement in foreign exchange availability. The build up to the 2019 elections however created some level of uncertainty in the business environment and led to decreased foreign capital inflows and declining stock prices.”
Speaking at the KPMG chief financial officers (CFO) forum, he advocated that there is need to broaden the tax base instead of burdening existing payers with increased taxes adding that infrastructure deficit remains a burden on the business environment which needs to be addressed
Speaking from the view of financial officers, he disclosed that compared to 2018, most CFOs are less expectant about the prospects of growth in the Nigerian economy in 2019. He further explained that it was due to the uncertainties that surrounded the 2019 elections as well as the failure of political leaders to address pending issues combating the Nigerian economy
Doyin Salami, Chief Executive Officer of Kainos Edge Consulting also posited that 2019 will be tighter than 2018, considering its economic situation and happenings in the global environment.
He said “With the newly increased minimum wage and government’s need for revenue, tax rates will be increased including the value added tax which will cause a rise in inflation.”
“Furthermore, government position in 2019 will be tighter by 15 percent as against 2018, due to the 5 percent decline in the federal government budget, in addition to the inflation, this will result in some contraction in government spending and if the budget is implemented, it implies that the year will be tight”
Salami who was the keynote speaker at the KPMG CFO seminar, said that having cleared the air of uncertainties in the country’s political space, there will be need to negotiate the transitions that will occur adding that despite the results of the elections, there will be new personnel who may or may not introduce new policies especially the position of the central bank governor. Furthermore, although the economy is in a fragile condition and will grow at a slow rate, it might possibly record a 2.5 percent growth this year.
Speaking on corporate organizations, he said most companies will have to manage its resources due to less demand for their products therefore in the process of cutting cost, downsizing will occur which will increase the rate of unemployment.
He advised the government to develop means of increasing the inflow of investors through enabling policies and regulations as well as give adequate attention to the fast growing sectors of the economy especially agriculture in order to avoid re-occurrence of various ills that hit the sector in precious years.
Adesola Sotande-Peters, vice president of finance at Unilever Nigeria said that for the manufacturing sector, the end to end supply chain is a critical issue especially for the Fast Moving Consumer Goods (FMGC) in the industry, as the sector is highly dependent on the foreign exchange coupled with the consumer’s sensitivity to product prices which has increased as their purchasing power is dwindling.
She advocated that there is need to increase the local sourcing of raw materials as well as establish more warehouses in a bid to reduce dependence on the foreign exchange and also reduce the cost of goods production. Furthermore, there is the possibility of increasing credit for distributors which might require the need for strategic partnerships.
Mukhtar Adam, Zenith Bank’s chief of finance stated that the lending power of banks has reduced and was lower than the GDP growth, partly attributed to the low rate of household spending. He added that banks were not able to increase its loan interest as well adding that the monetary policy has not been favourable for financial institutions.
Furthermore, He added that although banks are trying to push down costs, it is causing a decline in banks’ top lines, adding that this phenomenon is affecting all banks but lower tier banks are feeling the weight more.
He requested that with the unveiling of the new management, the idea and notion of the monetary policy will be properly explained, while hoping the exchange rate takes a better direction than previous years.
Gbemi Faminu
