Business Owners

Business owners recount tales one year after COVID

by with No Comment Business

Chisom Marvelous Elekwa is a young graduate of Public Health from one of the private universities in Nigeria. After two years without a job and not ready to watch her 50-year old mother struggle with her siblings school fees, Chisom in November 2019 went into the rice business, buying from producers and selling to consumers. She invested her life savings into the business which became instant success as she had huge patronage. But that joy was short-lived as the coronavirus disease which index case in Nigeria was detected in February 2020, took away her means of livelihood.

READ ALSO: How a gas company raised $650m facility…

Fortunately, she applied and got N1millon loan from the Federal Government to cushion the effects of the pandemic. Today, Chisom is back to her rice business owing to the lifeline.

But while Chisom is grateful and happy, Jummai Abdullahi, another small scale entrepreneur is sad and distraught. She told BusinessDay that the N5 million MSME loan she took from the Central Bank of Nigeria (CBN) last year which she invested in cassava and poultry farming has become a source of sorrow. Her 10 hectare farmland located in the outskirts of Kuje in Abuja, was last year destroyed by cattle herders whom she alleged invaded her farm at a time the crops were about to be harvested. “My brother I am in tears. All the money I took from the CBN and the ones I borrowed from my bank went down the drain due to no fault of mine. I went to my farm on November 10, 2020 to discover that the cattle ate up all the crops. How and where do I start from paying back the loans?’’ she said with tears.

The above two cases illustrate the joy and sadness associated with small scale entrepreneurs who were pushed to the world by the ravaging effects of COVID-19 which was first recorded in Nigeria on February 27, 2020.

In one year, the COVID-19 pandemic has had a far-reaching impact on the country’s already fragile oil and import-dependent economy. The pandemic affected the livelihood of 85.2 million people living in poverty, who mostly sustain themselves on daily labour, and 41.5 million small and medium enterprises (SMEs), which account for 76 percent of the labour force and contribute half of the gross domestic product (GDP) but are mostly informal.

The World Bank Group predicts that the long-term fallout of the pandemic led to food shortages, massive unemployment, and large-scale business failure while the recession that followed may increase the number of people living in poverty to 95.7 million by 2022, and reduce Nigeria’s economic and development outcomes. The government has taken decisive actions to mitigate the humanitarian and economic impact of the pandemic and the oil price shock but the outcome is still uncertain.

Government efforts have been enhanced by a US$3.4 billion loan from the International Monetary Fund (IMF) and have been augmented by massive support from the private sector and development organisations.

In the wake of the pandemic, the Federal Government provided access to funds for households and businesses affected by the pandemic, including cash payments for the most vulnerable as well as an Economic Sustainability Plan (ESP) – a one-year programme estimated at ₦2.3 trillion, focusing on achieving mass employment and mass domestic production and on expanding pro-poor spending to protect the vulnerable.

There was also a fiscal stimulus for micro, small and medium enterprises (MSMES) which include N50 billion loan SMEs, extension of revenue remittance deadlines for key non-oil tax payments (VAT, corporate taxes) and 50 percent rebate on corporate taxes for employers who do not make staff cuts between March 1 and December 31, 2020. Others were: three-month repayment moratorium for all TraderMoni, MarketMoni, and FarmerMoni loans and to all Federal Government funded loans issued by the Bank of Industry, Bank of Agriculture, and the Nigeria Export-Import Bank Central Bank measures.

COVID 19: Impact on businesses

The COVID-19 pandemic presented new challenges to businesses, disproportionately affecting smaller and less-efficient firms across all industries. Businesses had to move quickly to remote operations while ensuring business continuity under the lockdown. They had to change their operating models to safeguard workers and customers, manage disruptions in supply chains and cash flow, and respond to changing demand. Increased working capital requirements coupled with liquidity constraints, reduced access to forex for imports, logistics disruptions at ports and in interstate transport, and rising insecurity in the north have strained business operations. Right now, experts say many businesses are being forced to downsize operations, retrench workers, and reduce compensation to avoid failure.

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How Africa’s free trade pact can boost regional economy

by with No Comment Business

Again, the need for inter-African trade has been stressed by the World Bank as it says the African Continental Free Trade Area (AfCFTA) could boost regional income by 7 percent or $450 billion, speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035, if implemented fully.

The World Bank said in a new report on Monday.

In addition, experts say the trade pact will position Nigeria’s firm to compete better in the continental and global markets.

AfCFTA represents a major opportunity for countries to boost growth, reduce poverty, and broaden economic inclusion.

The report suggests that achieving these gains will be particularly important given the economic damage caused by the COVID-19 (coronavirus) pandemic, which is expected to cause up to $79 billion in output losses in Africa in 2020. The pandemic has already caused major disruptions to trade across the continent, including in critical goods such as medical supplies and food.

Most of AfCFTA’s income gains are likely to come from measures that cut red tape and simplify customs procedures. Tariff liberalisation accompanied by a reduction in non-tariff barriers—such as quotas and rules of origin—would boost income by 2.4 percent, or about $153 billion.

The remainder—$292 billion—would come from trade-facilitation measures that reduce red tape, lower compliance costs for businesses engaged in trade, and make it easier for African businesses to integrate into global supply chains.

It could be recalled that initially, the Manufacturers Association of Nigeria (MAN) was the biggest opposition to the AfCFTA, arguing that ratifying the agreement could kill industries in Nigeria. MAN had said it was important for Nigeria to position local manufacturers for competitiveness first before ratifying the AfCFTA.

However, the association later made a U-turn, saying African nations needed to trade more with one another.

“MAN recognises the imperativeness of creating a beneficial free trade area for export of the products of members and has strongly worked assiduously to promote the articulation of evidence-based positions on AfCFTA,” Mansur Ahmed, president of MAN, said at a South-West sensitisation workshop in Lagos in February 2020.

The Lagos Chamber of Commerce and Industry (LCCI) is backing the trade deal, arguing that if smaller African countries are not afraid of it, Nigeria with 200 million people and humongous $430 billion GDP, must grab it with both hands.

Muda Yusuf, director-general, LCCI, told BusinessDay in 2019 that multinationals would be the biggest beneficiaries when the AfCFTA started.

“Mostly multinationals and large enterprises are in a better position to gain from AfCFTA because their economies of scale will improve. They have the big market and the capacity,” Yusuf had said.

“The continental trade is more about economies of scale and the amount of what you produce. The higher you produce, the lower the unit cost, which is why small companies will benefit but not as much as large firms,” he further said.

AfCFTA seeks to liberalise trade among African countries. It is targeted at a ‘borderless’ Africa, with an eye on a single market for goods and services on the continent. It was supposed to start in July 1, 2020, but has been postponed to January 2021 owing to COVID-19 pandemic.

Experts believe AfCFTA is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994 and a flagship project of Africa’s Agenda 2063, targeted at creating a single market for 1.2 billion people and exposing each country to a $3.4 trillion market opportunity on the continent.

The AfCFTA is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030 if all the countries sign up.

The treaty liberalises 90 percent of products manufactured in Africa, meaning that a country can only protect 10 percent of its local industries.

Bismark Rewane, CEO, Financial Derivatives, said the AfCFTA would favour Nigeria, Kenya, Egypt and Ghana, among others, but warned that any government that was not effective would fail within the AfCFTA environment.

“Nigeria will benefit. But it will forced to be effective because if not, people can easily go to Cotonou to set up plants,” he told Channels TV in 2019, adding that government failures would be glaring under the trade arrangement.

by Hope Ashike and Odinaka Anudu 

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Nigerian companies binging on debt face low growth risk

by with No Comment Business

As a lot of Nigerian businesses tap the low-interest environment to ramp up borrowing to offset liquidity challenges fuelled by the effect of COVID-19, there’s a growing worry that the risk of low economic growth is going to constrain future revenues and increase the burden of debt servicing for firms.

In an economy hit by a double challenge of COVID-19 and collapsing oil price, slow economic activities, declining revenue, job losses and dampened purchasing power are expected to affect the bottom line of most companies and, even worse, make many handicapped to repay their debt.

Ayorinde Akinloye, a research analyst at CSL Stockbrokers, said the biggest risk for many companies would be the inability to generate adequate cash flow to pay back on maturity because of the slowdown in business.

“It is not about having funds, it’s about if there is demand. What use is producing when you cannot sell?” Akinloye asked.

Andrew S. Nevin, partner and chief economist at PwC, said “the economic impact of Covid–19 is just starting”.

“The reality is, we are now seeing the impact down the line in various industries,” Nevin said. “For us in Nigeria, it’s going to be hard to get our economy restored to normal without regretting the trade ties and investment from groups around the world, but that still looks a long way off.“

He said companies and government at all levels need to prepare for a long period of difficult economic times.

Due to the high liquidity challenges of most Nigerian companies amid the decline in business activities, about 27 firms issued commercial papers, bonds and rights issues in the first six months of 2020, as compiled from FMDQ data.

While Nigerian companies took advantage of the low-interest rate environment to raise capital, corporates most preferred the short–term commercial paper (CP) to bonds and rights issue due to the low cost of finance and the short maturity period, according to BusinessDay analysis.

Out of a total of N658.5 billion debt issued in the first half of 2020, commercial papers accounted for 70.86 percent as against the 23.95 percent raised through corporate bonds and 5.19 percent rights issue.

“It presents an opportunity for companies to raise cheap capital and those that have existing bonds raised some two or three years ago when rates were about 15-18 percent can call the bond,” said Yinka Ademuwagun, research analyst at United Capital.

While interest rates in Nigeria have always been high due to the monetary system in vogue since 2009 which sought to use FGN bonds/T-bills and OMO bills as means of attracting US dollars into the country to stabilise the naira, the recent OMO policy by the Central Bank (CBN) which prevents domestic investors from participating in the auction is the key driver of the low interest enjoyed today.

Yields on both T-bills and bonds instruments have hit a bottom record from a double interest rate enjoyed some four years ago, and according to industry analysts, the low yield environment is an opportunity ready to be tapped.

“The current state of the economy will affect the revenue stream of companies, and that is even the reason why they are raising funds because Covid-19 was a shock,” Ademuwagun said, projecting the Covid-19 shock to be short term.

According to ‘Covid-19: A Business Impact Series’, an advisory from KMPG business leaders, effective cash flow management is likely to be critical for many organisations during Covid-19 period as revenues fall and potentially, debtors delay payments or become insolvent.

In what could better describe the pains felt by the businesses due to the pandemic, consumer goods giant, Unilever, reported an underwhelming performance in the first half of the year, after its revenue plunged by more than 40 percent to N14 billion, compared to the N23.4 billion it reported the same period last year.

Across key product segments, revenue declined as both the food and home/personal care (HPC) businesses were down 28.5 percent and 43.3 percent, respectively, to N15.3bn and N12.1bn in H1 2020 from N21.4bn and N21.3bn, a pointer to how the pandemic has dealt a blow to the cash flows of businesses.

Similarly, revenues of Cadbury Nigeria declined by 18.2 percent to N15.9bn in the first half of 2020, from a high of N19.5bn the same period last year.

To at least tame the impact of the crisis on their businesses, many companies, particularly those in the fast-moving consumer goods space, have increased their books of trade receivables, giving stock of goods on credit to customers with the hope they would pay back at a later date after the goods are sold.

Irrespective, the move still doesn’t hold much water due to weak purchasing power of consumers whom the goods are meant to be sold to, thereby resulting in increasing firms’ books on goods returned inwards.

For Unilever, its impairment loss on trade receivables surged by more than 3,000 percent, from N17.4 million in June 2019 to N597.2 million.

More than 35,640 customers of Nigerian banks have restructured loans worth N7.8 trillion after the pandemic crippled business activities, Godwin Emefiele, CBN governor, said during the apex bank’s July Monetary Policy Committee meeting where members voted to leave benchmark interest rate and other key parameters unchanged.

Emiefele said that plans were underway to expand the forbearance levels for businesses, particularly those hard–hit by the impact of the virus, to as much as 65 percent.

This, however, might still not be enough to get the fundamentals of these businesses to their pre-pandemic levels, according to analysts who spoke to BusinessDay.

To a large extent, the success or failure of businesses mirrors macroeconomic realities of a country. When businesses thrive, there appears to be economic prosperity in a country, and vice versa.

For Africa’s largest economy which for a larger part of the last five years has suffered stunted economic growth at an average of 2 percent, the scenario appears not different.

Since 2017 when oil-dependent Nigeria emerged from its economic recession, not only has the country’s economic growth been sluggish but only a few sectors triggered the expansion, further undermining the country’s capacity to create enough jobs to meet the growing number of labour market entrants.

Africa’s top oil exporter which relies on crude sales for around 90 percent of foreign exchange earnings and more than half of government revenue is projected to post as much as 5 percent contraction in 2020.

Analysts recommend government intervention in key sectors of the economy and right policy implementation as some of the stimuli needed to bail Africa’s largest economy from posting its worst recession in decades.

But Nigeria’s planned fiscal and monetary policy stimulus targeted at addressing the economic challenges of Covid-19 are modest compared to its peers, according to the World Bank.

As a share of its 2018 GDP, Nigeria’s Covid-19 stimulus – whether as aid, grants, guarantees, CBN’s monetary liquidity injection, or interest rate – is less than that of Brazil, Angola, Mexico, Russia, South Africa, Ethiopia, Ghana, Kenya, Senegal, and Uganda, the Washington-based lender said in its recent Nigeria Development Update (NDU) report.

“Nigeria’s fiscal and monetary policy response has been modest by the standards of comparable countries, making it harder for the country to avoid recession,” the World Bank said in the report titled ‘Nigeria in Times of COVID-19: Laying Foundations for a Strong Recovery’.

The World Bank explained that the current challenges reflect long–standing shortfalls in human capital, infrastructure and public services, women’s economic inclusion, the business environment, access to finance, and governance.

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When policies conflict with reality

by with No Comment Opinions

The saying, ‘desperate times call for desperate measures’ isn’t new to most people, including Nigerian policymakers. But a situation where the Nigeria monetary authority, the Central Bank of Nigeria (CBN), seems to imply it has little idea of the ravaging impact of the COVID-19 pandemic on Nigerian economy, leaves a sour taste in the mouth and makes one wonder how it can put desperate measures in place.

Often times, Nigerian policymakers have enacted policies that have conflicted with the country’s reality due to their poor perception or understanding of what the true state of the economy is.

To the surprise of most economists, the CBN stated clearly in a note published on its website that it expects Nigeria’s economic growth to decline by a meagre 1.03 percent. This is at variance with the thinking among analysts, economists, international bodies and even Nigeria’s Ministry of Finance.

The International Monetary Fund (IMF) in June revised further downward to 5.4 percent their economic contraction expectation for Nigeria from 3.4 percent. Zainab Ahmed, Nigeria’s Finance Minister, projected that the country would contract between 4 to 8.9 percent.

This begs the question as to what parameters the CBN’s optimism is based. We cannot but wonder whether the CBN has opted for ‘walk by faith’ rather than ‘by sight’ in what is glaring to all.

CBN’s second quarter outlook of seems to point to an almost certain possibility that Nigeria’s economy is headed for a V-shaped recovery after plunging quarter-on-quarter by 0.64 percent to 1.87 percent in Q1 2020.

This also creates a misleading illusion of Nigeria’s resistance to the COVID-19 pandemic. Hence, the question: Is the CBN insinuating a contraction by 1.03 percent is the worst impact the pandemic has on economic activities in Nigeria?

Given that the negative effects of the pandemic was felt more in the second quarter of this year, the CBN’s outlook is, at best, a wish and not realistic as factors that will support its optimistic stance are missing.

Nigeria’s Purchasing Managers Index (PMI) which is a leading indicator providing valuable insights into the state of the Nigerian economy in general and the manufacturing sector in particular, provides a picture of what the Nigerian reality is.

The PMI reading for Q2 2020 was below 50, signifying manufacturers and non-manufacturers pessimism on the state of the economy and this signals a contraction.

It was no longer business as usual for the Nigerian manufacturing sector which contributes over $30 billion to the GDP. COVID-19 induced disruptions in business supplies, fall in household demands etc, coupled with foreign exchange scarcity, took a toll on manufacturers in the last quarter. Many had to lay off staff while some cut salaries.

Worsened by rising inflation which has caused consistent weakening in households purchasing power amid job losses, many manufacturers and non-manufacturers , especially manufacturers of non-essential commodities, will see sales drop and profit margin shrink.

Also, Nigeria risks another year of underperforming budget as price of oil is yet to recover to levels above $60 witnessed in January 2020. As a result, the FG had to cut down its revenue expectation by 36.4 percent to N5.16 trillion.

Therefore, we employ the Nigerian authorities and policy makers to remain factual and realistic when reviewing and giving outlook for the economy. We hope that this will help drive policies and actions that will suggest the level of work that must be done in line with current reality.

We believe that CBN’s outlook is unrealistic given how its FX demand management activities and reluctance to unify Nigeria’s exchange rates have stifled business operations and driven away foreign investors from our markets.

Nigeria’s journey to recovery calls for desperate measures and we urge the CBN to start this by providing clarity on Nigeria’s FX rate position and how it hopes to clear dollar-demand backlog.

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COVID-19 may slow CBN’s 80% financial inclusion by 2020

by with No Comment Business

Nigeria’s goal of ensuring 80 percent of Nigerian adults have access to financial services by the end of 2020 may no longer be visible as a result of the COVID-19 pandemic, which has adversely affected the revenue of many households and businesses.

However, stakeholders say collaboration may be the only opportunity the Central Bank of Nigeria (CBN) has to achieve the target, given the time left in 2020.

The stakeholders, who include the CBN, Mastercard, Carbon, MTN Nigeria, VerifyMe and Acumen, on Thursday, participated in BusinessDay Digital Dialogue Series with special focus on ‘Future of Payment and Financial Inclusion.’

As of July 23, Nigeria had 38,344 confirmed COVID-19 cases, 813 deaths and 15,815 people recovered. While the number continues to rise, the economic impact has been very devastating for many people and businesses. By April when the government began to enforce a nationwide lockdown, many online lenders said they were expecting massive defaults, a signal that all was not well with the majority of adults who had access to financial services.

But it was already predicted in a report by the Enhancing Financial Innovation and Access (EFInA), the organisation that conducts biennial reports on Nigeria’s financial inclusion industry. EFInA had noted at the beginning of the year that while more people became financially included between 2016 and 2018, it was not at the same pace with population growth rate. The COVID-19 has now exacerbated the situation, as experts note that much of the current 63.2 percent of the population with access to financial services have fallen behind.

Paul Oluikpe, associate head, Financial Inclusion Secretariat, CBN, says the current financial inclusion figures are being put together by EFInA and is likely to show that many people have fallen through the cracks in huge proportions as a result of the COVID-19 pandemic.

The bank also conducted a survey in which it found out that payment adoption was currently at 40 percent, savings at 24 percent, credit at 2 percent; pensions at 2 percent, insurance at 2 percent and financial exclusion at 36.8 percent, meaning that Nigeria is way behind other countries in financial inclusion.

“Hence, we have a -16 to -18 percent chance in reducing exclusion to 20 percent by 2025,” Oluikpe states. But the CBN says its agent programme, SANEF, is growing with about 350,000 agents added, with plans to increase the number to 500,000 already on.

The CBN however acknowledges that achieving the target is of great importance, as the cost of managing cash is very expensive and at the expense of the economy. Thus, in recent times it has increased its efforts to deepen its cashless policy.

In 2019, the apex bank granted Approval In Principle for Payment Service Bank licences to three organisations – Glomobile, 9Mobile and Unified Payments. MTN Nigeria on the other hand got a Super Agent Licence. The CBN has, however, withheld the PSB licence that would see telcos fully involved in offering financial services.

While many analysts have said the pace of financial inclusion could significantly improve with telcos’ full involvement in financial services, the CBN can also benefit from other collaborations. Elsa Muzzolini, general manager, commercials, Mobile Financial Services, MTN Nigeria, notes that there is more telcos can offer the sector.

“As part of the journey to achieving financial inclusion for all, I think we can do so much through collaboration and partnership with players in the fintech and the banking space, and as the number one telecommunications service provider in the country, that is core to our operations,” Muzzolini says.

Beyond telcos, the collaboration is starting to include non-bank financial services providers like Mastercard, which has a vast footprint of providing financial inclusion across the world.
“5 years ago, we committed to bringing 500 million financially excluded individuals into the digital economy,” Ebehijie Momoh, senior vice president, Mastercard West Africa, states, noting, “We achieved that goal and are focused on bringing in a total of 1 billion individuals by 2025.”

Mastercard developed and implemented solutions that make it easier and more convenient for people to use alternative means of payment instead of cash. Momoh says collaboration with the government is critical as it would enable innovation.

Financial inclusion is also attracting impact investors who are identifying innovative start-ups providing financial services to the grassroots.

Meghan Curran, West Africa director, Acumen, says impact investing can help identify innovative business models and ways to create access to financial services. Acumen has provided funding to Nigerian fintech start-up Paga twice.

“Identity management enables fintech and is a key pillar to financial inclusion,” Esigie Aguele, CEO of VerifyMe, saying, “We are committed to working with the government to digitize Nigerians.”

by Frank Eleanya, Micheal Ani and Bailey Oluwabunmi

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Enhancing Employee Engagement in the New Normal

by with No Comment Business

Engaged employees apply their total self (physical, emotional, mental) to their roles. They are creative, innovative, and go the extra mile in executing their assigned tasks. Engaged employees recover quickly when their companies go through challenging times; they provide competitive advantage to organisations. Engaged employees are valuable in a pandemic where uncertainty is a norm because they help organisations to keep afloat in the short-term and to work towards long-term recovery. However, the challenge is that before the pandemic, employee engagement was low across the world. Depending on the source of information, the level is put between 35% and 50%. Unless something is done differently, this is likely to decline. What are the drivers of employee engagement in a pandemic? The answer is the essence of this article.

Studies have shown that employee engagement elicits positive emotions from employees and thrives in a work climate that favours communication; growth and development; recognition and appreciation; and trust. A work climate is the outcome of leadership behaviour; hence, the foundational driver of employee engagement is leadership behaviour. With declining revenue owing to the global crisis, a leader cannot leverage the hard aspects of these drivers – growth and development – and the hard aspects of recognition and reward based on monetary incentives. Consequently, the article will discuss how the leader can use soft drivers such as leadership behaviour, communication, trust, and eliciting positive emotions to drive employee engagement.

Leadership Behavior

Leadership behaviour is the surface aspect of leadership that is apparent in an organisation. For example, one can identify autocratic and authentic leaders by their different patterns of behaviour. It is generally believed that under certain conditions, an authentic leader creates a positive work climate that will engage employees more than an autocratic leader. However, rather than focus on the surface aspect, it is better to examine the underlying causes of leadership behaviour which unfortunately cannot be noticed on the surface. This is the understanding of leadership or what some people call motive for leadership. There are two motives for leadership; it can be a source of status or a process of service. When leadership is motivated by status, followers are made to serve the leader. The environment created will be toxic and will never engage the employees. However, when leadership is understood as a process of service, the leader creates an environment that values employees and helps them to be the best they can be. Such a leader will exhibit the positive leadership behaviour that creates a positive work climate. Fortunately, leadership motive is not hereditary but can be changed through a deep desire to question the purpose of leadership and its effects on relationships.

In this period of uncertainty and fear, a manager’s leadership motive is reflected in how they communicate, create an environment of trust, and empathise with employees. A leader whose motive is to acquire status will leave employees to care for themselves and will take decisions to enhance organisational survival without regard for employees’ survival. A service motive will work to understand and relate with what employees are passing through and would do what is possible to help them work through the challenges. Empathy is a major tool of such leader.

Communication

In a survey of 1,090 people during a recent panel discussion, 28% reported that their salaries were reduced in the period of lockdown, 64% said that there was no communication between them and their organisation before the reduction, while 40% stated that the reduction affected their perception of their organisation. The problem is not the reduction because employees know that the organisation is facing hard times that require some level of adjustment. The first problem is that most of the respondents had no communication between them and their organisations before the salary cut. This action demonstrates that many organisations are yet to recognise that communication is critical in getting employees to understand organisational challenges in this new reality. Engaged employees want to be heard in matters concerning the organisation and their wellbeing. The second report from the discussion was that the lack of communication and subsequent reduction in salary affected the employees’ perception of their organisation. Engaged employees want to advance the reputation of their organisations but cannot do this when they have a negative perception of the organisation.

Communication builds a partnership between employees and their leaders. Partnership makes the organisational actors see individual challenges as a common challenge that requires joint action. Partnership is enhanced when the communication is 2-way, authentic, optimistic, and filled with empathy. When communication is 2-way, it allows for each party to voice their concerns and empathy ensures they are heard, understood, and appreciated. For example, imagine that before the salary reduction, the leaders discussed the challenges that necessitated the reduction with employees, and both listened with empathy. If the communication is authentic and optimistic, the result would be a joint understanding of the situation and acceptance of an action plan needed to sustain the organisation in the short-term and position it for survival in the long-term. Engaged employees study and understand the time in which they live. They recognise volatile environments and know that drastic actions are required to survive now and position organisations for future survival. They want to be part of the journey of the organisation now and in the future. The level of communication between them and their leaders gives an indication of how they are valued, and in turn, affects their level of engagement.

Trust

Trust is built and earned. It can neither be demanded nor legislated. It does not arise from the authority the leader has. Trust is an individual’s desire to be vulnerable to the leader. It is a decision an individual makes consciously; it depends on the perception of the quality of the past, present, and future relationship between the employee and his/her leader. In a crisis, trust is enhanced by the level of interest organisational participants show in the emotional challenge and other challenges of another organisational participant. For example, the organisation is uncertain and fearful about its present and future survival while employees are afraid of the health implications of COVID-19 and are uncertain about their current and future cash flow arising from the payment of their salary. Trust is built when both parties communicate honestly about each other’s challenges, and there is genuine care and desire to work together to create an acceptable path to survival. Trust does not depend on finding the best solution for each party but agreeing on a solution that is mutually satisfactory and allows for sacrifice from each party. Because trust also depends on the quality of past relationships, leaders whose relationship with employees in the past is poor will find building trust much more challenging, but not impossible. Engagement is enhanced when already engaged employees can offer their total self to the organisation, and trust that their leaders would not take advantage of them by refusing to do what is good for them.

Eliciting Positive Emotions from Employees

The emotional climate in organisations is the result of the leader’s emotional intelligence. Emotionally intelligent leaders understand their emotions and how they affect employees. They manage their emotions in ways that ensure that they do not affect the employees negatively. They are aware of the happenings in their social environment and use such awareness to design a mode of interaction that allows for a productive relationship between them and their employees. For example, emotionally intelligent leaders understand how emotionally depressing the COVID-19 situation can be for them and employees. They know that over-emphasizing on how they are affected emotionally while disregarding that of employees will not create a positive work environment. Such leaders can manage their emotions and recognise that of employees in such a way as to elicit positive emotion from employees. Emotionally intelligent leaders communicate authentically by telling the truth about the situation of the organisation and recognising what the employees are going through. The leader is not conservative with the truth. This would give a false impression of the severity of the situation and the need for action. While being authentic, such a leader does not lose hope that the future though uncertain, can be made remarkably interesting. The leader gives an optimistic view of the future, even when the uncertainty is recognised. In this way, the leader creates a positive emotional climate which elicits positive emotions of ‘can do it now and in the future’ from employees. Apart from organising seminars to help enhance emotional intelligence, pattern analysis can help in identifying emotions and reflecting on how to manage them for a productive relationship.

Conclusion

Organisations may not have the resources to enhance employee engagement with the hard factors of the drivers because of the reduction in revenue and poor cash flow. They can, however, leverage the soft factors which are based on the climate created by leadership behaviour. This is the time when leaders should question their motive for leadership, especially for those that have had a continuous past poor relationship with their employees. While organisations are using the COVID-19 situation to examine their strategy, business models, and processes, it is also worthwhile for leaders to question their understanding of leadership. This is the only way to enhance leadership behaviour and create a positive work climate that will improve and sustain employee engagement.

Article by Dr. Okechukwu Amah

Dr Okechukwu Amah teaches Organisational Behaviour and Management Communication at Lagos Business School

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COVID-19 Gov. Ugwuanyi grants relief, incentives to taxpayers

by with No Comment Enugu SME NewsNews

In furtherance of his administration’s efforts in cushioning the effect of the Coronavirus Disease (COVID-19) pandemic on residents of Enugu State, Governor Ifeanyi Ugwuanyi has granted tax relief and incentives to taxpayers in the state.

The governor’s decision was contained in a statement by the Chairman of the Enugu State Internal Revenue Service, Prince Emeka Odo.

Odo noted that “The Enugu State Government has since the inception of the current administration, in May 2015, waived the payment of Personal Income Tax as well as Market Tax, for all traders in the major markets of the state”.

The Chairman added that the waivers “which are part of the administration’s pro-poor policies” are still in force and will be sustained till the end of the tenure.

Other COVID-19 tax relief and incentives approved by Gov. Ugwuanyi, according to Odo, are as follows: “The deadline for the submission of Form A for employees and Annual Returns in accordance with Section 41 (3) and 81 (1-3) of the Personal Income Tax Act (PITA) 2011 as amended for companies and institutions operating in Enugu State has been extended to 30th July, 2020.

“A waiver of penalty and interest charged for late remittance of Pay As You Earn (PAYE) deductions is hereby granted from January to December 2020 for all sectors. A 50% discount on all assessed Capital Gains Tax (CGT) from now till December 2020. A 50% discount on all Personal Income Tax Assessment issued to owners of schools and hotels for Year 2020.

“A 50% discount on all assessed Land Use Charge payment for Year 2020. This discount will expire on 31st of December 2020. A waiver of penalty and interest on Land Use Charge for Years 2018 and 2019 once payment is made before December 2020”.

The Chairman stated that “all our esteemed taxpayers are encouraged to obtain their Enugu State Social Benefit Number (ESBN) as it remains the unique identity prerequisite for obtaining electronic Tax Clearance Certificate (e-TCC)”, stressing that “ESBN is free”.

He pointed out that “our liaison offices at Abuja and Lagos are open on a daily basis except weekends and public holidays for easier access to taxpayers” and went further to ask all taxpayers to “make their payments into any Commercial Bank with ENSG IGR Paydirect Platform”, warning: “You must not pay by cash to anyone”.

Enugu State is in the hands of God!