Thriving amid economic challenges in Nigeria: Strategies for business resilience and growth 

By Ayobami Ishola & Adedotun Adesile

The current business climate in Nigeria is characterized by unpredictability. Rising inflation, currency fluctuations, and increasing interest rates present significant challenges for businesses. According to data available from the National Bureau of Statistics in Nigeria, although inflation dropped to 33.4% in July 2024, it remains significantly higher than the 25.8% recorded in August 2023, having peaked at 34.2% in June 2024 (see Fig 1). Inflationary pressures are primarily driven by currency depreciation, with the official exchange rate averaging N1471/US$ in June 2024, compared to N769/US$ in June 2023—a 191% year-over-year change. As of September 2024, the exchange rate is averaging N1600/US$.

According to statutory filings on the Nigerian Exchange Group, notable multinational companies reported continued losses by the end of June 2024. MTN Nigeria reported a loss of ₦519 billion, Nestle Nigeria Plc ₦177 billion, and Dangote Sugar Refinery ₦144 billion, all attributing these losses to currency devaluation.

In 2024, the Central Bank of Nigeria raised the benchmark lending rate four times, increasing it from 18.75% in August 2023 to 26.75% in August 2024 (see Fig 2). The Central Bank’s Monetary Policy Committee emphasized the urgency of addressing inflationary pressures while remaining optimistic about price moderation soon.

Despite these turbulent conditions, opportunities exist for those who can adapt, innovate, and strategize effectively. This article explores key strategies that businesses and organizations in Nigeria can adopt to thrive amidst these economic challenges.

1. Effective Cash Flow Management

Maintaining strong cash flow is crucial during economic instability. Prioritize liquidity by monitoring receivables and payables, optimizing inventory, and negotiating favourable payment terms. Building a cash reserve provides a buffer against shocks, ensuring operational continuity and positioning businesses to seize opportunities.

2. Strategic Cost Control

Cost reduction should be strategic, focusing on eliminating non-essential expenditures while preserving growth investments. Adopt lean management principles and leverage technology to improve efficiency without sacrificing quality or customer experience.

A targeted approach to cost control helps maintain competitiveness while safeguarding the organisation’s core strengths.

3. Innovation and Adaptability

Foster a culture of creativity and agility to drive resilience. Encourage new ways of delivering value, diversify product lines, explore new markets, and be prepared to pivot quickly based on market insights.

4. Embracing Digital Transformation

Digital tools are essential for streamlining operations, enhancing customer engagement, and creating new revenue streams. Leverage e-commerce, data analytics, and automation to remain agile and competitive.

5. Strengthening Customer Relationships

Deepen understanding of customer needs and tailor products and services accordingly. Invest in CRM systems and personalized marketing to maintain and strengthen customer connections..

6. Proactive Risk Management

Regularly assess risk exposure and develop contingency plans. Diversify suppliers, increase inventory of critical materials, and explore alternative sourcing strategies to mitigate potential threats.

7. Enhancing Supply Chain Resilience

Diversify the supplier base and invest in local sourcing. Use advanced supply chain management tools to enhance visibility and agility, enabling quick responses to supply and demand changes.

8. Investing in Human Capital

Invest in employee training and development to enhance skills and productivity. Create a supportive work environment to foster loyalty and engagement, driving innovation and maintaining a competitive edge.

9. Leveraging Strategic Partnerships and Collaborations

Form strategic partnerships to share resources, access new markets, and reduce costs. Collaborations can enhance innovation and provide opportunities for knowledge sharing and market intelligence.

10. Building Organisational Agility and Resilience

Cultivate a culture of agility and continuous improvement. Empower employees to make decisions and experiment with new ideas. Balance short-term survival with strategic investments for future growth.

Conclusion

Despite economic challenges, businesses can thrive by focusing on cash flow management, cost control, innovation, digital transformation, customer engagement, risk management, supply chain resilience, human capital development, strategic partnerships, and organizational agility. A proactive and flexible approach will help navigate uncertainties and achieve sustainable growth.

About the Writers

• Ayobami A. Ishola (FCCA, MBA) is a seasoned finance expert with over a decade of experience in collaborating with organizations to provide strategic insights that fuel growth. Her proficiency encompasses accounting, auditing, finance, and business strategy, with a strong focus on optimizing business outcomes and driving success.
• Adedotun A. Adesile (ACA, MBA) is a distinguished business leader with over 15 years of experience in steering multinational corporations through transformative growth and strategic initiatives. His extensive expertise spans accounting, auditing, taxation, and revenue generation, all aimed at driving business success and sustainability.