• Sunday, June 16, 2024
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Survival strategies for Nigeria’s manufacturers battling COVID-19 effects

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When manufacturers in the south-south found their businesses in ruins with high rate of extinction in the heat of Covid-19 pandemic, they looked for an urgent way out. They settled on a man of two major parts; a medical expert who has built one of the best medical centres in the Niger Delta as well as an entrepreneur who has a group of companies that have footprints from marine to oil and gas-related activities.

Thus, when the Rivers/Bayelsa chapter of the Manufacturers Association of Nigeria (MAN) slated their annual general meeting and needed to go back to the drawing board with some medical review, they settled on a seasoned medical expert and one-time health commissioner in Rivers State. Emi Membere-Otaji, one of the first sets of the Lagos Business School and now a Fellow of the Nigerian Institute of Management.

The manufacturers sought to understand ‘Covid-19 Pandemic and Survival Strategies in the Manufacturing Sector’. The man who is the chairman of Princess Medical Centre (that has a world-class unit called the Signature Wing), also the Managing Director/CEO of Elschcon Nigeria Limited as well as being the National Vice President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA). Membere-Otaji is also the past President of the Port Harcourt Chamber of Commerce (PHCCIMA).

Read Also: How Nigeria’s manufacturing sector can enjoy effective AfCFTA participation

Membere-Otaji took the members through the pathway of pandemic effects on businesses and showed them the survival strategies.

Digging into medical science, Membere-Otaji said the virus affects principally the lungs but sometimes extends to other organs of the body with symptoms ranging from mild to severe and sometimes fatal manifestations. This, he said, leaves in its wake millions of cases of hospitalizations, deaths, and residual ailments.

Despite overwhelming hesitations and outright rejection of jabs, the medical expert showed gratitude to the emergence of vaccines that have been produced. He also observed that the effects in terms of health, economy, and industry will be felt for a long time. This, he stated, has resulted in the new normal, both in human existence and the corporate landscape.

Nigeria’s manufacturers

Membere-Otaji named the pandemic as one of the turbulent factors that disrupt businesses. He said; “Turbulence in business is characterized by sudden, unexpected, significant, and cascading commotion in the business environment, which does not respect the organization’s status in the industry, size, strategic plan, managerial experience or brand identity.”

By selling account receivables to third parties (at a discount), businesses under severe cash constraints can relieve their pressures and work towards better cash flow management

The closure of borders and shutdown of economies around the world remain the worst effects of the pandemic, leading to diminishing workforce, and challenging economic headwinds and job losses, he stated. “In 2020, Nigeria’s economy was already facing serious challenges from monetary and fiscal policy issues, insecurities, fall in crude oil price, etc, when the Covid-19 pandemic turbulence hit the country, thus hitting the economy below the belt.”

Business survival strategies

Membere-Otaji named what he called organisation’s agility and capabilities rather than quest for its stability as the strategy. He mentioned the strategies as leadership and corporate capabilities, saying an organisation’s ability to survive turbulence is not necessarily to create stability but the ability to learn fast, adapt and respond to changes and uncertainties, thus always adding value no matter what comes along.

He urged businesses to build a corporate culture of agility that keeps organisations stronger and makes them survive shocks.

For companies that have ‘Risk Management Plan’, he went on, first step is to analyze the situation and its impacts and activate their Business Continuity Plan. “For those that don’t have, activate a Crisis Management Strategy; in all, taking far reaching decisions to stay afloat. For the leaders, there’s no better time to exhibit transformational leadership than now, be visible and rebuild purpose.”

On how to reposition a business in times like this, Membere-Otaji counselled the manufacturers to re-strategize the business; improve client and employee relationship management; employ efficient cost-control measures for short-term sustenance and long-term viability; revisit the strategic plan; clarifying the business strengths and weaknesses, considering what used to work that may not (so do and adjust, to remain competitive).

He urged them to build a strong online presence and re-prioritize their marketing strategy. “The digital space also provides an avenue to improve inputs and spare parts procurements,” he added.

The expert particularly advised business executives to address issues of the ‘Low-Touch Economy in their dealings with stakeholders and “strategies to circumvent supply chain disruptions”

“Strategies to circumvent supply chain disruptions at all levels will be critical to survival. Revise your budget to account for new spending,” he said, also harping on diversification of product lines and other sectors of the economy.

He also told them how strategic it is to adjust the business to deepening poverty. Though Nigeria has a population of about 200 million people, almost half of them are too poor due to unemployment and underemployment or high inflation. He recommended what he called satchetization or packaging products into smaller packages to boost profitability. He called it a winning strategy; to play ‘cheap’ and thus also provide for the poorer segment of the populace in the array of products and services on offer.

This, he said, is because almost 90 million Nigerians live below the poverty line of N137.430 ($381.75) per year, making it the ‘poverty capital’ of the world.

He drew attention to the cash-flow of a business in such critical times. “For small and medium businesses, the ability to generate sufficient cash and manage liquidity will be a deciding factor for survival of the shock and aftershock of the difficult economic cycle, caused by the pandemic. Proper management of the cash conversion cycle is key.

“More precarious is the fact that banks and other lenders now become more cautious in the grant of credits to businesses to ensure preservation of the depositors’ funds from high risk ventures. Businesses can also explore other financing options to inject more cash into their operations.”

FG intervention funds to the rescue?

The expert caused a stir and a kind of bitter reminder when he harped on what seemed to prick the minds of most businesses in the region; lack of access to FG intervention funds. He put it this way; “As commercial banks are slow in giving credits at this time, even at unfavourable interest rates, tapping into the Federal Government’s various intervention programmes like Central Bank of Nigeria’s N220 billion MSME Development Fund, N300Bn Real Sector Support Facility (RSSF), and the N1 trillion Covid-19 Stimulus Fund seems to be a way out. The truth however is that access to these funds is challenging.

No wonder the Organized Private Sector (OPS) in Nigeria, in their recent state of the economy report, stated thus; “The imperative for transparency in the disbursement of the various Intervention Funds cannot be over-emphasized. The Organized Private Sector of Nigeria is willing and ready to partner with Central Bank of Nigeria (CBN) to ensure that credible and genuine businesses actually benefit from the Fund”.

He mentioned another option to be for businesses to improve their cash-flow by adopting the invoice discounting strategy for their receivables. “By selling account receivables to third parties (at a discount), businesses under severe cash constraints can relieve their pressures and work towards better cash flow management.”

Conclusion

Manufacturers asked the medical expert to give an opinion on vaccination because most of them did not believe in taking the jab. Membere-Otaji pointedly urged them to embrace it and make vaccination mandatory in business environments. He made it clear that the virus is real and that many are dying, saying it is dangerous to accept to fall to Covid-19 especially with the new wave of the disease and harm to the lungs.