President buhari had signed the 2020 budget of n106

This preview shows page 15 - 16 out of 52 pages.

President Buhari had signed the 2020 budget of N10.6 trillion into law based on crude price projection of $57. According to analysts, if the price stays below this projection for long, it could push Nigeria into another recession. Though, govern- ment has started moves to review the 2020 budget. The oil price staying below 2020 budget projections will affect the Central Bank of Nigeria, CBN’s ability to fund the foreign exchange market and reserves. What this means is that most companies that marketing communication agencies rely on for businesses will find it difficult to access foreign exchange for necessary imports for their op- erations. “Companies that depend on forex for import for their operation will find it difficult to operate” , an analyst told BusinessDay. He said that these companies will therefore be cautious in their expenses in- cluding marketing communication costs an area that has always taken the hit when companies go through difficult time. Steve Babaeko, CEO of X3M Ideas, a creative agency described the situation of oil price fall as pre- carious which will affect businesses across board. “The situation is cloudy and challenging time ahead as clients the agencies work for will be affected. In his assessment, Kayode Oluwasona of 1201 agency, who frowned at mono product econ- omy of Nigeria as disappointing said the present situation of price fall will increase cost of running businesses. Stating that companies will though adopt dynamic ways of running their business, Oluwasona who was president of Association of Advertising Agencies of Nigeria said the situation calls for rationalization of expenditures by companies with regrets that communication budg- ets will be affected. Akonte Ekine, CEO of Absolute PR said the oil price fall will com- pel companies to slow actions on certain activities while they will search for effective but cheaper communication channels. However, since the border clo- sure, some operators in the FMCG sector have intensified efforts to rely on local source of materials and this is expected to increase domestic production but it is yet to witness a boost in spending for marketing communication. Already, due to the harsh oper- ating environment occasioned by certain government policies, com- panies have not only cut marketing communication budgets but elon- gated period of payment sometimes upto 6 months for campaigns and other media jobs executed, a situa- tion that have strained the agencies who borrowed money to execute those assignments. The difficulty suffered by agen- cies recently pushed Biodun Sho- banjo, chairman of Troyka Group to suggest 60 days on media contract payment by clients through legisla- tion. This is as an option of saving the marketing communication busi- ness as debt within the industry between clients, service providers, media owners and advertising agencies, with its implications, need to be checkmated. But resolution of this will require a tripartite meeting between agencies, clients and the regulatory body to enhance ap- preciation of each other’s situation.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture