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How Recession Revolutionalises Office Rental Business in Nigeria

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  • How Recession Revolutionalises Office Rental Business in Nigeria

Notwithstanding the effect of the nation’s economic downturn on investments in the real estate industry, the rental market has remained vibrant with the emergence of co-working space stations for businesses and entrepreneurs.

Before now, co-working space stations were considered alien to the Nigerian business landscape but experts said about 80 percent of Nigeria entrepreneurs and investors are now adopting the model in their rental needs.

With the recession, where both small and large -scale businesses are finding it difficult to find office spaces that could fulfill their needs without necessarily borrowing, the model is expected to become the new face of office rentals in Nigeria for decades ahead.

In some cases, the office spaces range between 15 square metres to about 21 square metres, while there is also one-man office, two-man office and four-man office.

Apart from its affordability and low cost, the model comes with payment flexibility and provision of some basic office facilities in a serene environment.

According to experts, more businesses are expected to adopt the model because of the several unique selling points it provides.

The Group Managing Director of Fusion Group Facilities Management, Ikeja, Mrs. Oluwatoyin Edun, said workspace station is a new innovation in Nigeria, which is quite popular in developed countries.

The concept, she said is based on the concept of shared services, cost reduction, enhanced efficiency.

According to her, the concept also allows clients to have offices whereby they own space dedicated to their company and a virtual services which avail companies to have operators address as their office address, get a dedicated phone line for their company and use the operator business lounge like an airport lounge with a professional environment to hold meetings with clients.

For the Chief Operating Officer of Workbay Co-working Space Station, Maryland, Mr. Oseni Olanrewaju, clients have the opportunity to get what is called the virtual office service that goes for as low as between N10, 000, N25, 000, N35, 000, with a virtual address to their business, reception support services but limited access to operators facilities and permit to come in when they only have a client.

“Once you are coming in, you have a dedicated seat and desk for yourself.

Our clients are also allowed to bring in their staff, but we emphasise to them that this is a co-working environment which requires serenity,” he added.

He pointed out that the business environment in the country is not supportive in terms of the basic infrastructure; constant power supply, high taxation, unwillingness of banks to grant loans to fund the business which requires close to N20, 000,000 to start, bad roads, low acceptance culture amongst Nigerians and to some operators it could be security in terms of location.

According to him, the recession in the country has badly impacted on the business as client’s patronage has declined.

“Clients who were supposed to pay for their rents complain of low patronage.

“A strategy for the business is that the more people for us, the merrier. The real secret to the business is to make it as affordable as possible, to drive in more patronage particularly in this type of economy.” He added.

Olanrewaju expressed confidence that the future of the business is bright as his company targets about 8,000 clients in the next five years. He noted that with the call for diversification of the economy, people are realising that the jobs are no longer there and so the need to create the job adding that co-working station which was considered alien, is a good platform to operationalise business idea by Nigerian entrepreneurs and foreign investors.

To the Founder and Chief Executive Officer of Capital Square Workspace Solution Limited, Lekki, Mrs. Modupe Odunyemi the whole model is based on flexibility unlike the culture of rent where you pay annually or for more than a year.

She explained that clients could pay monthly or even daily sometimes.

“People are now seeing the need for flexible model; to rent just what they need and for the time suitable for them. With the recession, some larger companies are scaling down, more people are working remotely and have smaller spaces”, she stated.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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Private employers

As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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