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The Association of Corporate Treasurers of Nigeria has called on the Federal Government to tailor economic reforms to meet the needs of businesses whose ability to manage liquidity is impacted.
The treasurers stated this at a recently held ACTN Members’ Networking and Breakfast meeting, which offered strategies to navigate the economic policies and keep their businesses thriving.
The Director of the Centre for Promotion of Private Enterprise, Dr Muda Yusuf, highlighted the harsh realities of current economic reforms, noting that treasury management had become one of the most difficult tasks for organisations, particularly over the last 18 months.
The sharp increase in interest rates and liquidity restrictions, designed to curb inflation, had put immense pressure on companies’ ability to stay afloat, Yusuf declared.
“For treasury managers, this is perhaps one of the most challenging periods in recent history as far as managing treasury is concerned,” he said.
“We are seeing quite several casualties resulting from the current economic reforms.”
The director of CPPE acknowledged that while ongoing economic reforms were widely recognised as necessary by economists and business leaders, their impacts had been more destabilising than anticipated.
He pointed to monetary policy shifts, including the Central Bank of Nigeria’s contractionary policies, as key factors causing difficulty for corporate treasurers.
“The increase in the cash reserve ratio to 50 per cent and the rising monetary policy rate, currently at 27.25 per cent, have tightened liquidity and driven up the cost of borrowing, crippling many businesses,” he added.
He said, “The CBN believes that all of these things are happening because of the growth in money supply. And the way to do it is to come up with policies that will make it difficult for people to borrow money.”
According to Yusuf, treasurers play a pivotal role in keeping businesses solvent and missteps in treasury management could easily lead to a company’s collapse.
He urged treasurers to adopt risk management strategies to cope with emerging risks and explore alternative financing models, such as development finance, to ease the pressure.
The CPPE director contrasted the unorthodox monetary policies of the former CBN governor, Godwin Emefiele, with the more traditional, orthodox approach favoured by the current CBN leadership under Yemi Cardoso.
He noted that the unorthodox approach involved interventions in sectors, like manufacturing, agriculture, and health, using policies like the Anchor Borrowers Programme and differentiated CRR to boost local production.
However, Yusuf observed the shift to orthodox policies, which relied on market-driven interest rates and the floating of the naira, had exposed businesses to sharp currency depreciation and high inflation.
He asserted that those challenges had led to the exit of many multinationals that were unable to manage the foreign exchange volatility.
Yusuf warned that the current focus on inflation targeting, with sky-high interest rates, could be counterproductive.
He remarked, “We need to have a rethink about those who are going to import all this economic management model and just impose it on the system. We have to factor in local peculiarities and variables.”
The economist urged policymakers to reconsider their approach, taking into account Nigeria’s unique economic structure, where access to credit was limited and high borrowing costs disproportionately affected private businesses.
In another keynote, the Country Director at Verto Financials Ltd, Dr Austin Okpagu, introduced tech solutions that helped businesses hedge against currency volatility and streamline global payments.
Okpagu said businesses using platforms like Verto could convert and manage multiple currencies without needing to exchange naira for dollars or other hard currencies.
He explained that such platforms allowed treasurers to lock in favourable exchange rates, mitigating risks in the volatile foreign exchange market.
“Embracing fintech solutions enhances your working capital,” Okpagu noted. “And you can also mitigate financial risk with platforms that allow you to lock deals and save significantly on foreign exchange.”
He added that those were useful for companies dealing with complex import costs and liquidity management issues.
He said, “Today, there are solutions like checking FX rates through WhatsApp bot in seconds. Also, giving you access to advanced liquidity, fulfilling your obligation to your supplier on your behalf.”
Okpagu urged treasurers to embrace fintech solutions, which enable real-time access to competitive foreign exchange rates, facilitate global payments, and enhance financial control.
A member of the ACTN governing council, Benedict Ologbosera, reinforced the need for treasurers to rethink their liquidity management strategies
He noted that the dual challenges of inflation and foreign exchange volatility had drastically increased the cost of doing business.
Ologbosera said companies must optimise their liquidity, not just by sourcing funds but by ensuring that they are used efficiently for critical business needs.
“In today’s world, you want to use your funds for the right and best reasons. So basically, everybody’s optimising,” he said.
