In 6 numbers, insights from survey on 100 Nigerian CEOs

A survey by Lagos-based firm, Phillips Consulting Ltd (PCL), on 100 business leaders in Nigeria offered unique insight into the evolving dynamics of the business landscape in Africa’s largest economy amid a global health pandemic that has upended business activity.

Half of the CEOs surveyed are in professional services, construction/real estate, manufacturing and Oil & Gas. Financial services, Public service, ICT, Aviation, Agribusiness, Healthcare, Education and Consumer Goods formed the remaining half of the sectors of the surveyed CEOs.

In six numbers, here are the top insights from the survey that will support organisations in making informed management decisions.

55%

More than half (55 percent) of businesses in Nigeria are currently operating at less than half capacity, due to disruptions caused by the pandemic. That means one in every two businesses are operating below 50 percent capacity.

When businesses operate below capacity, it impedes economic growth and leads to job loses. The recent Q2 GDP and unemployment report published by the National Bureau of Statistics (NBS) best reflect this reality.

The economy fell 6.1 percent in the second quarter of 2020, the biggest contraction in 16 years while unemployment rate quickened to 27 percent in the same period, the highest in atleast 7 years. If the underemployment rate is factored in, one in every two Nigerians in the labour force are either unemployed or underemployed.

72%

Travel restriction is the single biggest factor impacting businesses, according to 72 percent of the CEOs.

Finance and liquidity (69 percent), Foreign exchange rate (65 percent) and inflation (56 percent) were other high ranking factors impacting businesses.

Also on that list are social distancing (52 percent), operations and supply chain (52 percent), government spending (28 percent) and credit defaulters (24 percent).

Of less impact to their business are the international oil price (19 percent) and legal framework (7 percent).

22%

As much as 22 percent of the CEOs said they laid off workers as a result of the pandemic, although they were in the minority with 78 percent saying they hung on to their staff.

In addition, 54 percent said their organisations did not cut compensation as a result of the pandemic but 46 percent did.

The key themes emerging from the pandemic-induced depressed business landscape is the acceleration in technology adoption, a rethinking of office space and the consideration of employees as business stakeholders, according to the CEOs interviewed.

57%

57 percent of CEOs expect business recovery in August 2021 at the earliest. The majority of surveyed CEOs (21 percent) expect it will take at least 18 months before business returns to normal in Nigeria. Only five percent expect the current business landscape to stay the same beyond 24 months.

The International Monetary Fund expects global and sub-saharan Africa growth to recover next year and Nigeria is expected to grow 2.6 percent next year after contracting by a record 5.4 percent this year, the worst contraction since 1987.

68%

Travel and tours ranked the highest on a list of costs that the surveyed CEOs said they were looking to cut.

68 percent of companies plan to cut travel costs to deal with the disruption caused by the pandemic. This confirms fears that the hospitality industry will be the worst-hit from the changing business landscape.

Staff allowances and salaries ranked second and third highest on the costs companies will be looking to cut at 55 percent and 45 percent respectively.

Rental fees (40%), CSR (35%), Consultancy (30%) and Staff training (30%) also made the list of costs to be cut.

6%

Only 6 percent of organisations were prepared for the pandemic. 51 percent said they were partially prepared and 43 percent said they were not prepared.

The key to preparedness was a strong leadership team, followed closely by the business strategy, the survey results showed. Government support and a robust business continuity plan were also fingered by the CEOs as part of what prepared then for the pandemic.

83%

Majority of the CEOs, 83 percent, said they were adopting remote work, whereby staff work from home, as a business continuity strategy option amid the pandemic.

55 percent said they adopted the stand-by model whereby staff stay at home until their services are required while 43 percent said they were adopting split operations where business functions are separated to work at different locations.

14 percent said staff were resuming work in the safest and closest branch to their residence while 7 percent said they moved all business operations to a central location. 5 percent said they relocated business operations to a temporary location that they operate while 2 percent said they moved business operations to a subsidiary, making it the least preferred option.