…experts blame lack of economic blue prints, pandemic lockdown
Ngozi Amuche
As Nigeria’s business communities are counting their losses amid fallout of the Covid-19 pandemic, major blue chip companies have suffered N130.042million revenue loss, to N633.3million in the third quarter of 2020.
This was against the N763.4million which was reported in the corresponding period of 2019.
The companies are Nigerian Breweries Plc, Total Nigeria Plc, 11 (Mobile) Plc, Conoil Plc, and Unilever Plc, respectively.
A detailed analysis of the company’s financial results, which was presented to the Nigerian Stock Exchange, showed that Nigerian Brewery lead the group with a revenue decline of N234.038million in the third quarter of 2020, from N235,679million in the comparable period of 2019.
Total Nigeria Plc, followed with a revenue loss of N151, 707million in the third quarter of 2020, from N221.835million which the company reported at the same time last year.
11 (Mobile) Plc recorded 18.91 percent revenue drop, to N114.746million, in the third quarter of 2020, from N141.510million in the 2019 financial year.
Others are Conoil Nigeria Plc and Unilever Plc respectively. Conoil reported 21.84 percent revenue decline, to N88.101million in the third quarter of 2020, from N112.722 which was recorded at the same time last year. Unilever Plc recorded 13.36 percent drop in revenue, to N44.732 million, from N51.627million, in that other.
Experts’ faults absence of sound economic blueprint
Market pundits who spoke with our correspondent attributed the weak performance of the company’s results to macroeconomic indicators, absence of sound economic blue print and the prolonged lockdown occasioned by the Coronavirus pandemic.
A stockbroker and a financial analyst, Mr. Kehinde Adekoya, said the main drivers of economic growth have suffered tremendous neglect, since the advent of President Muhammadu Buhari’s administration on May 29, 2015. “Apart from the administration’s obvious side-tracking of the business community in economic and business matters, many of its policies have impacted negatively on every sector”
He blamed the Covid-19 pandemic, lockdown which lasted for about three months, and sharply followed by the #Endsars protest nationwide, as well as the peculiar late passage of budgets on the part of government as an anathema to economic growth.
He pointed out that Nigeria’s Economic Recovery and Growth Plan 2017-2020 aimed at achieving macroeconomic stability and economic diversification is urgently needed to accelerate its implementation progress. “These are clear indications that Nigeria could slip back into recession as sectoral growth patterns has remained unstable”.
He added that the challenges confronting Nigeria calls for proactive and strategic responses must be supported by every responsible stakeholder of the Nigerian economy.
A capital market operator, Mr. Henry Adeaga, said that the cost and challenges of doing business in Nigeria are massive, ranging from lack of infrastructural development, political unrest, and policy uncertainty. “The aftermath of the #Endsars protest will likely affect the last quarter results of most companies, especially the banks which were directly hit by hoodlums who took over the peaceful protest”
He noted that the Nigerian Brewery which in every standard regarded as high profile Company had experienced a disappointing outing, as the revenue slumped. “However, observation of the Q3’2020 financial results of some other companies, like Seplat Plc, Conoil Plc, Unilever Nigeria Plc, also showed a drop in their fundamentals assets. Other salient indicators of the financial results were not encouraging”
Director General of Lagos Chambers of Commerce and Industry, Dr. Muda Yusuf also blamed some of the problems the nation is going through on the current administration’s slow start in building a viable economy.
He said absence of good policy direction was one of the concerns of the private sector in the early days of the administration. “The manufacturing sector also experienced some major challenges during the past four years of the current administration. The factors were both external and domestic. The main external factor was the collapse of oil price which affected forex availability and triggered sharp exchange rate depreciation. There were very little the government could do to stem that”.
The LCCI boss noted that the policy component of the problem resulted largely from lack of support, foreign exchange policy choices which aggravated the problem of forex liquidity.“The high interest rate and unfair competition from imported products were general factors that constrained the growth of the industrial sector”
While economists and other experts blamed poor performance of companies to financial indicators and macroeconomic challenges, others attributed the poor performance to continued focus on politics, which have dissuaded the implementation of meaningful structural reforms that could aid growth of companies.
An Assets Management Director, Mr. Ibukun Adeoye, advised that the National Assembly should always hasten in the passage of annual budgets, so that it can easily be implemented for proper use, noting that the market has continued its downward trend with some investors remaining on the sidelines, watching developments in the political environment.
“Foreign portfolio investors left the capital market and the market capitalisation slumped as never before. This is because they lack positive economic direction to grow the economy. There is the need for collaboration and synergy between regulators, investors, operators and other key players in the nation’s capital market to serve as a catalyst for economic growth” he said.