The ongoing recession forecast to end in third quarter has been adjudged a morale booster for innovation, which has led many corporate organisations to profitability despite the general economic hardship.
Already, optimism is high that the worst of the recession is over, although businesses that suffered erosion in bottom lines, and forced them to tweak models to stay in business are still reeling under the effects.
Consequently, chief executive officers across sectors, at the Nigeria Stock Exchange-Bloomberg CEO Roundtable, were unanimous that the recession provided an opportunity for entrepreneurs to display dynamism, as it has become a matter of “innovate or die”.
The newly appointed CEO, Stanbic IBTC Bank, Dr. Demola Sogunle, admitted that the last two years have been tough for Nigerian banks, as the quality of the loan book both personal and corporate portfolios were “affected” negatively.
According to him, in 2015 people were just not able to pay and the loans became impaired and the situation was the same in 2016, exacerbated by foreign exchange illiquidity.
But considering companies to do business with in these periods, he said his bank looked at firms that were able to source raw materials locally, and whose reliance on foreign currency was moderated, or those that earn foreign exchange to support their import.
Also, to deepen innovation in tune with times, his bank went more digital, scaled down branch networks, which led to rationalisation, changes in terms of channels and internal operations, but then fostered delivery of service to customers. “We scaled down on sectors. In agriculture for instance, we identified key subsectors to work with.”
The Managing Director, Okomu Palm Oil Company, Graham Hefer, said in agriculture, there were significant revenue, leading to aggressive lowering of cost, although there were also issues having to do with import and the lack of foreign exchange.
Hefer however, affirmed that the recession helped his company aggressively lower costs, while guarding foreign exchange that it obtained.
“To bolster our foreign exchange sourcing, we devised a system of selling palm oil locally and selling rubber to the international markets. On productivity, we’ve looked at vertical integration within our company and we are looking for better yielding crops so that we don’t look for more land,” he said.
The expert also stressed the need for value creation, if agriculture will deliver the promised benefits.
The CEO, Africa Finance Corporation (AFC), Andrew Alli, noted that in the last couple of years, there hasn’t been any new large scale infrastructure project due to the fact that the recession had constricted ability to pay, even by government.