The outbreak and rapid spread of the deadly coronavirus pandemic have disrupted industries across the globe and forced businesses to rethink their strategy.
For most companies operating in Nigeria, it is no longer business as usual as the impact of the virus is taking a toll on their operations and showing signs of ‘infecting’ their bottom line.
Gabriel Idahosa, an economist and CEO of UHY Maaji, said the coronavirus outbreak would have consequences for Nigerian businesses, especially those “who require physical presence or need to travel for import and export transactions”.
As at Friday, Nigeria had confirmed 65 cases of coronavirus, one of the highest in Africa. Three of the cases were said to have recovered with one death recorded.
Like most countries around the world, the fear of high transmission rate drove Nigeria to adopt some drastic measures, including closing its international airports, and national and sub-national governments in Africa’s most populous country are advising citizens to work from home, observe social distancing and self-isolate.
This had led to disruption in the global supply chain, and restaurants, hotels, shopping malls and business offices are closing down. There has been increase in demand for drugs, food items, hygiene products and online transactions, but most companies who are not in these lines of business are taking the most heat.
Analysts and the Nigerian business community are, however, optimistic that the situation will not last forever as they see a rebound at the end of the tunnel.
“The impact of the virus may be unavoidable but can be eased,” Ayorinde Akinloye, a research analyst at CSL Stockbrokers, said.
Industry experts and economists polled in a BusinessDay survey recommended these five measures for businesses to withstand the effect of the pandemic.
Safety of employees
According to industry analysts, a company is as good as the quality of its staff. As such, putting the safety of its employees at the forefront of its business is one of the key ways any company can withstand the shock caused by the virus.
Analysts at the advisory arm of Ernst&Young (EY) recommended that Nigerian businesses should sustain flexible and remote working arrangement, while also providing infection protection for on-site workers.
“Issue regular, transparent communications that reassure employees,” they said.
Make provision for liquidity
The ratios of a company’s assets and liabilities are measured and tracked through its business liquidity. It is a key factor in determining whether a company is in good financial health.
Industry experts advise that Nigerian businesses should protect existing hard and soft credit in order to maintain their business amid virus outbreak.
“Manage liquidity impact of disruption between finance and operation,” a Lagos-based analyst recommended.
Businesses are also advised to build a portfolio of cash improvement actions and rigorous dynamic cash forecasting to bring their cash under central control and visibility.
Adopt cost-effective measures
For a business to be considered a success, it needs to make more money than it spends. This is done by using the available resources to produce maximum output.
To successfully come out of the economic shock caused by the coronavirus outbreak, economists advise that Nigerian businesses should adopt cost-effective measures that will also not affect their productivity level.
“It will take a while for the global market to build up due to this pandemic, so companies would have to cut cost to be able to stay afloat,” Paul Uzum, managing director of Halo Nigeria Capital, said.
Protect business continuity
While it is certain that the virus outbreak will affect Nigerian businesses, industry experts have cited maximising efficiency, productivity and remodelling businesses to reflect current realities as steps that can help ease the shook.
“An option would be for businesses, where possible, to retool their activities to manufacture essentials that would be in major demand during the virus outbreak,” said Akinloye of CSL Stockbrokers.
The governor of the Central Bank of Nigeria (CBN) even urged Nigerian businesses to take advantage of turning the seeming adversity of COVID-19 into an opportunity.
Analysts at EY advised that companies should confirm responsibilities and delegate authorities under contingency measures.
“Review terms and conditions on commercial relationships to identify constraints. Develop and test contingency scenarios for the workforce, supply chain and footprint to operate in a restricted capacity,” they said.
Considering the virus outbreak was unexpected and was unplanned for, especially to Nigerian consumers and industry stakeholders, companies are advised to create cross-functional response team to address emerging challenges and issues and also track position daily.
“Understand critical stakeholders and their priorities in the short and medium-term, including people, commercial partners, financial stakeholders, shareholders, government and tax authorities, regulators and pensions,” the advisory team at EY recommended.
They added that companies would need to prepare engagement plan to address needs and priorities.