About sixty-one per cent of companies operating across 13 sectors of the Nigerian economy recorded huge declining sales over the past 12 to 18 months due to limited availability of foreign exchange and slower economic growth, a new report has found.
The report, which was unveiled in Lagos on Thursday, revealed that 42 per cent of the companies had been implementing aggressive cost-cutting measures, while 18 per cent were already sacking staff.
Commissioned by the Lagos Chamber of Commerce and Industry, the survey was conducted by PricewaterhouseCoopers.
It was unveiled by the President, LCCI, Dr. Nike Akande, and the Regional Managing Partner, West Africa, PwC, Mr. Uyi Akpata.
According to the survey, health care, telecommunications, and oil and gas sectors have the highest impact with the declining sales recorded by the constituents companies put at 100 per cent, 100 per cent and 80 per cent, respectively.
Sixty-seven per cent of the companies in the financial services sectors recorded declining sales/revenues as a result of the limited forex and slower economic growth, while 63 per cent of agricultural companies experienced the same.
The survey further showed that 63 per cent, 60 per cent and 56 per cent of companies in the agriculture, information technology and manufacturing sectors recorded huge declining sales/revenue as result of the forex rationing policy employed by the Central Bank of Nigeria following the sharp drop in crude oil prices.
Similarly, the report put the total number of companies that recorded declining sales in the hospitality, power and utilities, and consumer and industrial goods sectors at 50 per cent each.
The figures for the professional services industry, construction and real estate, and logistics and transportation were 43 per cent, 33 per cent and 33 per cent, respectively.
According to the report, the 10 top business challenges facing companies operating in Nigeria are: exchange rate (25 per cent), increasing inflation (19 per cent), and economic uncertainties (eight per cent).
Others are high credit (nine per cent), regulatory issues (five per cent), poor infrastructure (seven per cent), labour issues (four per cent), unfavourable government policies (three per cent), corruption (three per cent), and increased corruption (two per cent).
The report estimated that the Federal Government could have lost around $18bn in oil revenue in 2015.
It read in part, “Our report highlights the exchange rate as the top challenge facing industries in recent times. Capital controls, FX rationing and restrictions on the importation of certain items are measures the CBN has implemented to preserve the foreign reserves and maintain currency stability.
“Considering that the outlook for the oil price is a lower for longer scenario, we think these measures, if sustained over a prolonged period, are negative for the economy.
“Sustaining the wide premium between the official and black market rates as well as ingenuity to circumvent economic restrictions could further breed corruption and revenue leakages with massive costs to the economy.
“The argument has gone beyond the need for an adjustment to a more urgent need to re-liberalise capital flows for a resurgence in foreign investments, which Nigeria needs to buffer its foreign reserves.”
Akande noted that the sustained decline in global oil prices had put the nation in a difficult position, leading to the various fiscal and economic challenges.
She said, “I believe that a holistic diversification of the economy is desirable and inevitable at this trying period. There are many alternatives to oil and there are a lot we can do to make the best out of the present situation.
“More than ever before as a nation, we need more strategic decisions and policies that will put the economy on the path of recovery and social prosperity.”
Vice President Yemi Osinbajo said there were plans to make the business environment more conducive.
Osinbajo, who was represented by the Senior Special Assistant to the President on Industry, Trade and Investment, Mrs. Jumoke Oduwole, said Nigeria had gained poor reputation with the ease of doing business, adding that there were moves to address the issue in collaboration with the Ministry of Industry, Trade and Investment.
-punchng