Report: Tax Obligations, COVID-19 Impact, Forex Worry CFOs

Chief Financial Officers (CFOs) of top Nigerian corporate organisations have stated that foreign exchange (forex) availability, taxation and the impact of COVID-19 are their three major sources of concern in managing the finances of their respective organisations.

They expressed these views in the KPMG Nigeria 2021 CFO Outlook Survey (Half Year Review, June 2021), which also identified security, infrastructure and power as top three matters government should address to enhance ease of doing business, stimulate economic growth and improve public trust in the country’s economy.

The sectors covered by the survey included financial service, energy and natural resources, technology, media and telecommunications, consumer and industrial markets, infrastructure, government and healthcare among others.

The report stated: “Unsurprisingly, foreign exchange availability, taxation and the impact of COVID-19 emerged as the top three stay awake issues for the CFOs surveyed, while the top three issues requiring urgent government intervention from an ease of doing business perspective are security, infrastructure and power.

“These are the same issues identified year after year and it draws attention to the need for new thinking and a consistent, coordinated approach to addressing them.

“As the federal government continues to focus on boosting tax revenues, CFOs expressed concerns around tax multiplicity, aggressive tax collection drive and lack of transparency in customs/ excise administration.

“They believe that dealing with multi-layered taxation in the system hurts businesses, especially SMEs. They suggested that the tax administration should be harmonised and transparent.”

A Partner and Head of Audit Services, KPMG Nigeria, Mr. Tola Adeyemi, noted that leading organisations across all major sectors in Nigerian economy were surveyed on their business outlook, strategies for cost and risk management and the priorities for an enabling environment.

The CFOs expressed pessimistic view on the prospects for economic growth in 2021 even though they remained confident about the prospects of growth in their respective organisations and slightly optimistic of growth in their various industries.

The CFOs identified increased implementation of cost optimisation, digitisation and technology optimisation, changing the operating model to reduce risk and protect value and developing new products targeted at new customers as key initiatives that were taken during the period to enable businesses to remain profitable.

However, the report warned that cutting cost without a longterm view in mind could have damaging effects on innovation, growth and reputation as studies have shown that short-term cost-cutting often harm organisations across industries and can ultimately increase costs in the

long run.

“We deliberately reduced and are still reducing our service cost by launching campaigns to drive customers to adopt e-banking channels and instituted cost management initiatives development into the workforce KPIs and currently, business units are incentivised to meet set targets in managing their variable cost portions’’ the CFO of Access Bank Plc, Mr. Oluseyi Kumapayi.

The CFOs considered cloud computing, advanced analytics and visualisation as top technologies that were used to improve efficiency in their finance functions during the COVID-19 pandemic.

They further identified robotics process automation, artificial intelligence and blockchain as new frontiers for delivery of finance services that some of the CFOs have started exploring for adoption. The CFO of Oilserve Limited, Mr. Solomon Okodugha, urged companies to accelerate growth, “through delivery of its strategic objectives with the finance function fully embedded in the business, leading the enterprise wide integration and providing in-depth financial analytics and reporting to steer the organisation in the right direction.”