Opportunities in crisis Presentati… · Work Force Disruption: Organisations are experiencing...

© 2020 KPMG a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. Printed in Ghana

Opportunities in crisis

May 2020

Invest in Africa Webinar

2© 2020 KPMG a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. Printed in Ghana

Agenda Introduction and the nature of the crisis1

The opportunities2

Concluding remarks4

How to take advantage of the opportunities3

What crisis are we

facing?

4

“The COVID-19 pandemic is the defining global health crisis of our time and the greatest challenge we have faced since World War Two.”

-UNDP

5

Crisis can neither be avoided or accurately predicted. Aware of this, companies are increasing prepared to respond in the event if a crisis.

Despite these measures, crises are clearly difficult and trying experiences. In urgent situations, the workload to be tackled is huge and stress intense.

There is no doubt that a crisis causes many problems, but it also creates opportunities in industries directly affected, but also those indirectly affected.

The objectives of Opportunities in Crisis is to help participants understand:

The nature of the crisis we are facing and how it is impacting business and society.

Identify some opportunities in the current crisis

How to take advantage of these opportunities.

Introduction


0

1000

2000

3000

4000

5000

6000

7000

New cases Cumulative

Cases in Ghana keep rising steadily as government seeks to stop the spread

• As at 17 May 2020, 13 regions in Ghana had confirmed positive cases of the coronavirus bringing the total number of confirmed cases to 5,735 with 1,754 recoveries and 29 deaths recorded.

• The hotspots are in the Greater Accra and Ashanti regions.

• Ghana has a far lower death rate compared to global death rate of 7%.However, recovery rate globally is 38% which is higher than the rate of 31% recorded in Ghana.

Cases per region

Greater Accra Region 4,314

Ashanti Region 818

Central Region 210

Eastern Region 99

Western Region 98

Western North Region 57

Volta Region 34

Northern Region 31

Upper East Region 26

Oti Region 24

Upper West Region 21

North East Region 2

Bono Region 1Source: Ghana Health Service, Citinewsroom

Confirmed COVID-19 cases as at 17 May 2020 Measures by Government

Closure of borders

CovidAlleviation Programme

Social distancing and restriction on public gatherings to 25 persons

Emergency response team

Contact tracing

Public education and awareness campaign on the virus

Closure of schools and universities

Absorption of utility charges for 3 months.

4.9 + million

Global

90,000 +

Africa

7

Economic Slowdown: The global economy is expected to contract 3% in 2020, according to the International Monetary Fund (IMF), a deeper downturn that that seen in the 2008-2009 financial crisis.

Business Survival: Businesses are experiencing major impacts no matter how established they are and are having to re-look at how they manage and operate their business. It has becoming challenging for most businesses to keep financial wheels turning due to less revenue and the general uncertainty in the global financial environment.

Unemployment:. The expected contraction of the global economy is likely to result in an increase in unemployment globally. The most vulnerable ones are the people working in the informal sector.

Work Force Disruption: Organisations are experiencing workforce disruption at an unprecedented scale. Companies are still determining how heir staff will work in the short- and long-term.

Opportunities in CrisisSupply Chain Disruption: The spread of the COVID-19 has already disrupted supply chains in several ways including:

Weakening demand for some companies (Hotels, Airlines, etc.,)

Skyrocketing demand for select companies (Telcos, Pharmaceuticals, etc.,)

Creating uncertainty in obtaining raw materials

Impacting the ability to ship and receive products on time due to shortages and logistics bottlenecks

Ensuring workforce capacity to assemble and ship products.

Education Crisis: The COVID-19 pandemic has affected all levels of the education system from pre-school to tertiary. Schools have been closed and students are out of school. Whilst the intention of the closure is on public health basis to prevent both spread of the virus

Changing Customer Habits: The COVID-19 crisis is fundamentally changing how and what consumers buy. It is accelerating immense structural changes in in the consumer goods industry, for example.


Value chain impact has been devastating in the tourism sector

Aircraft manufacturers Airlines Travel & tour operators Hotels & tourism facilities

Aircraft orders canceled Airlines gone bust Operators gone bust or drastic fall in sales

Hotels shut with very low occupancy

100 million job losses

US$2.7 trillion loss in output

9

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”

-Winston Churchill

What are the opportunities?


COVID-19 impact will create some winners and losers and a long recovery

Degree of “Permanent” Change to Industry Economics/Value Chain

Pace

of C

OVI

D

Rec

over

y

Slow

Fast

High

Low

“HARD RESET”

Industries/companies which struggle to recover from COVID due to “permanently” lowered demand for offerings, insufficient capital to ride out extended

recession, and/or poor execution of digital transformation.

“SURGE”

Industries/companies which scale post-COVID as consumer behavior that was altered during the crisis

is sustained in their favor. Investors sense their potential to lead and provide capital to scale

aggressively during recovery.

“MODIFIED BAU”

Industries/companies seen as daily essentials will suffer effects of the consumer shutdown

recession but will recover more quickly as consumer demand returns in similar volumes.

• Airlines• Brick and mortar retail• Higher education• Oil & gas

• Online retail• TMT• Food delivery • Tele-medicine

• Asset management/PE• Life Sciences/Pharma• Interaction platforms• Streaming media

• Hotels• Restaurants• Entertainment venues

• Banking• Consumer goods

• Agriculture• Transportation

“TRANSFORM TO RE-EMERGE”

Industries/companies who will recover but along a protracted path requiring reserves of capital to

endure and transform operating models to emerge stronger and more in line with changed

consumer priorities.

• Travel and Leisure• Automotive• Durable goods• Other Industrial Manufacturing

• Professional Services• Insurance• Healthcare• Real estate/Construction

REACT•Liquidity

•Customer service•Supply chains

Every firm must triage then prepare

for the likely recovery path for their sector


What are the opportunities in this crisis?New products

• Product development strategy.

• Revamping business model to address current urgencies or market demand i.e. Technology firms rolling out e-learning, clothing line developing PPE’s

Regulatory/Political

• Taking advantage of regulatory/political assistance and interventions being offered i.e. government stimulus packages, GRA tax amnesty, BoG directive to banks.

Business continuity plan (BCP) / disaster recovery plan

• Prevention though planning.

• Business recovery plan and stress-management plan.

• Managing risks around suppliers and inventory planning.

Technology

• Leveraging virtual platforms to deliver products and services to customers.

• Benefits to be gained from e-commerce.

• Adopting electronic payment platforms as people are avoiding cash payments to prevent infection.

• Development and deployment of e-learning materials.

Human Resources

• Altering working patterns, retraining and re-deployment.

• Working from home where possible, flexible working time arrangements i.e.. changes to start and finish times.

New markets• Potential demand as attention

may shift from China to Africa.

• Exploring export preparedness in anticipation of global demand for products i.e. agro-based companies.


What are the opportunities in this crisis?Data mining

• Gathering relevant data to better serve customers and other relevant stakeholders.

• Improved data analysis and data analytics on business, policies and procedures.

Addressing security vulnerabilities

• Enhancing cyber and information security.

• Reviewing access rights of employees and third parties.

• Backing up all critical systems

Financial interventions

• Taking advantage of the six-month moratorium of principal repayments for selected businesses.

• Reduced interest rates on loans


Distilleries producing hand sanitisers Automotives making ventilators

Firms are leveraging their capability to fill a gap

15

“The optimist built the aircraft. The pessimistic built the parachute. Both make aviation safe.”

-Anonymous

How to take advantage of

the opportunities


The priority is to survive, followed by a recovery and growth

18

1

3

5

2

4

Defer long term expenditure

Recalibrate budget targets

Negotiate with suppliers/ creditors

Key tips for surviving and responding to this crisis

Empatise with your customers

Keep employees informed


INTERNAL ASSESMENT EXTERNAL ASSESMENT

STRENGTHS OPPORTUNITIES

WEAKNESSES THREATS

SITUATION ANALYSIS

SWOT ANALYSIS

Perform SWOT analysis and focus on the internal factors

Resources Competencies/ Capability


Stre

ngth

s Brand

Capacity

Technology

Internal control

Develop new product lines – clothing adding PPEs, beverages & cosmetics adding sanitisers

Develop new markets – Africa could be in waiting to step in if China. Are we ready?

Internal factors – use your strengths to maximise opportunities

Create platform for e-commerce, automate processes & entertainment

Cost optimisation and priortisation of expenditure


Wea

knes

ses

Technology

Financial

Image

Start-up

Strengthen your cyber security & embark on automation

Stimulus package from government and negotiation with suppliers/creditors

Internal factors – minimise weaknesses by taking advantage of opportunities

Corporate social responsibility to project image

Build the internal structures –governance, policies and procedures

Concluding thoughts


Concluding thoughts

• The Covid-19 pandemic is a medical crisis that is rapidly leading to an economic crisis and may become a financial crisis.

• As the crisis continues to evolve, businesses must be agile, and be ready to adapt quickly to the possible ‘new normal’ instead of waiting for the return to ‘normalcy’.

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© 2020 KPMG, a partnership established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International") a Swiss entity. All rights reserved .

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Opportunities in crisis Presentati… · Work Force Disruption: Organisations are experiencing...

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