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Nigeria’s marketing agencies that are seriously affected by the economic downturn under the present administration have started to cut workers’ salaries to stay afloat, BusinessDay has gathered.
The percentage of the salaries’ cut differs, but according to a source, the average is 25 percent across cadres in the agencies. A particular agency operating in Lagos informed its workers about this development and said it is a measure to sustain the business in the difficult time. Apart from this measure, another company is downsizing.
The agencies’ tough time is exacerbated by the cut in companies’ marketing communication budgets and delay in payments for jobs executed, developments that are informed by the challenging times.
“One of the factors keeping some agencies from sinking is affiliation” they entered into with foreign partners. This is allowing them to execute some businesses, another source told BusinessDay.
Assessing what the media agencies are going through, Segun McMedal, President of Lagos chapter of Nigerian Institute of Public Relations said it will be difficult to divorce the larger economy from marketing communication industry. “It is tough out there and this naturally translates whether agencies are getting businesses or not”
According to him, such downsizing is to fit in. The tough time, he said is not limited to marketing agencies but even the manufacturers in Nigeria and the signs still don’t appear to be good, he said.
Today, Nigerian companies appear to be overburdened by the difficult operating environment, occasioned by poor infrastructure and unfriendly policies that have eroded their margins.
Companies in Africa’s biggest oil producer, suffered greatly from a recession that occurred in 2016 owing to a global collapse in oil prices.
The fall in the oil prices caused a huge dollar shortage for the oil dependent nation since it gets 90 percent of its foreign earnings from oil.
The dollar shortage caused the Central Bank to devalue the naira, which dealt a deeper blow to most manufacturing companies since most of their raw materials are sourced abroad.
The situation seems to have gotten bad for most companies especially giving the high inflation environment that has eaten deep into consumer’s purse.
Feeling in the industry is that unless dramatic things happen to bolster the economy, such as full implementation of 2019 budget of N8.9 trillion, support for infrastructure, improvement in electricity supply, security, support for agriculture, massive support for SMEs and improvement in non-oil export, many sectors including the marketing communication industry will continue to face headaches. This will also have reverberating effect on employment rate.
Highlights of the 2019 budget include: capital expenditure of N2.094 trillion and recurrent expenditure of N4.055 trillion.
Looking at agriculture sector that supposed to be the backbone of the nation, Mike Nzeagwu, a communication expert, expressed displeasure at frequent killing of farmers in certain parts of Nigeria, an unfortunate development that has put clog in that promise.
He said if budgets such as that of 2019 are fully implemented, it will give real sector fillip to function well and improve the operators’ capacity and when this happens, both employment and other sectors such as marketing communication will thrive.
According to other stakeholders, months ahead do not appear to be bright for the agencies as their clients are still hard hit by unfavourable environment. Many of them suspended product promotions and brand campaigns because of harsh environment.