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Experts charge policy makers on coordination for growth

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KPMG


Identify forex risk as major obstacle to business operations in two years

Government at all levels, including policy markers and regulators have been urged to ensure that they coordinate their policies for overall business sustainability and economic growth.

This formed the highlight of a report, titled ‘Risk management Survey’ presented by KPMG Professional Services at the end of a survey conducted to identify the key risks that executives believe would impact on their businesses in 2018/2019.

The survey, which focused on 94 executives of multinationals, large sized public and private companies across various industries also identified foreign exchange risk as a major barrier to organisational performance over the next two years.

Specifically, the Partner in Risk Consulting, KPMG, Tomi Adepoju, said: “following the external nature of some of our highly rated risks, there is no doubt that 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.”

According to her, while there are a number of external risks beyond the control of the organisation, the report also showed that opportunities exist for organisations to look inward with a view to optimising risk and minimising losses.Furthermore, she added that there was need for organisations to establish and implement a comprehensive risk management framework.

“For organisation that have commenced their risk management journey, it is essential for the board and senior managers to determine which aspect of the process requires enhancement and take active steps in addressing them. Specifically, they are enjoined to properly identify, prioritised and mitigate these business risks. This remains crucial to business growth and survival.”

The Partner and Head of Risk Consulting KPMG, Olumide Olayinka, said the survey, which was KPMG’s second edition, was carried out from December 2017 to February 2018.He said the report derived its 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, including the chief risk officers of those organisations, chief compliance officers and 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, and 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: “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,” he added.


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KPMGTomi Adepoju
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