The upward growth trajectory anticipated in Nigeria is to have very little impact on the revenue of businesses as a significant number of CEOs KPMG surveyed expect moderate corporate growth across board.
Key findings from the survey show that 76 percent of the CEOs of 25 top Nigerian companies are confident about the country’s growth prospects over the next three years, however 88 percent of them are projecting topline revenue growth of less than 2 percent.
“I think it all boils down more to the purchasing power of consumers, which we have seen is a major challenge especially given the fact that we still have sectors like real estate still in recession,” said Abdul Bello, Group Managing Director /CEO of United Africa Company of Nigeria.
“Opportunities are however emerging and we are seeing some growth even though not at magnitude most of us expect.”
Nigeria, Africa’s largest economy just exited a recession owing to the collapse in oil prices which slid two-decade low to $28 per barrel in January 2016 coupled with renewed militant attacks in the Niger-delta region of the country which sent production levels to near a decade low of 1.2 million barrels in the same year.
Wole Abayomi, head of tax at KPMG stated that if the trend in average oil price increase continues, coupled with stability in the FX market and full implementation of the government’s Economic Recovery and Growth Plan (ERGP), the economy should start accelerating.
“Every industry is impacted by the dynamic changes in the economy and in my interaction with clients, it is increasingly clear that the prospects for the company is directly linked to the health of their industry,” Abayomi concluded.
For Paul Gbededo, CEO Flour Mills of Nigeria PLC, infrastructure is a critical area to look out for. He reiterated the need for policies that are consistent, sustainable, inclusive and enforceable stating that it is important that government creates the enabling environment for growth.
The Managing Director of Shell petroleum development company of Nigeria Osagie Okunbor said, “Resolving the security situation in the Niger delta, shortening contracting cycles and right legal and fiscal environment will be critical enablers for investment and growth in the industry.”
On the strategies for this growth to emerge, CEOs believe that organic growth, outsourcing and strategic alliances are the key strategies for growth over the next three years as 3 in 5 of the CEOs say organic growth is one of their top two strategies for growth while 28 percent ranked it as first.
However, this growth trajectory is not without threats as 88 percent of the CEOs agreed that operational risk is among the top three threats to their organizations growth while 48 percent of the CEOs say the same for talent risk.
Kunle Elebute, Senior Partner, KPMG in Nigeria and chairman, KPMG Africa said the issue of getting the best talent to stay in order to fit into client standard is a major risk being faced by companies in the country.
“We have noted several ways that can help cushion talent risk and they include making entry barriers higher such that the best talents can be selected, investing heavily in both local and offshore trainings, growing the businesses to accommodate this talents,” he added.
The CEOs are confident that their existing leadership team is fully equipped to oversee the radical transformation their organisation requires with 100 percent saying they are personally prepared to lead such a change.
On technological disruption, the CEOs believe that it is more of an opportunity than a threat, and they all agree that it is the only significant disruption facing their businesses.
However, many of them stated that they are struggling to run parallel processes to transform the digital and non-digital aspects of their businesses. 88 percent of the respondents are of the opinion that their digital and technology investments are strategic and long term but 64 percent of them expect to see significant return on such investments in 12 months.
“I do not think investment in technology is a challenge says Olusegun Ogunsanya, CEO of Airtel. This is because it is a choice one needs to make to stay relevant,”
“The returns are good no doubt; the efficiency is there but the quantum if investment/cost is huge. For us in the telecommunication space, we earmark as high as $200 million yearly for the cost of investment in technology just to stay relevant in the industry,” the Airtel Boss noted.
Another important key finding from the survey was on meeting of customer expectation as 66 percent of CEOs believe that they are meeting or exceeding their customers’ expectations.
However 44 percent of CEOs admit that they have to reposition their brand to meet the needs of millennia’s, while 40 percent of them say it is a challenge understanding how the needs of millennia’s differ from older customers.
Gbededo noted that flourmills overtime, is rolling out initiatives that are aimed at reaching out to the younger generations (Millennia’s) through social media platforms.
According to him, the company engages with these classes of people to get feedbacks on new ways in which their products are being used by them and this has helped in growing the market horizon of the company.
Echoing the same line of thought was the CEO of 9mobile, Boye Olusanya, who said one of the best thing that has happened to the telecommunication industry has been the way millennia’s absorb and digest information on specific ways which the company has always tried to cash in on.
According to the CEOs surveyed, 84 percent of them say they are ‘well’ or ‘very well’ prepared for a cyber-attack, while 96 percent are confident in their ability to identify new threats and all are confident about their ability to manage external stakeholders in the event of an attack.
