Recession avails opportunities for firms to invest in capacity building
by Seyi John Salau
April 3, 2017 | 12:49 am| | | Start Conversation
Adesola Adeduntan, managing director/CEO of FirstBank of Nigeria Limited, said the current economic recession open doors of opportunities for firms that can keep costs down without sacrificing the capacity to ride the upswing when the tide turns. What this means is that businesses must continue to invest in capacity, especially human capital, as the recession bites.
Adesola, who gave the keynote address at the 2017, KPMG Alumni cocktail “Opportunities for Businesses in the Current Economic Recession”, over the weekend in Lagos, said, “For most businesses, therefore, the challenge in a recession is to keep costs and accounts receivables down, as they move their respective operations down the value chain.
According to him, in 2016 Nigeria’s economy experienced four consecutive quarters of negative growths, the first time that this has happened in a quarter of a century. The economy thus closed December, 2016 with a 1.5 percent decline in Gross Domestic Product (GDP) growth.
Using the expenditure approach to measuring output, all components of GDP (government spending, net exports, consumer spending and business investment) declined in 2016.
Whereas the oil and gas sector accounts for less than 10 percent of domestic output, it nonetheless comprises the bulk of national export earnings and government receipts. With household spending and government consumption accounting for 79 percent and 7.2 percent of GDP respectively.
Speaking further, Adesola opined that a drop in government earnings should not have excessively affected domestic output growth. With about 70 percent of paid employment in the country made up of public sector jobs, household consumption was always going to be affected by a falloff in government spending that affected public servants’ pay.
However, he is of the view that government must do more to refocus the economy from a public sector led economy to private sector led. The government should fix the power sector to improve economic activities across the country, as it reconsiders the current size of the civil service to cut government recurrent expenditure.
Yimika Adeboye, Director, Finance and Strategy, Cadbury Nigeria Plc. in a sectorial focus said the Fast Moving Consumer Goods (FMCG) in general and the foods segment of the market in particular was the worst hit by the recession.
According to her, companies are faced with the challenge of either increasing price or reducing content. However, both appears not to be the best option for the beverage segment because the recession has pushed the sector further down the consumers’ preference list of needs.
Nike De Souza, managing director/CEO People Temp/ People Prime, a human resource firm said investing in human capacity developing is key to getting out of a recession. According to her, investment in structural infrastructure is good, but the human infrastructure of the Nigerian economy would be the driver in getting the country out of recession.
Kunle Elebute, National Senior Partner, KPMG in his opening address said the Alumni cocktail is an avenue for networking amongst KPMG alumnus. According to Elebute, a committee would be put together to work out the modalities of constituting a KPMG Alumni in a bid to formalize the body.
The KPMG Alumni cocktail is an annual event organised by KPMG things industry experts in the legal, accounting, financial and government together. The cocktail usually held in the first quarter of the year offers an opportunity for networking and reunion. It is also an avenue to discourse topical, critical industry and national issues.
Seyi John Salau
Big Read |