“When you talk about opportunities, I think there are tremendous opportunities here in Nigeria. Nigeria has good potentials for its economy to be one of those regional financial centres, regional financial hubs.” With these
statements, Mr. Dennis Nally, the global chairman of PricewaterhouseCoopers (PwC) International Limited, a network of membership firms currently operating in 158 countries worldwide, including 31 in Africa, charged government at all levels in the country to create an environment that is business friendly.
Of course, Nally knows what he is talking about as a man of extensive experience.. He is a frequent speaker and guest lecturer on issues affecting the world economy. He has spoken at the World Economic Forum, the Asia-Pacific Economic Cooperation (APEC) CEO Summit, the British American Business Council CEO Roundtable, Financial Executives International, the St Petersburg International Economic Forum, the Detroit Economic Club, the World Business Forum, just to mention a few. Armed with these intimidating credentials, the PwC boss gives tips on what would help the country win the hearts of global investors: “What the investors are looking for is a classic risk-free world in terms of policy. When you are looking for and making all investments, you are looking at stability of government; you are looking at infrastructure issue, you are looking at how these relate to your business; you are looking at regulatory environment. And so, investors today are looking at how Nigeria stands up to all these challenges when compared with anywhere around the world.” He advised the government to do what would make the country and its entrepreneurs competitive in the global arena.
Nally, who was in Nigeria briefly as part of his tour of PwC Africa member countries, told journalists about the significant opportunities that are going to come from developing countries, including Nigeria. Excerpts: Tracking investments Today, across the globe, there is significant amount of investment capabilities that is looking for good opportunity. And so, this is no wonder that in discussion about one country to another, countries will have to compete for FDI and investments. And what the investors are looking for is a classic risk-free world in terms of policy. All these factors are, ‘how do I judge, how do I make informed decisions around risks and returns on my investments?’ You just can’t look at the regulatory environment only, you’ve got to look at it in terms of being competitive on those funds across more capable countries.
If you cannot, you are not going to track investment; you are not going to track business. And so, government has a very important role to play to create that environment that would allow you to be competitive. When you talk about the opportunities here, I think there are tremendous opportunities in Nigeria. But if some of those issues are not effectively addressed, you would not realize those opportunities. The private sector also has a big role to play because the private sector, historically, is the one that is making investments and it is the one making the final decisions. The private sector should be engaging with the government to talk through those vital issues. And that requires political leadership; that requires strong regulatory leadership, it requires operating environment that is business friendly or else, you are going to lose to other parts of the world.
I think, frankly, the people need to voice their concerns about that as well because if you continue to talk through those issues, you will be successful in the future as well. Nigeria as investment haven If you think about the opportunities that exist here in Nigeria, and to realize those opportunities, there is need to have some forms of capital to capitalize on these opportunities. But one thing I would just tell you here is that, as companies, the private sector competes for that capital, they compete for that investment.
If there are not acceptable standards that are in place to deal with business practices; to deal with how a particular organisation is to conduct itself, there would be severe disadvantage to accessing those capital markets because, in that case, we are going to look for a type of environment that is comfortable to give investor good returns. You have that pushing up again all the other things that we’ve talked about here. You talked about major change that could take some time to work through the system from government, from regulatory, from private sector, from professional services, respectively, all pushing in one direction designing to deal with making this country competitive vis-a-vis alternatives that investors are going to look at.
CEO survey It is not my first time in Africa but I have been more impressed about the more and more opportunities here. And more importantly, (I am here to see) how we can position PwC here for future success role in several of our clients. I am glad to be here; I am glad to spend some time with you here. When we did the Global CEOs Survey, (it was) very extensive. We interviewed over 2,000 global CEOs across all parts of the world. Seventy five per cent of those CEOs actually indicated that Africa was the area that they would most focus on for growth into the future. And I think on that, we get four areas very well for future success.
The opportunities, you know, are unlimited…not without challenges. We’ll talk about those ones later. I think many from around the world are looking into this part of the world for real growth in an economy that we think the global environment is not growing as we expect. And I will talk a little bit about that. I particularly see Nigeria as an area that can play an important role into the future economic growth of all of Africa. I mentioned those areas some weeks ago in St. Petersburg, Russia, when we were talking about future financial centres around the world. I actually think we are looking at Nigeria. Nigeria has good potentials for its economy to be one of those regional financial centres, regional financial hubs. Now, we see enormous challenges that exist here, but I think it goes around the significant opportunities here in Nigeria. Global economy PwC, you know, has been here for over 65 years and we understand the significance of the market place. When I look into Africa, when I look into Nigeria, we have seen tremendous progress taking place over the last several years. Before I specifically talk a little of Africa, one will give a scene of what is happening around the world from the standpoint of the global CEOs’ perspectives. Some of the issues and challenges we see are [also] facing the global environment, as you are aware, like what is happening in Europe today.
We all know significant uncertainties continue to exist in Europe. Apart from that, the crisis that you are familiar with is continuing to have negative impact on the growth of Europe, of particular countries in middle Europe. When you mention Europe, most would say that Europe is not in recession or show negative growth this year. We will predict from PwC standpoint that the growth would be maybe positive; slightly positive this year, slightly positive next year. But certainly very slow growth. Obviously, that would very much depend on some of the outcomes of critical policy issues that the various governments in Europe are dealing with, and would be dealing with. Clearly, while more parts of Europe are certainly seeing slow growth this year, we will predict about the same next year as well in an economy that is moving forward, but certainly not in the pace that many would like to see. Of course, there is a big issue, not only from regulatory standpoint, but also from policy standpoint; upcoming elections, etc. And many business CEOs would take a view that until they see things more clearly on some of the major policy issues, you are not likely to see a major growth towards policy investments or hiring. Clearly, when we look at the US economy, I think that explains in part why you see the growth in the United States the way it is. Most of the importations coming out of Europe and the United States are having impact on all other markets around the world. For example, I was in China a few weeks ago and, clearly, you see slow growth in China today. I think it points to the fact this is coming out of the financial crisis. We now realize that from all of these, we should appreciate and understand how inter-connected all of these economies are around the world. That, notwithstanding, the developing economies, whether in China, whether parts of Africa, Russia, Middle East, Brazil etc., would experience higher growth rate than the developed markets. In other words, we all depend upon one another to really drive these economies forward. Anyway, we begin to see that as well. Clearly, the issues are the existence in Middle East, what you are familiar with, some uncertainties there that is having impact on those economies. Also, there are significant political leadership changes taking place in many countries around the world, France, Germany, Russia, United States etc honestly are creating some uncertainties to the picture as well. So the environment is very cautious, that is the way I will describe it. From the business standpoint, most of the CEOs have taken the view that there are issues they are after. And those issues are not necessary under their control. These issues are going to be there for foreseeable future. And therefore you see a lot of companies trying to understand what those issues are as best as they can. What is going on with many CEOs is the execution of business strategy. And that is the trend that we see taking place in many of our clients around the world. Business trends Just a comment on some of the real trends that we see within many of our clients today and what they would really focus on. What are the CEOs really pay attention to today, this is maybe from 12 months ago. The first one is the environment they are dealing with. There is fundamental change to the way many companies are doing business today. We describe it as business macro-changes. If you are going to grow in a slow growth global economy, how do you really capitalize on and realize those opportunities? For example, many companies historically that have central research and development activities are moving those research and development activities into many developing markets to get better understanding of the market place, better understanding of consumer tastes and desires so that they can really capitalize on the opportunities. Many large companies historically that have been on the upside of a lot of business opportunities are now looking into [such areas as] how do I get the economies of scale? How do I make those businesses more efficient? How do I really start to do a better job that is leveraging individual and components of business across greater spectrum of the business to get more efficiency, more economies of scale, cost reduction, sort of. So we see a lot of changes taking place to companies in terms of how they actually operate the business in the current environment. The second point I want to comment on deals with a whole issue of talents. When I reference the global CEO survey, this is one of the top issues that these CEOs talk about, which is the lack of talents, the lack of talents in a way that will make them to really capitalize on these opportunities. This may sound a little strange in the sense that quite many parts of the world have high rate of unemployment. What we are truly saying is that there is not a sufficiency of qualified talents, qualified individuals in places[where they can] can really focus and make a difference. And what that is doing is clearly putting a lot of pressure on the human capital agenda. We have seen wages increasing and increasing in cost structures. In the whole topic of human capital, talent management is one that is really engaging a lot of attention, a lot of focus from what we see today than we’ve seen historically. The third component that I will like to comment on has to do with the whole issue of government. Governments today are much more engaged and involved with business than we have seen before. Some will say that it is the function of the financial crisis and therefore getting more engagement from the regulatory or from policy perspective is not the consequence of that. We actually see the trend that is here today that may be a hinder to the future as well. That requires the CEOs and the individuals to spend a lot of more time with government trying to understand their policies; understand their directions, trying to figure out where there are points of collaboration that can really make a win-win for businesses. And another thing I will comment on is the fact that significant opportunities are going to come from these developing markets. The risks associating with operating in this market is fundamentally different from the ways most companies have operated in the past. Most companies specifically want an operating environment that is stable, that is predictable, that they can clearly understand. We all know that when you are operating in a developing market, you have issues around the government stability, issues with regard to the currency, issues with regard to risk management, corruption, all of the things that you are familiar with. That increases the global volatility that goes with capitalizing on opportunities. And that is, in my view, something that is much more better understood today than in the past. In other words, if you don’t think of those potential volatilities, you shouldn’t be in these markets because you can’t have the upside, you can’t have the opportunity without facing the downside. So, the challenge for most businesses is to first understand that environment, risk management and that will have to do with the consequences of the issues surrounding the volatilities of the market. So, those are the four trends we see taking place with many of our clients. They really want to think about the environment, the economic environment they will see taking place in the next several years. Nigerian capital market To talk about the capital market, I think it has to do with the volatility we are referencing. The problem in the Nigerian capital market is directly related to the uncertainties of those factors that I have talked about really. And those factors will be there with us for a while. And I will tell you, you should expect to continue to see that type of volatility in the market not only here in Nigeria but also in other markets around the world and that shows the reality of the environment that we will be dealing with in the next two to three years. The fundamental issues will wade through the whole of the capital market system because of the fact that these markets are intertwined and integrated. How well you are doing here in Nigeria, you are going to have importation of things that are operating outside of your market. PricewaterhouseCoopers At PwC, we too do see a significant shift in our businesses as well because our businesses are related with what is going on with our clients. So the shift that our clients are experiencing from the developed markets to the developing markets, we see that too. We expect that by the year 2016, about 30 per cent of our revenues globally will come from the developing markets. That is up from 19 per cent today. So that is a very significant shift. And places like Nigeria, places like other parts of Africa will be a big component of that shift in terms of where we see growth coming from. We see Africa as very important part of our growth strategy.We see the opportunities that are here. We see what our clients are doing; and honestly we want to continue to be part of the physical success that we see here in Africa. And so, when we think about our business, we have three lines of business: insurance, tax business and advisory business. All the three lines of businesses are growing with different ways of growth. Today, our global business is about 48 per cent insurance, 30 per cent of tax and advisory services make up the rest. Effective from July 1st, we brought 17 of our firms that are operating in Africa together to one collaborative structure, one governance structure and one leadership structure to really better serve our clients. That is a huge step forward for PwC in terms of how we think best to serve the market place and how best to serve our clients. We have always worked together as independent firms. We actually think that by bringing those firms together, that will really be a huge opportunity to move people, to pool our resources, making investment to better serve the market place and that is important to us. Today, PWC is the number one firm in Africa, in terms of the size, reputation and clients. And we have almost 7,000 people across Africa in terms of our partners and staff, we expect to double that within the next five years We certainly look to Nigeria as being a big component of that strategy. We expect to double our staff in size over the next five years here in Nigeria as well. Challenges To talk about some of the challenges that we are dealing with as a professional firm, I think wherever you have any environment experiencing financial crisis, there is a number of questions that arise, from the financial reporting from, the government itself, from the rating agencies etc. We at PwC think that what could we do differently, what have we done differently to avoid crisis. So, we actively engage in conversation in the market place. We have taken the view that we very much welcome any conversation, we are very much engaged; we are very much focused on what we could do differently and, going forward, we will continue to do this on regular basis to avoid crisis.
source:thesun
