[ad id=”187″]By Ntia Usukuma and Ofuma Agali.
Broadly speaking, businesses thrive through some fundamental points of input: financial resources, human resources and marketing. When these three factors combine in the right proportions, businesses experience success at some point after take-off. For many organizations, the success is carried long into the future for generations to come. For many other organizations, this success is short-lived. And of course, there is a segment of those who hardly witness the success at all.
While finance makes it possible for businesses to be set up and for operations to exist for people to run, human resources is actually responsible for the people who run business operations, from strategy level down to tactical levels. However, before financial considerations or human considerations are taken, the idea for which the business will exist would have been considered. It is upon this idea that a business model will be developed. It is this model that will determine how a particular product or service will be sold in order to achieve the objective for which the business is set up. This is the function of marketing in the business mix.
The Marketing Mix & Supply Chain
The Marketing Mix is one of the most commonly used business phrases, being an age-old model that explains various aspects of the marketing function with a view to helping professionals to highlight points of synergy between the different parts of the mix. First, as the four Ps, comprising of price, product, promotion, and place; then later as seven Ps, having an extension to include people, process and physical evidence. Each of these elements has its specific purposes in the business of marketing.
Place, however, is the element of primary concern with respect to distribution of products and services to various locations for which they can be made available to consumers. Place will, therefore, dovetail into a structure for supply chain, where systems and people combine sets of activities, resources and information for the purpose of moving products or services from place to place via producer to wholesalers, wholesalers to retailers, retailers to consumers, or producers to consumers in the case of service businesses.
It is due to this that many businesses have supply chains extending from one country to another. In Nigeria, it is a normal practice to have large organization having supply chain networks and sales distribution channels in states and regions of the country. Some organizations may have office branches throughout the country, especially in the case of service businesses. Smaller organizations may have branches in few parts of the country.
Boko Haram Insurgency
The Islamic sect, Jama’atu Ahlis Sunna Lidda’Awati Wal-Jihad, otherwise known as Boko Haram, may have its history dating back to more than a decade ago, but the impact of its terrorist activities began to permeate the Nigerian society only four years ago. Between September 2010 and September 2014, there have been various terrorist attacks by the sect, ranging from assassinations, prison breaks, bombings, attacks, kidnapping, to mass killings and so on. Some of the affected locations, most of which have been within Northern Nigeria, are Bauchi, Yola, Abuja, Maiduguri, Suleja, Damaturu, Kano, Kaduna, Jos, Bama, Chibok, Gamburu, Tsangayari, Garawa, Gwoza, and so on.
Today, the insurgency issue has not only become a national issue but also a global concern, as international leaders have all shown a considerable measure of concern in collaboration with the Nigerian government over the issue. Even more devastating is the effect of the insurgency on the economy of the affected areas, and by extension, the economy of the nation.
The tension that has been generated from this development, following massive loss of lives, has resulted in tremendous movement of southerners from the North down to the South. While it is obviously impossible for people to completely desert these affected areas, it means that one way or the other businesses will still have to go on in these places. How do these developments affect business generally?
The Marketing Communications Industry
This set of business people appears to be affected in two ways. First, consultants in this space appear to now find it difficult to pitch for businesses in the affected locations, or businesses that they would have executed at the affected locations now remain at a standstill, all due to the fact that their human resources are unwilling to visit those places, while employers are reluctant to embark on business development efforts in those areas. Secondly, the fact that the Federal Government and the state government of the affected locations now expend financial resources in fighting and restraining insurgency, creating very little or nothing for service providers in the marketing bracket.
While expounding on this, Yomi Badejo-Okusanya, Managing Director at CMC Connect, a perception management company, agreed that the security imbalance in Nigeria is affecting marketing communications players, arguing that the money which the Federal Government ought to have used in developing infrastructure and the economy is now being used to fight the insurgency. “Today, Nigeria is seeking to borrow 1billion USD to fight insurgency; this could have been used to invest in other areas of the economy for it to grow,” he said, adding that “because this is affecting the economy, it is definitely affecting marketing communications.”
The out-of-home sector seems to be gravely affected in concrete terms. According to Emmanuel Young, Principal Consultant with Research Links, a media monitoring agency with a leading telecoms company, “in our confidential report to our client, we have noted that over 75 per cent of billboards installed in Borno State, Yobe State and parts of Adamawa State have been destroyed. Our recommendations include a gradual reduction or total elimination of this item in the advertising budget for these areas.” With the likelihood of brand owners heeding to this advice, outdoor practitioners, especially those with huge businesses in the region, might need to wait for some time before they can really smile.
In every nook and cranny of the country, newspapers and magazines are distributed through vendors who sell to citizens. The media business might have been remarkably hit in the insurgency areas. First, it is on record that some journalists have made the supreme sacrifice via activities of these insurgents. Femi Adesina, Managing Director/Editor-in-Chief of The Sun Newspaper and President of the Nigerian Guild of Editors (NGE), commented on the insurgency situation as it concerns the media. He explained that the insecurity issue has affected all facets of national life for which the media is a critical part. From the business side of things, he pointed out that selling in the affected areas has been very difficult. “For many months, the Northeastern part of the country has remained a no-go area, in terms of business. You find it difficult to sell your papers there; it is either there is a curfew and you cannot approach the areas, or you sell your papers and you cannot retrieve your money,” he lamented.
Commenting on an ugly experience newspaper companies faced in the country in the month of June, following a nationwide military crackdown, Adesina revealed “They seized all our vans and our products. It is the fallout of the insurgency, because they accused us of wanting to transport dangerous things through our vehicles and all that.” He added that “if there was no insurgency, the situation would not have been so.”
[ad id=”135″]Manufacturing Industry
This is probably the worst hit. Known to be powered heavily by large distribution networks and supply chains, manufacturing firms thrive better with excellent distribution networks that can reach far and wide. The fast-moving consumer goods (FMCG) even have a much higher challenge to keep distribution constantly running. But with the disturbing insurgency issues in the northern part of the country, it begs the question as to how the FMCG manufacturers are currently fairing in that region.
Femi Adeyemi, Head of Sales Operations at GSK Nigeria threw some light on what the situation is like currently with FMCG companies. According to him, one of the greatest challenges of the moment is the reality of the fact that third party logistics providers have been developing cold feet towards the affected regions. “Most of the third party logistics providers are skeptical about going to those areas, and the ones who agree to go will only do so by increasing their haulage fees to those areas,” he explained.
According to him, the reality of the situation is that the risks are very high. While recalling that the Abuja plaza bombing affected salesmen among other persons, he said the risks appear to be higher at this time as haulers still face risks to deliver products. “Although products still find their way into the troubled regions, the delivery costs rise up remarkably,” he said, explaining that “supply chain cost generally goes up with human capital facing danger at the same time and all those negatively impact on the business’ bottom line.
The first image that comes to mind here is that so many buildings have been destroyed. The fact that the buildings have been destroyed means that there will be many buildings to rebuild as well as many virgin lands to redevelop. But for the fear of possible insurgency, many engineers would rather choose to work in any other location of the country.
Azoro Tobechi, Chief Executive Officer at Keats Associates Limited, a civil and structural engineering firm, said his firm would rather not embark on any project in the insurgency-affected areas at this time. “Being dead or alive has nothing to do with being an engineer,” he sniffed.
For Fordmarx Nigeria Limited, business still has to go on, although extra care has been taken to adjust the operations in the insurgency-affected areas. While trying to create a balance in-between the possibilities in the insurgency situations, Akunna Onyedum, Import Manager at Fordmarx, said despite Boko Haram attacks, people still need water and boreholes and they have to be serviced and run efficiently to maintain a semblance of normalcy at all times. She, however, disclosed that the company no longer accepts contracts in Boko Haram-affected areas. “As we cannot send any of our staff members to those areas for installation, we have stopped every outwards business into those areas,” she said. According to her, except the client comes to the Lagos-based office to take delivery of the goods, they may not be considering delivering the goods to clients in those areas.
“In the past, we received the payment through bank transfer and then sent the goods to the clients. But with the Boko Haram insurgency, we don’t even send goods to the clients anymore because we are responsible for the safety of the goods until it gets to the client. It is a risky thing to do now,” she informed.
Training and Research
As human resources abound all around Nigeria, training and research are two constant things that happen all the time. Training and research vendors may have also developed cold feet towards the insurgency-affected areas, which will mean loss of revenue for them or any company that ought to be doing business in those parts of the country.
While speaking on the situation, Sunny Agboju, Chief Executive Officer at Prot Consulting Limited, a management and training consulting firm, said the situation is sensitive as loss of lives and properties have been involved. According to him, his company will weigh the options carefully before accepting training contracts in the insurgency-affected areas. “In as much as people are still there. We are likely to execute businesses if we have a brief from those areas,” he said.
Chinelo Agada, a research manager at TNS-RMS, a frontline marketing research company in Nigeria, also informed that the company still gets research briefs from and on the insurgency-affected areas and they still execute those briefs. “We still send our staff there to interview people for responses. But the costs of doing that are much higher now than before because of insecurity,” she said. For Borno State, she, however, said the company only executes research briefs through telephone interviews as they do not send in any staff to the state at the moment.
Music and Entertainment
In the last one decade, the Nigeria music industry has witnessed positive explosions with lots of new artistes emerging. Musical concerts, performances and events have been rampant all over the country, boosting the economic power of the musicians as well as providing entertainment for the various audiences and lovers of Nigerian music.
For the insurgency-affected areas, musical activities seem to be declining for two reasons. One, these concerts and musical events pool up large number of people, which is now being discouraged in those areas. Two, some artistes say they are not motivated at the moment to sing or perform in the insurgency-affected areas.
Adegbite Adeniran, popularly known as ADX of the Artquake musical group, said for any amount, the group will not perform in the insurgency-affected areas with the way things are currently. “Music performance is always a thing of joy. But performing now with the way things are in those areas will not be a thing of joy as sad memories of many lost innocent souls would be evoked,” he told Brand IQ in a telephone interview.
[ad id=”147″]Real Estate
While this kind of business does not require supplying or distribution to the affected areas, these fixed assets will have to attract people to the locations to buy into them. With the intense nature of the insurgency, there appears to be more outward movement from the affected areas. This, from BrandiQ’s investigations, has definitely affected the price of rent and land. Prices of properties in most cities of Northern Nigeria have significantly crashed.
Besides crashing the prices of property, public property worth billions of naira have gone down the drain through the destructive acts of the terrorist group.
The destruction of private and public buildings in the region has led to an all-time crash of property prices, as has never been experienced in the North-eastern part of the country.
Mr. Uwem Edikpo, an indigene of Cross River State, who relocated to Lagos with his family from Maiduguri last year, spoke recently, while counting his losses.
He said: “I had a five-bedroom bungalow, with all the appurtenances in a choice area in Maiduguri, going for N600,000 per annum, yet no buyer has come up for it. It is that bad. There are many vacant houses and apartments in the city without occupiers. This is what the insurgency has done to us.”
For those in the business of hospitality, people are obviously their most precious asset. If they are unable to attract people to patronise them, then the overall business outlook will be gloomy.
The tourist sites in the areas that the Boko Haram crisis has affected are currently unattractive to visitors. Hotels that need people to patronise them are currently suffering from low patronage as lesser number of persons are motivated to visit such locations. The impact on hospitality is so much that investors in the industry are looking elsewhere, since tourism does not thrive in an environment characterised by insecurity and violence.
As a result of the prevailing level of insecurity, many businesses, especially beer parlour operators, night clubs and other places of relaxation, are gradually folding up as their owners count their losses.
For banks, operating in the insurgency hot spots must be one venture too difficult to consider. Being financial institutions that deal with money, banks in the affected areas have attracted criminals and terrorists. Reports are rife in the media as to how the Islamic sect raises money to fund its operations by robbing banks and embarking on kidnapping for financial ransoms.
As of 2013, some banks considered closing down operations in the affected areas due to the mass movement out of the areas southwards, especially the southerners. Bank employees, who were uncomfortable with the situation, have demanded postings out of the affected areas.
In the interior parts of the insurgency-affected regions, farming comes as a major source of livelihood for the people. Be it crop farming or animal rearing, both are mainly out-of-home activities for those engaged in it.
Media reports have detailed the travails of those who have fled their farms and villages for fear of attacks. Early this year, the National Emergency Management Agency (NEMA) had warned of a possible famine in the country, following a massive displacement of small and large-scale farmers from the North-East as a result of the Boko Haram insurgency in the area.
The warning was given in the ‘2012 and 2013 NEMA Report on Boko Haram Insurgency and Disasters in the North-East’ made available recently in Maiduguri, Borno State.
The report revealed that “Nigeria may face famine by the end of this year because most of the small-scale farmers and big-time farmers in the North are threatened by the Boko Haram attacks. More than 65 per cent of such farmers have already migrated to the southern parts of Nigeria, fearing that insecurity to both lives and property, including their farmlands and livestock, continues to persist for nearly three years.”
The report further stated that the Boko Haram attacks on farmers, who produce beans, onions, pepper, maize, rice, livestock and catfish in the Lake Chad area for the southern states in the country, have forced them to migrate since the insurgency broke out in Borno State in July 2009.
Even traders of agricultural goods have abandoned their wares and their markets for fear of attacks. As they are being displaced, and the hardship bites, a lot of foodstuffs that actually come to the South from the North also seem to be in short supply, causing prices of these items to skyrocket in the southern parts.
What about the telecommunication companies? In 2012 and 2013, telecom companies lost over N1b due to destruction of facilities such as base transceiver stations by Boko Haram. The destructive activities were carried out using bombs, guns and other weapons, with MTN, Globacom, Airtel, Etisalat as well as some independent tower services providers affected in Gombe, Yobe, Bauchi, Bornu, Adamawa, Kano, Jigawa, and Taraba.
Earlier in the year, the sect had issued a warning that it would destroy telecom facilities as the companies that own them are assisting the Federal Government and security agencies in tracking their activities towards arresting some of their members.
In the last two years, there are reports that the attacks have affected the quality of telecoms services in the affected areas, while operators in the industry said that it would take up to a year before the affected base stations can be totally repaired and reconnected to the networks. There are indications that some telephone service providers might leave the troubled states of the North if attacks on their installations continue.
Boko Haram Insurgency; The Nigerian Market, Business Sectors X-ray Losses
[ad id=”187″]By Ntia Usukuma and Ofuma Agali.