The Delegation of German Industry and Commerce ( DGIC) and the Nigerian-German Chamber of Commerce (NGCC) recently hosted a virtual conference featuring top entrepreneurs in Nigeria to discuss the impact of the prevailing COVID-19 pandemic on business in Nigeria.
Welcoming participants, the NGCC Director-General, Mr. Gbenga Adebija said the Chamber and the Delegation shared a common objective to support its members as well as German companies in Nigeria through this challenging period. ” We are all going through very challenging and unprecedented times which require even stronger cooperation, synergy and leveraging of networks” Adebija declared.
The German Delegate, Ms. Katharina Felgenhauer, who also moderated the session noted that the pandemic required companies and organizations to rethink their business strategies and methodologies in view of the far-reaching impact of the pandemic. Ms. Felgenhauer noted that prior to the spread of the virus into Nigeria, the domestic economy already faced an existential threat to its single major foreign revenue earner – crude oil. The stalemate within the OPEC led to the decline in global oil prices to an all-time low of $28/barrel (from $58) on March 9, 2020. This resulted in a shock to Nigeria’s depleting ($40 billion) foreign reserves and prompted an urgent review of its budgeted revenue from the oil sector and additional burden on the government’s fiscal ability to implement the ($35 billion) 2020 national budget.
The session was prefaced by a business presentation by Dr. Goodluck Obi, a partner at KPMG who discussed various implications and scenarios for business during the COVID-19 pandemic.
Participants drawn from various sectors of the economy then engaged in a very vibrant and interactive session with key highlights as follows
- Business shutdown: businesses categorised as providing “non-essential” services have been advised to shut down or work remotely. Aside hospitals, pharmacies, food processing and distribution chains, water and power utilities, and others with the essential service status, banks and other financial institutions are permitted to carry out skeletal operations. However, it is unclear which agencies issue / confer this exemption as well as the procedure for the same. Companies which are not categorized as “essential” but whose products and/or services are relevant to the essential industries for production and distribution seek clarity on their operational status and ask to close potential loopholes in the directive
- Supply chain challenges: domestic interstate land borders remain closed even though ports remain operational, companies still report challenges about clearing and transporting goods. It is important for businesses that government directives are clearly communicated and executed accordingly by its agencies.
- Mobility and transportation: With the restriction of movement and closure of interstate borders, public transport operators are presently inoperative. Thus, safety and security of employees of essential service providers as they commute to and from their respective sites during this lockdown exercise is of major concern.
- Foreign exchange: As the foreign reserve continues to shrink following the recent fall in global oil prices, and the CBN having adjusted the naira-dollar exchange rate from N360 to N380 per dollar in the investors & exporters (I&E) window, speculation over devaluation of the Naira is already affecting banking and payment transactions among businesses. Access to foreign exchange remains a cause for concern for manufacturers and suppliers alike who require foreign exchange to import raw materials for local production and for other international transactions.
- Security and political concerns: The operating environment is shrouded with much tension and unpredictability, the direct economic implication of the lockdown, i.e. loss of income for the vast majority and potential scarcity of basic supplies, could trigger disruption and instability should the much anticipated N3.5 trillion economic stimulus package be managed inefficiently.
- General uncertainty: The number of new COVID-19 cases is daily rising in Nigeria and it is becoming more and more unlikely that the situation would be curbed within this initial 14-day lockdown. Taking cue from other countries battling COVID-19, companies are preparing for a prolonged shutdown. Given the current state of public health in the country, a full-blown epidemic might be difficult to handle and further cripple the economy. Businesses, therefore, are preparing business continuity plans and scenarios which span across timelines from a few weeks/months to a year and beyond, including worst-case scenarios. Those with HQ offshore are beginning to turn to their respective HQs for assistance.
Concerted efforts by the federal and state governments in close collaboration with the organized private sector are in top gear to contain the Coronavirus pandemic in the country and stir the economy afloat. Ms. Felgenhauer assured that AHK Nigeria, would continue to work with all local partners and stakeholder to provide relevant information, monitor market trends as well as support COVID-19 relief programs.
