2017: Experts warn Banks, others against retrenchment in recession

Financial experts on Tuesday warned commercial banks, industries, and small and medium scale organizations not to see massive staff reduction in 2017 as a means of surviving the current economic downturn.

From the beginning of 2016 till the third quarter of the outgoing year saw a lot of organizations, especially commercial banks retrenching in order to survive the harsh operating environment.

But analysts recommend reducing production cost rather than retrenching, as some organizations did at the beginning of 2016.

Commenting on this development, Professor Funmi Soetan of the Obafemi Awolowo University, Ile-Ife, believes should consider cutting the cost of production through waste elimination rather than staff layoffs.

According to her, the Nigerian economy is currently passing through a difficult phase of the business cycle. She adduced the economic downturn to 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 Northeast 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, an associate professor at the Nigerian Institute of Social and Economic Research (NISER), Mr. Femi Ogundele, 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, with the desirability of its products compromised,” Ogundele said.

He noted that government must increase monitoring its agencies that are critical to revenue generation, and 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.

Similarly, a financial expert, Mr. Banji Akinola, called on Nigerians to be diplomatic in the investment of their resources, adding that there is 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 online 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.