Last week, I did the last piece in the Recovery Series in which I tried to suggest strategies for the Micro, Small and Medium Enterprises (MSME) sector in Nigeria, to get back on their feet, following months of devastating lockdown. In that series, which had nine articles, I tried to establish certain inalienable facts about recovery of businesses following a debacle of the kind we currently face. I posited that the first recovery imperative is Business Continuity, by which I mean the return to production of goods and services by business entities, despite the occurrence of a disaster. Clearly, it would be simplistic to expect that business houses will spring back into normalcy after a disaster of the magnitude of this pandemic.
With a disruption of the kind being currently experienced; we are talking about total annihilation of certain businesses and severe damage to others; restarting will take more than a passing exertion. Indeed, it will take, not just time but also effective strategic actions, to restore businesses that did not get out rightly obliterated. One of such preliminary actions would be to put businesses in a position to begin, once again, to serve customers and clients.
It is usual for organisations to establish and maintain Business Continuity plans, often epitomised by Disaster Recovery Facilities. Such facilities are mandatory in certain strategic sectors, including banking, pension fund management and some high-tech services. However, small businesses do not always consider the establishment of Disaster Recovery facilities necessary, nor do they have the capacity to maintain effective business continuity plans. In the course of the recovery series, I suggested that concerted effort, on the part of operators and government, to help small businesses secure the momentum to restart, was inescapable. Graciously, the government has done quite a bit in this regard, which must be acknowledged. I also did highlight the importance of disposable income in the restoration of consumer demand – a key element in the drivers of national income.
The need to restore the spending power of households, which would help production to restart, is fundamental to boosting consumer confidence. Needless to say that nobody makes more goods when the warehouse is full and demand is almost nonexistent. However, in addition to all the individual operators’ and public policy efforts to restore economic activity, I also suggested that cost containment should be the current mantra for all economic agents, public or private. Cutting costs is the definite corollary of income generation. Saving money is another way of making money.
we are in the middle of the business continuity stage, which one could say is proceeding successfully. Although the country is still partially locked down, many business houses have reopened. We keep an eye on them and move over to something more life-threatening
Although cost containment is not usually a popular project in any organisation, for obvious reasons, it is no longer possible to look the other way as avoidable expenses drain life out of the business. Cash flows have dried up and costs must, at best, be kept down. The time for paying lip service to cost reduction, as they do in the public sector, is gone, at least for entities that have Balance Sheets and Profit and Loss Accounts to present at the end of the year. The Speaker of the House of Representatives recently spoke of the need to reduce the cost of governance. The reaction from the public was that of unmitigated pessimism – nobody believed him. Government officials have always said that but never able to match words with action. Reducing the cost of governance in Nigeria has been in the burner (not sure if it’s the one in front) since the First Assembly. And nothing significant has been done. Many of those in this Ninth Assemble have been around through several assemblies in the past.
While we do not ascribe any atom of exhaustiveness or finality to our suggestions, in regard to business recovery, we shall rest that conversation for now and attend to another important issue in the daily menu of our business community and entrepreneurs, in particular – security of the business environment. It is good to marshal out as many recovery strategies as we can articulate, and there are lots of them.
However, doing so without reference to the need for a secured business environment is an incomplete exercise. This is so because the most important conversation anywhere in the country today is insecurity. Even in the boardrooms of the corporate giants, the pervasive insecurity in the country, occasioned by unfathomable banditry and terrorism, has occupied the center stage. Regrettably, whatever success the security agencies may have achieved in the fight against insecurity appears to be dwarfed by the shared audacity of brazen and unabatingly constant raids by terrorists. I am convinced therefore, that postulating on business restoration and continuity, cash flow rebound and customer retention, when the domain of many microenterprises are being raided almost every day, is short of the mark.
Accordingly, I intend to do a few pieces, going forward, on the impact of the current state of insecurity on entrepreneurship activity in Nigeria, especially with regard to small businesses, and the socioeconomic well-being of the nation. By so doing, I hope to draw attention to some of the challenges that arise when policy makers try to influence economic outcomes through financial support to economic agents of their choice, and not those selected by the market. I hope thereby to throw some light on the micro relations of insecurity and entrepreneurship in an environment like ours, and probably give some lead to the reasons behind the seeming ineffectiveness of public policy in this regard.
I would therefore like to close the Recovery Series by restating that we are in the middle of the business continuity stage, which one could say is proceeding successfully. Although the country is still partially locked down, many business houses have reopened. We keep an eye on them and move over to something more life-threatening. Over the past several years, the risk of getting killed by Boko Haram terrorists, herdsmen or bandits (a group that is getting more and more indistinguishable) has moved rapidly north. Talking business without security now seems like a shot in one’s own foot. Perhaps it may be wise if we do something in the realm of entrepreneurship and the economics of insecurity, beginning next week.
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