Stakeholders seek strategies to mitigate market volatility, uncertainties

• Urge deployment of digital tools for risks monitoring

As the COVID-19 pandemic continues to ravage economies globally and stall business growth in developing countries, stakeholders have called for the adoption of risk management strategies for businesses to thrive under the current VUCA market environment.

According to them, the West African market framework is currently going against a matrix of growth, fiscal strength and monetary room, noting that Nigeria’s current growth is averaging at 2.2 per cent, which is lower than previous annual cycles.

Speaking at the third virtual session of the Rand Merchant Bank (RMB) Nigeria’s Economic and Business Conference, the stakeholders noted that a VUCA market is one characterised by volatility, uncertainty, complexity, and ambiguity, adding that locally, concerns have remained around fiscal strength and monetary room.

Specifically, Global Markets Research Analyst, RMB Nigeria, Neville Mandimika, said while there were legitimate reservations about the price of oil rebounding to pre-COVID-19 levels as it seems to be trending upwards, the future comes with several risks to contend with.

He maintained that the impact of the United States elections and their relationship with China, a possible second wave of Coronavirus infections, as well as the Ghana and Ivory Coast elections would be part of the key determinants of business growth.

Speaking, the Chief Executive Officer and Managing Director, RMB Nigeria and West Africa, Michael Larbie, said Nigerian businesses could become resilient and sustainable by adopting strategies to adapt to and manage risks, noting that the session was positioned to help businesses respond proactively and thrive in a VUCA environment.

Contributing, Founder, Graeme Blaque Advisory, Zeal Akaraiwe, said although the systematic risk is unavoidable, investors could manage it through measurement and mitigation. He said banks could manage the risk posed to their assets by focusing on asset quality and portfolio monitoring.

He stressed the need for investors to proactively identify risks, employ competent risk managers, and monitor risks with the right tools, adding that even in times like these, investors need to diversify the nature of the instruments in their portfolios, as well as the sectors they invest in.

On his part, the Chief Executive Officer, FMDQ Group, Bola Onadele, stressed the need for the adoption of digital tools in measuring and monitoring risks, supported by competent risk management teams tasked with managing and reporting the risks.

He advised corporations and institutions that were putting together risk management strategies to always start at a macro level, and use the investor’s philosophy, corporate architecture, leadership framework, and business strategy as their guiding principles.

Similarly, the Chief Executive Officer, Emerging Africa Capital Group, Toyin Sanni, said there was a need for medium to long-term solutions, which include reducing the dependence on crude oil and foreign products.

Her words: “The markets are vulnerable to volatility in the oil prices because of their dependence on the proceeds of crude sales, which has reinforced the need to strengthen alternative sectors such as agriculture, solid minerals, and value-added exports. Nigerian also needs to engage with the Diaspora, encouraging and supporting Diaspora flow.”

Contributing, the Chief Executive Officer, Leadway, Asset Management, David Alao, said institutional clients were asking for more collateral or guarantee-linked investments, or investments structured as repos or reverse repos.

He noted that the market was trending towards more structured type instruments and said that while institutional investors don’t have control over external risks, they do have control over their portfolio and could act prudently and hedge Naira exposure, and create a diversified portfolio of investments.