Deloitte survey: Nigeria's consumer products & manufacturing sectors at risk in 2024

A recent survey conducted by Deloitte on restructuring in South Africa, Nigeria, Kenya, and Ghana has highlighted significant concerns for the Nigerian economy. The survey emphasized the urgent need for key changes such as a unified Insolvency Act, regulations to facilitate early distress identification, and a focus on rescue instead of recovery. According to respondents, Nigeria's consumer products and manufacturing sectors are at risk in 2024. Akinola Akinboboye, Partner and West Africa Turnaround and Restructuring leader at Deloitte, joined CNBC Africa to discuss the survey's findings. Akinboboye shed light on the essence of turnaround and restructuring, comparing it to individuals taking a step back to address stress and re-engineer. In the corporate context, when companies face operational challenges, the recommendation is to halt operations, assess the underlying issues, and pursue remedies to ensure business continuity. The survey targeted practitioners, including lawyers, accountants, C-suite executives, and lenders, to gather insights on economic dynamics, restructuring practices, and distress management strategies. The findings of the survey revealed critical gaps in knowledge and awareness regarding business rescue mechanisms, emphasizing the need for heightened education on the role of business rescue practitioners. Notably, the survey highlighted recent legislative amendments aimed at prioritizing business rescue over liquidation, underscoring the importance of salvaging financially distressed companies. Concerning the Nigerian economy, the survey pointed out the vulnerability of sectors such as consumer goods and manufacturing due to currency exchange challenges, inflation impacts, and borrowing constraints. The imperative to mitigate these risks and enhance operational resilience in these sectors was emphasized. Deloitte's survey encompassed four African countries - South Africa, Nigeria, Kenya, and Ghana, with a view to expanding the coverage to include additional African nations in subsequent reports. The objective is to provide a comprehensive overview of restructuring and turnaround practices across diverse regions, enabling shared learning and best practice adoption. One of the significant challenges identified in the survey was the late identification of distress, which hampers effective informal restructuring processes. CEOs often overlook early signs of financial strain, such as cash flow disruptions, weakened bargaining power, and market share loss, leading to a delayed response to mounting challenges. Addressing these issues promptly is vital to maximizing recovery options and minimizing business disruptions. In conclusion, the Deloitte survey underscores the critical need for proactive restructuring measures and early distress detection to bolster the resilience of Nigeria's consumer products and manufacturing sectors amidst evolving economic pressures.