The economic landscape in Nigeria is currently marked by volatility, uncertainty, complexity, and ambiguity (VUCA). With rising inflation, currency fluctuations, and rising interest rates, businesses face significant challenges. Though inflation dropped to 33.4 percent in July 2024, this is a far cry from where it was in August 2023: 25.8 percent. The rate peaked in June 2024 at 34.2 percent. The inflationary pressures remain driven by currency depreciation, with the official exchange rate averaging N1471/US$ in June 2024 compared to N769/US$ in June 2023 (191% change YoY). The exchange rate is currently averaging N1600/US$ in September 2024. Source: National Bureau of Statistics in Nigeria.
Period-end June 2024 results from multinationals reported on the Nigerian Exchange Group show that the losses continue unabated. Companies like MTN Nigeria (#519 billion loss), Nestle Nigeria Plc (#177 billion loss), and Dangote Sugar Refinery (#144 billion loss) all attributed the losses to the devaluation in currency. Source: Nigerian Exchange Group.
In 2024, the Central Bank of Nigeria raised the benchmark lending rate four consecutive times. The rate that was 18.75 percent in August 2023 is now 26.75 percent as of August 2024. The central bank’s Monetary Policy Committee stressed the urgency of addressing inflationary pressures while remaining optimistic that prices will moderate soon. Source: Central Bank of Nigeria.
The above situation is our present reality and, although turbulent, presents opportunities for those who can adapt, innovate, and strategise effectively. This article explores strategies that can help businesses navigate these turbulent times and position themselves for sustainable growth.
Read also: Enhancing financial performance of Nigerian businesses through new technology adoption
Cash Flow Management
Managing cash flow effectively is crucial for businesses facing economic instability. By closely monitoring receivables and payables, optimising inventory, and negotiating favourable payment terms, companies can ensure liquidity and build financial reserves. This approach provides a buffer against unforeseen disruptions and allows businesses to seize new opportunities.
Cost control
Adopting lean management principles and leveraging technology to improve efficiency can help reduce costs while maintaining quality and customer satisfaction. According to Brenna Schwartz in her 2022 article titled “The 5 Lean Principles: Definitions & How to Use Them,” she listed defining value, Value stream mapping, creating flow, establishing pull, and continuous improvement as the principles.
Innovation and adaptability
Businesses should encourage a culture of creativity and agility, exploring new products, markets, and business models that align with evolving consumer preferences. Quick adaptation to market shifts, supported by data-driven decision-making, enables businesses to stay competitive and capitalise on emerging opportunities.
Digital transformation
Utilising digital tools and platforms can streamline operations, enhance customer engagement, and open new revenue streams. E-commerce, data analytics, and automation are examples of how technology can help businesses adapt to market changes and boost productivity.
Read also: Nigerian businesses establish coalition to boost AfCFTA implementation
Customer relationships
Businesses should deepen their understanding of customer needs and tailor their offerings accordingly. Investing in customer relationship management (CRM) systems and personalised marketing can help maintain strong connections and foster loyalty, setting businesses apart from competitors.
Risk Management
Regularly assessing risks related to supply chain vulnerabilities, regulatory changes, and market volatility allows businesses to prepare for various scenarios. This could include diversifying suppliers or increasing inventory of critical materials to mitigate potential threats and maintain operations.
Supply chain resilience
To cope with supply chain disruptions, businesses should diversify their suppliers and invest in local sourcing. Strengthening relationships with reliable partners and utilising advanced supply chain management tools can increase visibility and agility, allowing quick responses to supply and demand changes.
Human capital
Investing in employees’s training and development enhances skills, productivity, and engagement. A supportive work environment that fosters well-being and career growth helps retain a motivated workforce, driving innovation and maintaining a competitive edge.
Partnerships and collaborations
Forming strategic partnerships and collaborations allows businesses to share resources, access new markets, and reduce costs. Engaging in industry networks and alliances enhances innovation, market intelligence, and collective advocacy.
Organisational agility and resilience
Cultivating agility and resilience is key to thriving amidst economic challenges. Encouraging a culture that embraces change and continuous improvement, empowers employees to make decisions, and balances short-term survival with long-term investments ensures businesses remain flexible and resilient.
In conclusion, the key is to remain proactive, adaptable, and resilient, leveraging strengths to navigate uncertainties and achieve sustainable growth.
Ayobami Ishola, FCCA is a finance expert with over 10 years of experience partnering with organisations to deliver strategic insights that drive growth. Her expertise spans accounting, audit, finance, and business strategy, with a strong emphasis on optimising business outcomes.
Adedotun Adesile, ACA is an accomplished business leader with 15+ years of experience in guiding multinationals through transformation and strategic growth. His expertise encompasses accounting, audit, taxation, and revenue generation, with a strong focus on driving business success.
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