Recession: Cut production cost, don’t sack, business leaders tell companies

BUSINESS leaders across the country on Tuesday warned that organizations especially small and medium scale industries should not see retrenchment of staff as a way out of the economic recession facing businesses and the country as a whole, advocating for a cut in cost of production rather than lay off as staff as a way of conquering recession.

The business leaders arrived at this at a business leaders’ conference organized by EZ37 solutions with the theme, prospering in a recession at the Kakanfo Inn Conference Center in Ibadan.

Spearheading the panel discussion on strategies for Managing the Economic Impact of Recession, Professor Funmi Soetan from the Department of Economics, Obafemi Awolowo University, Ile Ife, advised companies to as a matter of importance consider cutting the cost of production through waste elimination rather than lay off of workers.

According to her, Nigerian economy is currently passing through a difficult phase of the business cycle and factors responsible she said includes Nigeria’s overdependence on oil revenue, the adverse impact of the increase in global crude oil supply, continuous fall in global oil prices, slow and declining growth in China, the BRICs and Europe, rising global and local terrorism and its attendant insecurity in Nigeria and security issues – Boko Haram  in the North east and avengers  in the South south.

Other factors listed by Professor Soetan include corruption and poor management of Nigeria’s oil revenue and the resulting decline in external reserves and CBN devaluation of the Naira.

Buttressing her point, Mr Femi Ogundele, an associate professor at the Nigerian Institute of Social and Economic Research (NISER), stated that the immediate consequence of recession is that businesses may cut employees which translate to more work being done by fewer people.

This according to him leads to low morale due to longer hours. “The work becomes harder and in an attempt to further cut costs to improve its bottom line, the company may compromise the quality, thus, the desirability of its products is compromised,” Ogundele said.

Ogundele stated that government must increase monitoring its agencies that are critical to revenue generation, think of ways of cutting tax to encourage small and medium scale industries and ways of making life easier on people at the period when the economy has made life difficult for many.

Also speaking, the Director of Development Finance Department in the Central Bank of Nigeria, Dr Mudashiru Olaitan, represented by the Head of CBN Development Office in Ibadan, Mr Banji Akinola, called on Nigerians to be diplomatic in the investment of their resources, adding that there exists no reason why Nigerians should get involved in any scheme that could raise their blood pressure especially at this period.

According to him, the nation is blessed with many resources and businesses that can bring returns at minimal risks, urging people to embrace agriculture.

He further advised those involved in on-line ponzi schemes investments especially MMM to be careful in finding means of multiplying their income, adding that the issue has become a national embarrassment and insult with the operators of the scheme boldly insulting the Nigerian government just because it cautioned the people to be careful of a scheme that is sure to fail.

Also speaking during the panel session, Mr. Pacqueens Irabor, the Oyo state officer of the Bank of Industry, urged people not to act on unverified statements in getting facilities to expand or establish their businesses, adding that most people just go on what others say without taking the required steps.

According to him, for the country to move out of recession, small and medium scale industries should be empowered while entrepreneurship activities should also be encouraged and supported to take root as there exists a nexus between entrepreneurial development and recession.

In her welcome speech, the Chief Executive Officer of  EZ37, Adaora Ayoade stated that the effects of recession on the business community has been challenging and it calls for a need to engage the situation in an informed, constructive and pragmatic manner.

According to her, with three quarters of negative economic indices, recession in now more than just a word but a prevailing reality that is compelling enough for business leaders to come together and rub minds with the aim of developing practical strategies to help organizations to navigate the recessionary tide and remain on the path of prosperity.