How Nigerian firms can navigate present economic headwinds – Kroll
In spite of economic headwinds, international and local investors see Nigeria as a market hard to ignore. But running organisations this time presents a complex set of challenges and opportunities that require expert guidance to tackle, says Kroll, global provider of business intelligence and risk solutions. Mark Simmonds, senior consultant, and Alexander Booth, associate managing director, Kroll, were in Nigeria recently to further build and deepen business relationships. They spoke to Daniel Obi on how firms could navigate some operational challenges.
Presently, every business concern in Nigeria, Africa’s largest market and most populated nation in the continent is searching for solutions to navigate through current economic headwinds. There are myriad of economic challenges confronting them.
Nigerian businesses are facing difficult time over weakened purchasing consumer power, low foreign exchange rate against the dollar and inflation. Businesses in Nigeria including manufacturing, financial institutions and companies in other sectors face challenges in distribution channels, erratic electricity generation, counterfeit of their products, stealing within the company, poor strategic decisions, nonperforming loans in financial institutions, credibility issues before international investing community and poor cyber security among others.
Under this environment, many business concerns are confused, finding easy way in cut of staff strength, closing offices and waiting for miracle for improved economy. Businesses are struggling because of government indecision. Foreign investors who of course know that Nigeria is a green investment land, are also rather cautious about the Nigerian business environment as most not-too fact based information they receive are threatening and scary.
The numerous challenges are enough to bring down a business concern but with resilience and determination the businesses are eager to weather the storm and are therefore in search of solutions to navigate through the gamut of the challenges. It is not however simple to solve all the challenges in a swoop, but Kroll, the world’s foremost business intelligence and risk solutions firm which has long been active in Nigeria, working with both Nigerian clients and international investors, further promises to help Nigerian firms investigate challenges.
For instance, the Nigerian banking sector has been experiencing challenges over rising non- performing loans. As at May this year, reports say non-performing loans stood at over N650 billion which calls for serious concerns.
According to a report, in fact the balance sheets of most of the deposit money banks are bleeding badly as a result of the humongous debt overhang in form of non-performing loans. It is therefore surprising how the banking sector or the environment allowed the nonperforming loans to rise up to that figure.
But according to Kroll’s senior consultant, Mark Simmonds in a chat with BusinessDay in Lagos, Kroll can help organisations looking to understand what is happening to some of the loans given out that are not being repaid and try to understand how those banking loans have gone wrong and why.
And what can be done to recover some of the assets of the loans anywhere around the world. He also said that Kroll with established links across the world can help trace assets outside Nigeria towards recovering them for the financial institutions.
“We have helped banks in association with their lawyers to recover their loans; to identify assets that can be recovered as part of rationalization of loans. The problem may have originated from Nigeria but the assets to be recovered are all over the world. This comes back to our international reach because we have offices around the world,” Mark Simmonds said.
Simmonds further said that Kroll with more than 50 offices across nearly 30 countries and which has for more than 40 years, helped clients make confident risk management decisions about people, assets, operations, and security through a wide range of investigations, cyber security, due diligence and compliance, physical and operational security, and data and information management services can also assist to investigate business potential partners for Nigerian and foreign firms.
“Kroll is the world leading business intelligence; risk mitigation and investigative firm covering a whole series of services including helping companies navigate market entry. There are companies from around the world looking to invest in Nigeria. Or to partner with Nigerian businesses, this requires doing due diligence of both business partners as well as market entry studies.”
Mark Simmonds and Alex Booth highlighted Kroll’s depth of knowledge and experience in Africa’s most dynamic marketplace and noted a growing demand for specialised consultancy projects for Nigerian clients in the private and government sectors, as well as investment advisory support. This would enhance growth.
Simmonds acknowledges that it is important for Nigerian businesses that want to grow in Nigeria and who are entering into partnerships to understand who their foreign partners are.
“We can help those businesses understand who those proposed partners are, what they have done before and whether they delivered on their promises, history and other jurisdictions which is largely valuable for Nigerian businesses to make sure they have a trust worthy and reliable partners to grow their business not just in Nigeria but in other markets.”
On the challenges of the FMCG, Simmonds said one of the challenges is the integrity of the supply chain, distribution and the vulnerability of some international brands to counterfeit products which are being introduced in to the Nigerian market in parallel to the genuine products.
“We use our skills to support manufacturers as they try to ensure the integrity of their supply chains. We have done a lot of work in the intellectual property arena both in Nigeria and in other challenging markets; to help them to understand the distribution channels and how they are being compromised, how the counterfeit products are entering the market and to trace the chains to their point of origin”.
Kroll’s recent work in Nigeria has included an overseas investment advisory project for a Nigerian business investing in India and the Middle East. On behalf of the investor, Kroll drew upon the expertise of its multi-cultural team and cross-border capabilities to develop an understanding of the investment target’s profile, activities, operations and vulnerabilities in the relevant markets outside Nigeria.
“We are excited by the growth we continue to see here in Nigeria in spite of the headwinds the Nigerian economy faces but in the medium and long term the Nigerian economy is promising and remains attractive” “International and local investors are attracted by Nigeria’s increasingly diverse economy. There is a visible growth in consumer markets which has resulted in the development of a vibrant entrepreneurial workforce and is contributing to Nigeria’s economic progress,” Simmonds added.
Kroll believes that with expert advice based on market research, foreign firms could successfully enter Nigerian market while firms operating in Nigeria could attempt to navigate some operational challenges and ensure genuineness of their partners anywhere around the world.