PricewaterhouseCoopers (PwC), one of the global leading global economic research and consulting firms, has set three key operational areas for corporate managers in the country to focus on to enable them cope with the current fiscal and monetary whirlwinds and position their entities on the path of growth and improved returns on investments.
The research firm, in its just published ‘Nigeria Economic Outlook August 2023’ report, after critically appraising the fiscal and monetary policy measures introduced by the President Bola Tinubu-led administration and the impacts on the broad spectrum of the socioeconomic landscape, predicted that the implementation of the policies would sustain the rising inflation in the short to medium-term and consumers would be pressured by higher prices causing demand to slow down.
The PwC researchers also believe that wage adjustments will not be done simultaneously and proportionately, further cuts in Monetary Policy Rate (MPR) are not expected, the adoption of a managed float exchange rate is projected to cause volatility, and that possible increase in crude production is expected due to likely improved security architecture in the oil-producing regions.
Based on the ugly scenario, firm’s analysts predicted that continued inflationary growth and rise in the cost of living may slow real economic growth in the medium term.
On investment outlook, the experts projected: “Economic reforms such as the FX market liberalisation could gradually attract foreign investments and boost capital inflows in the long term. However, in the short-run, investors will likely adopt a wait and see approach. This may be a result of the absence of further reforms to strengthen business and economic fundamentals. Rise in inflation will likely reduce the real yields or returns on investment.”
Similarly, they also predicted that rise in energy, food, transportation and import costs may dampen consumer spending on non-discretionary items just as high FX rates may drive up production costs and impact negatively on firm performance.
To mitigate the potential fiscal and monetary policy whirlwinds and to profitably sustain their operations, the PwC experts canvassed a three-point agenda, namely customer growth optimization, cost reduction and sustenance of talents and improvement of working environment for corporate leaders to prioritize in their operational strategies
On customer growth optimization, they recommended: “To achieve customer growth optimization, corporate organisations should implement the following strategies: adjust pricing and pack architecture using Revenue Growth Management (RGM) analysis to cater to shifting consumer habits, adapt products to accommodate changing demand dynamics by substituting expensive raw materials, leverage post-event analytics for promotion decision-making, renegotiate contracts for better terms, and expand distribution through discounters and online platforms to align with evolving consumer buying patterns.”
This is even as they tasked corporate leaders that in order to optimize their costs across value chains, companies should conduct thorough analyses across the value chain and that to secure the key talent required to win, CEOs need to realign their Employer Value Proposition (EVP) with emerging realities; explore alternative resourcing models and ways of work; review recognition and reward programmes to compensate differentiated capabilities and performance; and deploy enterprise-wide up-skilling to build the capabilities required for the new world of work.
