6 Risks for Nigerian Facility Management Industry in 2019

Credit: Google Trends, Infoprations Analysis 2018

The last 10 years in Nigeria points to the fact that the facility management industry is growing beyond the practitioners’ expectations. The growth has been premised on the multidisciplinary nature of the industry, which allows aggregation and coordination of other professionals in the built environment.  

For instance, apart from measuring the industry impact on the Gross Domestic Product within the administrative and support services, the industry have made significant offerings to the electricity, gas, steam and air conditioning supply’s contributions to the real GDP growth from 2016 to the second quarter of 2018.

Like other industries in Nigeria, the facility management industry is not impervious from various risks. As 2019 draws near, Infoprations identifies potential risks that would affect performance of players and the growth of the industry. From the analysis, it emerged that FM industry is most likely to experience financial, regulatory, quality, employee, sustainability and political risks. For Q1 to Q3, 2018 business periods, Infoprations’ risk trends analysis shows that risk determines public’s interest in the industry by 65.4%.

Financial risk

Players in the industry have to contend with the rising inflation rate, which started in September, 2018. The previous rates show that the country enjoyed 18 months consecutive disinflation. In August, it rose slightly from 11.14% to 11.23% for the September period. The increase has mostly been linked with the rising food inflation. Expectation is that FM companies will share from the consequences of the increase in procurement of materials and operational activities. For the companies that import materials, dollar scarcity and naira exchange rate fluctuation would have significant influence on solutions delivery. Post-2019 elections will be characterised by weak credit and sluggish economic growth because whoever emerges as the President will concentrate on working out institutional framework for his or her financial and economic policies implementation. Hence, the industry growth in the first and second quarters of 2019 would be retarded.

Regulatory risk

The recent passage of the Facility Management Council of Nigeria Bill by the Senate will be a blessing in disguise for the players if the oppositions’ views continue in 2019. Other professionals have seen the emergence of the Bill, which aimed at registering persons and organisations seeking to practice facility management, set regulations and standards as threat to their own councils and practices. The Nigeria Institute of Estate Surveyors and Valuers as the main body opposing the council would not relent on its position that NIESV has the sole responsibility of regulating facilities management in the country. NIESV will deploy its resources towards retaining the Act that gives the role. This and the notion that the industry is young to have a council will deny the industry its due recognition by the public, especially the government at all levels. The consequence would be huge on the professionalism and the place of the industry in national development.

As long as the industry lacks own regulatory council in 2019, players will be forced to accept the Estate Surveyors and Valuers Registration Board of Nigeria’s new Adhesive Stamp. The stamp will become operational from January 1, 2019. Property and Facilities Management Control Agreements must carry the stamp.

Quality risk

By 2019, the users of existing FM solutions would be more aggressive in requesting for quality and sustainable solutions as they increase in knowledge and essence of facility management towards cost reduction and operational efficiency. The year 2019 will be a decisive one for the organisational buyers who make final decisions on FM solutions as the need to reduce operational cost would be tensed in the first and second quarters because of political uncertainties that would characterise the economy after 2019 general elections. Any company that toy with quality in the face of reducing clients’ operational cost would equally pay for it in the long run. There should be a balance in cost reduction and quality solution delivery.

For the property and facility managers at various estates in the country, residents and homeowners would continue their agitation for low service charge fee in 2019. The year 2018 has already pointed to this fact. Concerned user-stakeholders would form associations towards public awareness of exorbitant service charges, which will draw government’s attention particularly the Federal Government.

Employee risk

This risk will be in two-folds. The first fold is that key players in the industry are likely to lose their trained staff to the new FM companies that would be established in 2019. Already, prospective entrepreneurs are studying the industry with the intent of tapping from the smart facilities management solutions that would surface ahead of 2020 Lagos Smart City. Existing companies would also lose employees to key players with better strategies for talent attraction.

In the absence of the core FM professionals, who understand the nitty-gritty of FM solutions, many companies will not have option than employing professionals from other built sectors. One main consequence of this action is complexity in coordinating the hired staff towards sustainable solutions delivery. Operations Managers have to devise short term strategies for the integration in order to enhance value delivery and separate the industry from other professions, claiming superiority over the industry. Already, analysis has shown that the world’s interest in facility management in the last 5 years is incomparable with asset and property management, indicating that separation of FM from building management seems untangle. The second fold is that knowledge-workers will play crucial roles in quality and sustainable solutions individuals and businesses will demand in the coming year. Clients will entrust their facilities in the hands of businesses that have knowledge-workers, knowledge-driven process and solutions. The key remedy is aggressive investment in process, smart devices and training to attain greater operational efficiency and productivity.

Sustainability risk

The highlighted financial risk and emerging environmental issues occasioned by the need for businesses to work towards attainment of the Sustainable Development Goals remain critical threats to the industry. The industry is expected to have strategic climate change mitigation plan in addition to sustainability facility management which optimises economic, environmental and social benefits as the country works towards the SDGs realisation. To get out of this risk, senior executives and managers need to identify training, equipment, knowledge and awareness gaps within sustainability components and devise appropriate strategies before 2019.

Political risk

By 2019, Nigeria will celebrate 20 years of returning to democratic governance. In February, general elections will hold. This has implications for business growth. During the election period, business activities would be grounded due to political activities. The political uncertainties are on the increase. Defections and consequences of failed primary elections of the ruling party and others are gradually shutting down business activities ahead of the general elections. Cities like Lagos and Port-Harcourt where FM thrives most are likely to experience high political tensions. FM businesses in these cities should expect low growth in the first and second quarters.