Mike Adenuga-owned Conoil Grew Profits By 503% Yet Laid Off 50 Staff

In a period of 33 months, the profits of Mike Adenuga‘s Conoil Plc, a Nigerian petroleum marketing company, have grown by 503 percent. However, 50 members of staff have lost their jobs within this period.

According to Economy Post, in an analysis of Conoil’s financial statements from December 2020 to September 2023 (covering a period of 33 months), the profit of the oil marketing company jumped to N8.690 billion in September 2023 from N1.440 billion reported in December 2020, representing a 503 percent growth over the period.

Its revenue increased from N117.471 billion in December 2020 to N137.888 billion in September 2023, representing 17.38 percent rise over the period.

Despite the significant growth in Conoil’s revenues and profits, the number of staff members in its employ fell from 198 in December 2020 to 148 in September 2023, signifying a decrease of 50 workers over the period. In fact, Conoil Plc has been cutting jobs since 2020, reducing the number of its staff by 20 between September 2022 and the corresponding period of 2023 despite an increase in profits by 196 percent over the period.

Analysts are wondering why Conoil Plc has consistently reduced jobs since December 2020 despite soaring profits, saying that the government must begin to raise a team that can ask questions around job cuts by prosperous firms.

Dr Mike Adenuga is Conoil’s chairman and majority shareholder. He is also the owner of Globacom.

What could have happened?

Productivity analysts have provided possible reasons why Conoil’s jobs fell by 50 in a space of 33 months.

A consultant in labour-related matters, Dr Lyon Onwuchekwa, said it could have been caused by retrenchments, willful or forced resignations, or deaths.

“First of all, companies retrench their staff. This is not new. However, given that the company in question is making profits, it makes little sense for it to sack workers.

“Secondly, it could be caused by forced or willful resignations. In some places workers are forced to resign when there is an infraction. In other places people willfully resign when they feel an environment is not conducive for them.

“Thirdly, it could be caused by deaths of staff. But I do not think a company can suffer 50 deaths in 33 months. So, maybe, there is something else they need to tell you,” he further said.

A Lagos-based economist, Ms Doris Joan-Hyacinth, noted that job cuts could be attributed to the state of the economy and lack of incentives by the government.

“In nations where incentives are given to companies when they add new jobs, firms will employ. However, when there is no incentive to engage people, firms may be reluctant to do so.

“So the government must begin to provide incentives to firms which employ new workers.

Another reason for job cuts is the poor state of economy. Even if a company makes profits in our own type of economy where there is high level of unpredictability, it may be cautious to engage new workers because of unpredictability and uncertainty of the future,” she suggested.

Nigeria’s worsening job data

In the last quarter of 2020, unemployment in Nigeria stood at 33.3 percent, according to the National Bureau of Statistics (NBS).

However, the NBS, in 2023, surprisingly adopted a new methodology. It subsequently produced a report which said that the Nigerian unemployment rate stood at 5.3 percent in the fourth quarter (Q4) of 2022 and 4.1 percent in the first quarter (Q1) of 2023, based on the new Nigeria Labour Force Survey (NLFS).

This, however, does not make sense to several economists who likened it to shifting the goalpost in the middle of a football match.

“I think it is a question of hiding behind data,” a financial analyst, Mr Kalu Ajah, told Economy Post.

“To hide behind data and say that unemployment rate is 4 or 5 percent is wrong. The whole essence of statistics is to plan with it. Can a governor plan with this number? What you are telling a governor in Yobe State is that he has no unemployment problem, and that is the problem. That is not true. They could have had three numbers that said pessimistic, optional and best case like the US has household and BHS,” he noted.

Before the NBS new report, however, several reports had suggested that the jobless rate in Nigeria could hit 35 percent or more.

Audit firm, KPMG, said the Nigerian unemployment rate had increased from 33.3 percent in 2020 to 37.7per cent in 2022 and to 40.6per cent in the first half of 2023.

“Unemployment is expected to continue to be a major challenge in 2023 due to the limited investment by the private sector, low industrialisation and slower than required economic growth and consequently the inability of the economy to absorb the 4-5 million new entrants into the Nigerian job market every year,” the firm had noted.

In its 2023 Macroeconomic Outlook report entitled, “Nigeria in Transition: Recipes for Shared Prosperity,” the Nigerian Economic Summit Group had projected that the nation’s unemployment rate could reach 37 percent in 2023.

Any hope for job seekers?

Analysts have suggested ways of reducing Nigeria’s jobless data, suggesting that it would take a cacophony of policies to achieve that.

For Ms Doris Joan-Hyacinth, earlier quoted, the government must provide tax or export incentives for companies assimilating 20 workers or more annually.

“If you provide some form of incentives for firms employing 20 or more people a year, others will like to join. Maybe a tax credit, export grant or any other type of incentive, the critical thing is that firms engaging workers at this time should be celebrated and encouraged,” she said.

On his part, Dr Onwuchekwa, earlier quoted, said the government must work on the Nigerian economy to create a prosperous and convivial environment for businesses.

“The truth is that the Nigerian economy is so tough now and investors are squeezed,” he said.

“All you need to do is to create the right atmosphere, reduce multiple taxes, give tax incentives, provide cheap credit to small- and medium- sized firms, build infrastructure and provide security. Firms would be glad to create jobs, but they can only create jobs when there is prosperity and are sure that creating jobs would make them sustainable.”

Conoil did not respond

Text messages sent to Conoil spokesman, Mr Mike Oduniyi, to explain why the company cut jobs despite making humongous profits were not replied. WhatsApp messages sent to him were also not replied despite that he read them.