KPMG Business Survey Highlights Forex Risk in Nigeria


Nume Ekeghe

A survey of 94 executives of multinationals, large sized public and private companies across various industries that was conducted by KPMG Nigeria has ranked foreign exchange (forex) risk as the highest hurdle that might impact organisations over the next two years.

The survey, titled: ‘Top Ten Business Risks 2018/2019,’which was presented yesterday at media briefing in Lagos,identified a total of 31 business risks with solutions to mitigate the risks.

The top 10 risks were forex risk, fiscal and monetary policy risk, regulatory risk, crude oil price risk, brand and reputational risk, customer attrition risk, political risk, liquidity risk, insecurity risk and interest rate risk.

Speaking at the briefing, the Partner and Head of Risk Consulting KPMG, Mr. Olumide Olayinka said the survey which was KPMG’s second edition was carried out from December 2017 to February 2018.

He said: “The report represents our findings from the risk survey from about 94 executives and directors of large sized public and private companies across a number of industries in Nigeria.
“And these executives include the chief risk officers of those organisations, chief compliance officers and indeed the chief audit executives.

“The objective of the survey was to obtain the perspective of these executives on the potential impact of 31 specific risk issues across four dimensions. One of those is the macroeconomic dimension, strategic dimension, financial and operational dimensions.

“The report clearly identifies the key risks likely to affect businesses operating in various sectors operating in the Nigerian economy.”

He added: “Hopefully, this report would help organisations to see the risks that would affect their businesses and proactively put in place things that would manage those risks.”
An aspect of the report relating to forex stated: “The active management of FX risk has become imperative, due to CBN’s flexible FX rate policy, which seeks to improve the dynamics of the Nigerian FX market.

“In addition, Nigeria is still behind the levels of foreign exchange liquidity generated from export proceeds and capital inflows in 2013, despite improved terms of trade and significantly higher capital inflows (in part due to the introduction of the Investors’ & Exporters’ FX window) which helped ease concerns about FX availability and rate stability in 2017.

“In light of the above, executives are enjoined to continually monitor the country’s trade level, external reserves, policy direction and capital inflows which could impact FX availability and rates.”
On her part, Partner in Risk Consulting, KPMG, Mrs. Tomi Adepoju said: “The nature of some of the highly rated risks, there is no doubt that some of our economic challenges, as a nation are multi-faceted and require strategic regulatory interventions.

“To this end, we enjoin policy makers, regulators and capital market operators to support the Nigerian Private Sector and Capital Market to continue to embrace carefully coordinated initiatives for sustainable economic growth.”