The Nation Newspaper

Tag: Economic downturn

  • How businesses can survive economic downturn

    Most businesses experiencing the adverse effect of economic downturn need to wait for this: literally wake up and smell the coffee!

    That is the candid advise of Mr. Victor Eburajolo, who leads the Kewalram-Chanrai Group, the over 100 years old conglomerate with diverse interest in automobile, pharmaceuticals, agric and agro-allied sectors, to mention just a few.

    Speaking in an interview with our correspondent, Eburajolo who is Group Deputy Managing Director, while recounting the experience at Kewalram-Chanrai Group during the period of recession, said, “What we do here is, we scan the business environment and we project for each and every business. If it’s going up, we’ll invest in that area. But then we’re very cautious and l think that’s the way to do business. You must continuously scan your environment and know what measures to take and what to do at every point in time.”

    At the risk of sounding immodest, the Warri-born prince who said members of his team are not fly-by-night investors, unlike other crop of investing public who take flights, stressed that, “No, we’re not like that. We study the environment and we’re constantly studying the environment in each of our businesses and we take appropriate measures. Take for instance, when foreign exchange was becoming difficult, we had a way of cushioning it by getting our investors from abroad to help. So these are the things that we do. And of course, you can only do this if you’ve investors who’re prepared to help from abroad. We do that a lot. And then also, we don’t just go on spending. When we spend, we’re very careful. And I think that’s just been prudent. I’m aware that some companies when the going is good, they spend lavishly, they bloat their labour and all that.”

    Pressed further, he said, “Here we joke and say; we’ve kicked out the box. We don’t have any stereotype in the way we do business. We’re constantly scanning the environment and keeping abreast if not the business will leave you behind. You know what they say, if you think you’re successful and you stay where you’re, other business will overrun you and before you know it, you’re a dinosaur. If these big stores don’t take into consideration online shopping and delivery, they’ll be run out of business. I was growing up when Kingsway stores went out of business in this country.”

    While reiterating the fact that his company is a wholly own Nigerian company that has been there for almost 110 years, he noted that as a rule, the company is constantly looking for what they can do with the environment.

    “We’re just coming out of recession, and we’re in very strong talk with the Kano state government. We’re looking for land in Kano, at least five hectares. How many companies would say they’re prospecting for land now? We want to use it as our sesame hub in Kano. And I met with the chairman of the Kano Investment Agency along with the Commissioner of Finance, a young dynamic gentle man, who is looking many years ahead. They know we’re serious about agric. Even in Ogun state here, we have 20 hectares of land. So unless you’re a company that is ready to stay, you don’t go looking for lands and spending billions investing in land.”

  • Benin Monarch hails Buhari anti-corruption war

    Benin Monarch hails Buhari anti-corruption war

    The Benin Monarch, Oba Ewuare II has hailed President Mohammadu Buhari for the anti-corruption war.

     

    Oba Ewuare II said President Buhari management of the country’s scarce resources will improve the welfare of the people.

     

    The Benin Monarch spoke Monday when President Buhari paid him a courtesy visit as part of his two days working visit to Edo State.

     

    Oba Ewuare II noted that the President was the first person he would receive at the new palatial palace since he was crowned the 40th Oba of Benin.

     

    He urged President Buhari to improve the welfare of Nigerians in his effort to reposition the country.

     

    Oba Ewuare II requested for more federal presence in the state and reminded the President on the need to support the transformation of Gelegele jetty to an export processing zone.

     

    The Benin Monarch said the transformation of Gelegele would provide employment and contribute to the economy development of the country.

     

    President Buhari praised Governor Adams Oshiomhole for developmental strides despite the economic downturn.

     

    The President said Oshiomhole has served well and would not be allowed to go as the All Progressive Congress would look for a place for him to serve.

     

    He promised the Benin Monarch he would do well to move the country forward.

  • Economic downturn: Minister urges Nigerians to be faithful and sacrifice with Buhari

    The Minister of Communications, Barr Bayo Shittu has urged Muslims and non-Muslims alike in the country to commit themselves to be faithful to  God and the government of the day in Nigeria led by President Muhammadu Buhari in order to overcome the economic downturn confronting the country.

    This was contained in an exclusive interview with The Nation in Ibadan yesterday to celebrate th Eid-El-Kabir celebration.

    “Nigerians should remember that the economic hardship the country is facing presently was not caused by the present President Buhari’s administration, it was caused by the 16 years of lawless governance by the People’s Democratic Party (PDP), administration who simply criminalise government to the extent that today the President is finding it difficult to fulfil it’s promises to the people.

    “The lesson we Muslim in particular must learn is that more so that we have a president who is trusted not to be a thief, who cannot steal from public purse and does not support corruption.

    We must have faith in who will never support corruption and who appreciates the sufferings Nigerians are going through and is committed to solving the problems and bringing about redemption in our nation. “ Shittu said

    He urged Nigerians to see the sacrifices President Buhari is making to make Nigeria great again, adding that Nigerians should not condemn him, but noted that they ought to support him.

    “We need to always remember our president in our prayer especially at the auspicious occasion and to also rely on God for help to our leaders should be able to solve all this challenges. God has assure us that after every challenges there will be peace. If we can go through this periof of economic downturn, God will replace it will comfort and with enjoyment for us. Let’s us all imbibe that spirit of sacrifice  and faithfulness to our leaders. We should all pray for God to continue to give our leaders the wisdom to turn this country around to a nation in abundance.

     

    “In every position we occupy in life we should be thankful and also give. We must sacrifice in order to get. In both instances there is an element of transition. Weather you are a leader or rich or poor everybody must sacrifice. The situation we find ourselves today was caused as a result of wasteful lifestyle.

    We must understand that Nigerian are really suffering, but it didn’t only come from Government but also the citizens itself. We have a role to play for the country to progress and it is a collective responsibility. All of us must change for the better. “ he said

  • We shall overcome economic downturn, says Tinubu

    We shall overcome economic downturn, says Tinubu

    All Progressives Congress (APC) National leader Asiwaju Bola Tinubu has predicted that the country would overcome the economic downturn “which is not our making”

    In an Eid-el-Kabir message from his Media office, the former Lagos State governor, said: “During this Season of Eid-el-Kabir, I wish to felicitate with the Muslim brotherhood. We must give thanks to almighty Allah for keeping us alive to celebrate this Eid.

    “This spirit of sacrifice and unselfish giving that defines this celebration must guide us all in the way we relate to others and in our quest for a better society. Through sacrifice and a heart and hand of charity we can lift up many who will in turn become better tools for the socio-economic rejenevation we so desire.

    “We must see our current economic situation as a passing phase. We shall overcome. Our faith summons us to have faith but also to work so that things can get better.

    “This economic predicament is not of our making or choosing. It came not by invitation. The economic downturn represents a tough challenge not lightly overcome. No one wished that such an impediment would confront us. Now, we must rise to the occasion. Our economic situation presents an opportunity for us to do something we have avoided too long.

    “The present circumstance demands that we engage in a discourse concerning the type of “post-oil era” economy we truly want and what are the ideological underpinnings and policy thrusts needed to erect this new architecture.

    “This architecture must be inward looking and homegrown starting with the boosting of the agricultural economy leading to a diversification we have all longed for. As the government re-tools and re-fines different policies, we as citizens must locate our role and responsibility and join hands with this government until the clouds of recession receeds. A new horizon beckons for Nigeria sooner rather than later as we pass through a necessary phase often experienced in the life of virtually all nations.

    “Nigerians deserve a better country, more empowerment, job opportunities and an overall strong economy. The current government is committed to achieving this.”

  • Kumuyi: How Nigeria can wriggle out of current recession

    Kumuyi: How Nigeria can wriggle out of current recession

    The General Overseer, Deeper Christian Life Ministry (DCLM), Pastor Williams Folorunsho Kumuyi, has given insight to how Nigerians could wriggle out of the current economic downturn in the country.

    kumuyi said apart from seeking God’s intervention through prayers for the nation, Nigerians should shun corruption, make a habit of doing the right thing always and also delve into agriculture to ensure food availability and security.

    He said Nigerians need God’s help to “turn around the economic, social, individual, domestic needs and other hydra – headed problems of the nation,” adding that where there is no food on the table and enough apparel for the body, there would be grumbling everywhere.

    The General Overseer spoke in Abeokuta, through the DCLM State Overseer, Pastor Dele Rosilu, while fielding questions from reporters at a press briefing to herald his planned visit to MKO Abiola Stadium, Abeokuta, next Friday, for a “turn around” crusade at the state capital.

    Over 50,000 worshippers across the state are expected to attend the programme.

    Rosilu who addressed the press on Kumuyi’s behalf, noted that Nigerians are not doing enough in agriculture, saying there are no better time to pour more energy into farming either on “commercial or part time basis” than this period of economic recession.

    He also made case for more money to be expended on security of lives and properties of Nigerians by the governments if that is what it would take to keep enough manpower on ground amid rising cases of militancy and kidnappings in parts of the country.

    He however, expressed the hope that at this period of “failures,” God would minister success to the country, stressing that the church in Nigeria should partner with the governments, its institutions and agencies to better the lot of the people.”

     

  • Economic downturn tests telcos’ mettle

    Economic downturn tests telcos’ mettle

    For telcos, these are not the best of times. The slide in the prices of oil has had a defining impact on every aspect of the economy. The value of workers’ disposable income has crashed, taking a toll on average revenue per user (ARPU) of telecoms services. Tariffs of grid electricity, as well as automotive gas oil (AGO) and premium motor spirit (PMS) prices have soared to unimaginable levels. Added to these is the stiff competition in the industry that has virtually eroded any hope of profitability, LUCAS AJANAKU reports.

    The Co-Founder and Interim CEO, IHS Towers Nigeria, Mohamad Darwish, captured the essence of sponsoring the Economist Intelligence Unit report titled: Power Up, Delivering Renewable Energy in Africa in support of Africa’s renewable energy goals in Lagos when he formally unveiled the report.

    According to him, with daily diesel consumption of 20 million litres, exploring renewable energy option in a more sustainable way is the right way to go.

    His firm manages no fewer than 16,000 base transmission stations (BTS) for most of the telcos across the country, besides some 23,000 across Africa.

    Darwish said in the face of the challenges confronting the telcos that have made quality of service (QoS) a nightmare for end users of telecoms services, outsourcing was the best solution to address network congestion, spiralling cost of running BTS including providing security, fueling, technical services and others.

    IHS Towers have spent about $4billion in acquiring towers from MTN, Airtel and Etisalat in the country, in a move to optimise telcos’ costs.

    There are a plethora of other associated headaches the telcos have to contend with. They include multiple taxation/regulation, right of way (RoW), refusal to grant approval for the expansion of existing capacities by way of building more BTS, vandalism and others. The Executive Vice Chairman/CEO, Nigerian Communications Commission (NCC), Prof Garba Dambatta, has however assured that these challenges were being addressed at Governors’ Forum, adding that telecoms infrastructure should not been seen as immediate cash cow but a long term investment that will impact positively on every facet of the economy.

    Mergers and acquisition (M&A) may not be enough to support a new wave of sustainable growth for telecoms operators.  Then in the face of these mounting challenges and declining revenue, what are the options for telcos to remain in business in the digital economy?

    Senior Adviser, Digital Economy Growth Strategies at Analysys Mason, Simon Torrance, in TechFinancials, an online platform, lamented that telecoms groups tend to erect their growth strategies on ‘product’-based business models, adding that platforms will be the key to success in digital economy.

    He identified the business models’ challenge faced by most telcos and proffered potential solutions.

     

    Strategies re-appraisal

     

    He said: “A few weeks ago, I was running a workshop on new growth strategy and digital disruption for the Board of a leading international telco. After a short while, the Chairman announced that he was more worried about the prospects for his company than he had ever been in the past.

    “Why was this? His company has a large or dominant market share in most of its territories. It has very good relations with local regulators. It has money to invest in a fibre roll-out, which could enable it to offer TV, broadband and cloud services to enterprises, and make it the leading converged operator in all its markets.

    “So why the pessimism? Fundamentally, the growth prospects do not look promising, given the decline in voice revenue and the increasing costs of providing data. Perhaps small single-digit year-on-year growth … if the business plans for quadruple-play and cloud services work out.”

    He said it is a common situation across the industry, with local variations of course. Telcos have become defensive stock for investors and M&A seems to be the main growth strategy, for the big players at least. This is all fine and certainly important, but it is not going to support a new wave of sustainable growth for the industry, for big or small players, in emerging or mature markets, Torrance said.

    He said it is time for telcos to move from a ‘product’-based business model to one based around a platform

    Most telcos are aiming to become ‘digital telcos, digital lifestyle service providers and/or regional ICT companies. They know their networks play the key enabling role for the digital economy, they know they have unique and valuable assets, and most are experimenting with many different types of digital services from advertising to healthcare, he added.

    According to him, many have set up specific ‘digital’ business units to try to fast track innovation, in parallel with significant investment in network virtualisation and more-flexible BSS systems to get fit for a digital future.

    These are necessary developments, and some are starting to deliver results (especially in the machine to machine (M2M ) and ICT sectors), but they are still primarily driven as ‘products- capability is built or bought and then sold to customers.

    Torrance argued that the problem is that products are difficult to defend in the digital world, whereas the most powerful business models are based around ‘platforms’.

     

    Digital economy platforms

     

    An open platform will create new opportunities for telcos to compete in the digital economy. Apple is the most valuable company in the world not because it makes great devices, but because it has the best platform.

    AirBnB, Alibaba, Amazon, Facebook, Google, LinkedIn, Rakuten, salesforce.com, Uber, Xbox and many more facilitate interactions between multiple parties to create rapid scalability, he added.

    WeChat – with 450 million users – is not just a free chat app, it is an ecommerce platform that drives significant revenue for Tencent via a range of shopping and banking services. Xiaomi has a market capitalisation of $45 billion after only four years of existence not just because it ships more smartphones than anyone else today, but because it is also the third biggest ecommerce company in China – it sells its smartphones at near cost and makes money from commerce services. It is the opposite of Apple, but has the same platform business model, he said.

    Interbrand, a brand consultancy company, has produced a list of the ‘best global brands. Of the top 30 in 2014, 13 were platform businesses, he said, adding that those joining the category in 2014 included non-technology companies like General Electric (GE), with its industrial Internet platform, and Nike, with its open fitness platform.

     

    How platforms work

     

    He explained that platform providers build ecosystems around their core business. Ecosystem members use the platform to create innovative services for the platform providers’ end customers. Apple has thousands of developers and hundreds of accessory manufacturers continually creating complementary products that work beautifully with Apple’s devices and create increasing demand for them. Apple takes no risk on its innovation efforts and takes a cut of the revenue from those that are successful.

    The more complementary service providers drive demand for Apple’s core business, the more Apple has an incentive to disrupt more adjacent markets – such as payments and streaming music – to support this virtuous circle. When companies get this right, the ‘network effects’ kick in. As a result, Alibaba is worth more than Walmart Stores

    MySpace lost out to Facebook because it tried to create all its own products. Samsung is suffering because it lacks a strong platform model – and the same can be said of telcos, Torrance averred.

     

    Actions for telcos

     

    He said so far, the industry has not evolved its business model from product- to platform-based. It has made various movements in this direction, particularly with its digital initiatives, but these have been isolated from a fundamental upgrade of the business model.

    “Our view is that it is time, at board level, for all telcos in all countries to start by re-considering what their purpose is and which companies they are really competing with and how. Will they remain ‘leading providers of telecoms/ICT services’ or could they become ‘creators of digital innovation platforms that drive local socioeconomic growth’? The latter provides scope for an exciting new future.

    “The successful business model template for the digital economy is available and ready for adoption and adaptation. It is time to put the objections aside and take some bold steps forward,” he said.

    He said winners in the digital economy are those companies that can create platforms-business models around their products, adding that the time has come for telcos to be bold and evolve to a platform-based business model to assure them of  a more exciting and sustainable future.

  • Economic downturn: SMEs restrategise

    Small and Medium Enterprises (SMEs) are cutting costs to boost profitability amid slow revenue growth.

    Association of Micro Entrepreneurs of Nigeria (AMEN) President, Prince Saviour Iche lamented that small businesses were confronting wages and input costs as well as regulatory burdens across n various sectors.

    According to him, SMEs are challenged to make tough decisions on how to cut costs without damaging product and service standards.

    Operators are apprehensive as the economic slowdown, which coincided with high inflation, led to a drop in consumer demand, crimping revenue and pushing companies to reduce costs.

    Iche said companies were struggling to save costs following high cost of raw material sourcing and increasing manufacturing assets.

    According to Iche, small business owners are spending heavily in alternative sources of energy which is not helping to bring down costs.

    He explained that it had become challenging to focus on reductions that would not compromise their long-term growth prospects.

    Small business owners have expressed worries about the economy dipping into recession, declining commodity prices, high interest rates and stiffer regulations.

    Among  the big ones, one of the employers have its employees to consider the financial crisis facing the company and accept proposals to cut wages and other costs in order to avoid job losses.

    To stay afloat, organisations are optimising their businesses by cutting costs and increasing efficiency. Companies are trying to restructure operations, citing slowdown in the economy. The exercise has resulted in job cuts.

    It was learnt that several projects are stalled due to lean financial resources and creating large work in progress.

     

    In most organisations, s rationalisation is being carried on as part of the ongoing steps to reduce the operating costs, improve the competitiveness and contain the operating losses.

  • Pray for Nigeria, Monarch urges

    Nigerians have been urged to always pray and fast for survival of the country and its leaders, especially in this trying period of economic downturn so that through it all, we will come out a stronger and better nation.

    Gombe monarch, Abdu Buba Maisheru II, Mai Tangle spoke at his Palace in Billiri at the instance of his 15th year on the throne and Nigeria’s Democracy Day celebration.

    “As Nigerians, we should be praying for the leaders of this country, the chairmen, governors and the President; we should pity the President and pray for him more because he carries bulk of the load of this country.

    “That Nigeria will be peaceful depend on all of us. So we should be praying for God to help Nigeria; this is a season of prayer and fasting for peace, peace of mind, leaders, increase, good advises and God’s intervention wherever and whenever we see or feel the need for it, instead of running-down leadership.

    “Nigeria is a good country. Whoever says it is not does not know what he is saying,” said the traditional ruler

    He nevertheless called on government to have pity on the Northeast sub-region, particularly the victims of insurgency and help them rebuild the destroyed places as well help them stand on their feet.

    The royal father said it had been for him a successful fifteen years of peace, as well as total cooperation and support from the Tangale Chiefdom and called on the people to continue in that light.

    He told to them to continually strive towards enhancing their harmonious attitude and to always remember and consider home a safe haven for investment whenever God blessed them.

    On the incessant communal clash over farmlands between the Billiri and its neighbour, Mai Tangle absolved himself and his counterpart in the neighbouring chiefdom of blames, saying the lasting solution to the matter rested with the state government and the presidency.

  • Economic downturn: SMEs may cut jobs

    Economic downturn: SMEs may cut jobs

    The prevailing economic downturn may force Small and Medium Enterprises  (SMEs) to cut jobs as part of cost saving measures, President, Associa
    tion of Micro Enterprises of Nigeria (AMEN), Prince Saviour Iche, s has said.

    He said SMEs could reduce jobs across operational and support positions.

    With the depreciation of the naira, he said small businesses are experiencing a significant increase in running costs, especially with the increasing cost of raw materials.

    Most businesses have higher running costs that are having negative impact on cash flows, he lamented.

    Iche said the increase in the prices of raw materials makes finished products less competitive.

    For instance, he said one of the raw materials being used by one of his members used to be sold for N18, 000, adding that it has risen to N35,000.

    With many SMEs unable to pass on their cost increases to their customers, they are being forced to look for ways to reduce their operational costs. This, he noted, would require reducing staff.

    While   demand for finance is rising, Iche said SMEs are failing to get the funding they need from their banks.  This is crucial given SMEs constitute over 90  per cent  of all firms and account for approximately 70 per cent  of employment.

    He  said the priority area of banks should  be SMEs, adding that it  is the  entrepreneurs in SMEs, many of them in unorganised sector, who form the backbone of the economy.

    According to him, SMEs are concerned that the increased regulatory pressure will force them to reconsider and to err on the side of caution, when choosing the markets and sectors in which to operate.

    Iche stressed that more needs to be done to help SMEs perform at full capacity. Although they have been extended gestures of assistance, such as Central Bank of Nigeria (CBN) and Bank of Industry (BoI) funding programmes  for small businesses, he  said  more needs to be done to ensure that they see their portion of funding.