Dike Onwuamaeze
Chief Financial Officers (CFOs) of top Nigerian corporate organisations have stated that foreign exchange (forex) availability, taxation and the impact of COVID-19 are their three major sources of concern in managing the finances of their respective organisations.
They expressed these views in the KPMG Nigeria 2021 CFO Outlook Survey (Half Year Review, June 2021), which also identified security, infrastructure and power as top three matters government should address to enhance ease of doing business, stimulate economic growth and improve public trust in the country’s economy.
The sectors covered by the survey included financial service, energy and natural resources, technology, media and telecommunications, consumer and industrial markets, infrastructure, government and healthcare among others.
The report stated: “Unsurprisingly, foreign exchange availability, taxation and the impact of COVID-19 emerged as the top three stay awake issues for the CFOs surveyed, while the top three issues requiring urgent government intervention from an ease of doing business perspective are security, infrastructure and power.
“These are the same issues identified year after year and it draws attention to the need for new thinking and a consistent, coordinated approach to addressing them.
“As the federal government continues to focus on boosting tax revenues, CFOs expressed concerns around tax multiplicity, aggressive tax collection drive and lack of transparency in customs/excise administration.
“They believe that dealing with multi-layered taxation in the system hurts businesses, especially SMEs. They suggested that the tax administration should be harmonised and transparent.”
A Partner and Head of Audit Services, KPMG Nigeria, Mr. Tola Adeyemi, noted that leading organisations across all major sectors in Nigerian economy were surveyed on their business outlook, strategies for cost and risk management and the priorities for an enabling environment.
The CFOs expressed pessimistic view on the prospects for economic growth in 2021 even though they remained confident about the prospects of growth in their respective organisations and slightly optimistic of growth in their various industries.
The CFOs identified increased implementation of cost optimisation, digitisation and technology optimisation, changing the operating model to reduce risk and protect value and developing new products targeted at new customers as key initiatives that were taken during the period to enable businesses to remain profitable.
However, the report warned that cutting cost without a long-term view in mind could have damaging effects on innovation, growth and reputation as studies have shown that short-term cost-cutting often harm organisations across industries and can ultimately increase costs in the long run.
“We deliberately reduced and are still reducing our service cost by launching campaigns to drive customers to adopt e-banking channels and instituted cost management initiatives development into the workforce KPIs and currently, business units are incentivised to meet set targets in managing their variable cost portions’’ the CFO of Access Bank Plc, Mr. Oluseyi Kumapayi.
The CFOs considered cloud computing, advanced analytics and visualisation as top technologies that were used to improve efficiency in their finance functions during the COVID-19 pandemic.
They further identified robotics process automation, artificial intelligence and blockchain as new frontiers for delivery of finance services that some of the CFOs have started exploring for adoption.
The CFO of Oilserve Limited, Mr. Solomon Okodugha, urged companies to accelerate growth, “through delivery of its strategic objectives with the finance function fully embedded in the business, leading the enterprise wide integration and providing in-depth financial analytics and reporting to steer the organisation in the right direction.”
The report also noted that 50 per cent of the CFOs believed that the African Continental Free Trade Area (AfCFTA) agreement would have medium impact on their businesses, while 40 per cent of them believed that the AfCFTA would have low impact on their business in 2021.
Nonetheless, the CFOs mentioned that having an effective execution plan for the AfCFTA would be important for Nigeria.
The CFO of Foods Concept Plc, Ms. Anthonia Agbonifo, was quoted to have urged government to ensure that, “policies are created to primarily support the growth of local businesses and assist them to become export friendly. Preferential tax breaks to brand and product exporters should be considered.”
Similarly, the CFO of Access Bank stressed the need for government to be proactive in delivering policies by analysing market trends with a pro-business stance and putting in place a winning strategy and execution plan for the AfCFTA.
They also agreed that recent policy reforms such as the Finance Act 2019 and 2020 suggested that the government has learnt from the country’s recent economic recessions and have begun to prioritise “the need to diversify the nation’s earnings by seeking practical ways to boost the nation’s non-oil revenues.”
