KNOW HOW THE CURRENT ECONOMIC SITUATION IN NIGERIA AFFECTS YOUR BUSINESS AND POSSIBLE SOLUTIONS

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Biafra
Chief Anayo Nwosu

 

By Anayo M. Nwosu

The write up below might help someone you know.

I have attempted to categorize various business enterprises, situate their current business challenges in the economic sphere and proffer some practical solutions. I also avoided banking or economic jargons.

More knowledgeable fellows could extend the frontiers of this discussion to provide more useful insights and panacea.

Group 1. DEALERS IN IMPORTED ITEMS (BOTH IMPORTER, DISTRIBUTOR &RETAILER).

While some of you battle with inability to source FX to replace your stock, you and your distributors must have noticed that the high rate of dollar has forced you to increase the price of your goods beyond the purchasing powers of your customers. Therefore, sales have slowed down or non existent. It’s not the handiwork of evil hands upon your business but an economic reality. There is always a price limit beyond which a customer of a fixed income can’t pay for your goods even at gunpoint.

SOLUTION: Wind down and look at branching into production or distribution of local substitutes of your stock in trade. By so doing, you would be assured of continuous stock replenishment and reduced cost which would make your products affordable.

Group 2. CLEARING AND FORWARDING AGEN:
The nature of your business is that whatever that affects the importer affects you. If he has not sold old stock, he would have enough money to place new orders. If he is not importing, you will have no consignments to clear and to forward. In this category are those in Haulage business. You haul when goods are available. Right now, due to low sales and scarcity of cheaper FX, importation has reduced hence the hard time you are experiencing now.

Only those who can clear and dispatch goods on credit for importers (who may not eventually pay) seem to be in business.This hardship is further compounded congestion at the port and inability to access the ports. Also, in the business are your colleagues who cut corners. They will soon go to jail. Don’t join them. Just change profession and re-enter when the economy improves.

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Group 3. MANUFACTURERS
If you need to import raw materials to produce, you may have noticed that your distributors are complaining of poor sales due to your frequent increases in product prices to recover cost even with increased production costs.
Poor sales, high bank interest rates and inability to replace depleting raw materials stocks have conspired to force you to close shop.
You must quickly lay off non-essential staff and join the Manufacturers Association of Nigeria to put pressure on government for some incentives.
There is a limit to which your customers cannot afford to buy your products as packaged.
Why not innovate and come out with products with reduced quantity and easy to pay prices? Peak Milk has done so with N10 sachet milk reacting many years after Cowbell did it. People live by meal these days.

Group 4. DOCTORS AND PHARMACISTS
Being that most drugs are imported as many local manufacturers are closing down due to rising cost of production or inability to import raw materials at reduced costs, many patients cannot afford to pay hospital bills and have resorted to churches, mosques and native medicine practitioners for cheap opium or cure.
SOLUTION: You may have to improve your customer service practice to make the few customers or patients who can pay to remember you first and to prefer you to a crowd of competitors. Hospitals should explore working with health insurance organizations for assured patronage and payment. Sales of generic and effective brand of drugs would attract low income buyers. Volume sales is key.

Group 5. SELLERS OF FASHION AND STATUS GOODS
There are few people who are like lions that wouldn’t eat grass no matter the economy of the jungle. But they also have competing needs and may not buy as much as they used to buy. Therefore, the key to keeping them is excellent customer and after sales services.
The bad news is that instead of increase in your clientele base, it’s decreasing as there is a lull in the upward migration within income groupings.
People no longer replace clothes and other apparels as before. It is that bad.
The easiest test is the massive failure of dry cleaning business.

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SOLUTION: If you feel the economic pinch, please come down and move into other areas that have wider mass appeal.

Group 6. CHURCH & FAITH-BASED ORGANIZATIONS
Many penticostal churches and the orthodox ones have noticed a shrunken size and decreased flow of funds from the faithfuls not because they are backsliding but it is a reflection of the economic realities of the members. Many of the yuppy members have lost their plum jobs and others have had their salaries slashed by 45%. Bonuses are gone as clients’ capacity to do more business has dwindled.
SOLUTION: Many churches have started setting up Filling Stations, Commercial Printing Press, Private Schools to cater for the poor and the rich, Portable Water Production, Hospitals etc.to augment offerings. Everybody is now existential and are struggling to survive.

Group 7. HIGH SCHOOL FEES-PAYING PRIVATE SCHOOLS
Following reduced earnings, many children and pupils of many private schools might not return come September 2020. Their parents have made realistic plans to move them to less fees-paying schools. Most Catholic and Anglican missionary schools are their first ports of call. I was shocked to see a rabid Catholic Church hater and a pastor move his children to Lagoon and Whitesand schools owned by Catholic Church in Lagos.

SOLUTION: The private schools may have to review their fees downwards. But this may impact on their standards. The cost of operating a school on commercial basis is very prohibitive. Owners may have to seek foreign foundation’s or NGO’s donations or adoption. That’s what catholic schools like Marist Brothers of School and Loyal Jesuits College enjoy.

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Group 8. LANDLORDS AND REAL ESTATES
Many landlords are the first indicative victims of the worsening economic conditions. Most tenants are no longer paying due rents and they are not moving out. Even when you evict them, the house would remain unoccupied for months.
Tenants are not really bad but can’t just pay. They are overwhelmed by expenses as they now live from hand to mouth with no savings remnant.
SOLUTION: Landlord should reduce rents and should never contemplate rent increase at this time. Unreasonable rent increase would annoy old tenants into defiance. Many of them think that you, the landlord, has a hand on their economic downturn through spiritual dwarfing arsenal.

Group 9. ALL SERVICE INDUSTRIES
Many people can no longer just pay for leisure but are ready to consume on credit. There is no free money to patronize businesses of easy virtue. Funnily, wives misinterpret their husbands’ current fidelity and early home coming as a spiritual rebirth. It is not. It is economy induced. They are guilty of the offense in thoughts.
SOLUTION: All people in service industry should improve customer service, practice gratitude and do a lot of promotions.

Generally, please note that things are hard. Just do a forensic audit of your business, study the value chain and see how you can adjust otherwise you will misread the signs of times.

“It is not my portion”, is not applicable here.

Don’t be deceived by any person of faith. Ask your banker or economist friend to help you analyze your situation and proffer solutions.

There is no evil hand or spell on your business. What you feel now is economy-induced. And it is going to be with us for a couple of years more.

-This Business Advisory Article is culled from the Collection of Articles written by Anayo Nwosu (Ikenga Ezenwegbu)


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