BUSINESS STRATEGIES FOR THE MUSLIM BUSINESS COMMUNITY IN NIGERIA TO THRIVE AMIDST AUSTERITY AND TAX REFORMS IN 2025
As Nigeria approaches 2025, the Muslim business community faces the dual challenges of economic austerity and significant tax reforms. To navigate this landscape effectively, it is essential to integrate Islamic principles with strategic adaptations to the evolving fiscal environment.
1. UNDERSTANDING AND LEVERAGING TAX REFORMS
The Nigerian government has introduced tax reforms aimed at enhancing revenue and promoting economic equity. Key aspects include:
Corporate Income Tax (CIT) Adjustments:
Small Companies: Businesses with annual turnovers below ₦50 million are exempt from CIT, providing relief to small enterprises.
Medium and Large Companies: The CIT rate is set to increase to 27.5% in 2025, impacting businesses with higher turnovers.
Capital Gains Tax (CGT) Increase: The CGT rate will align with the CIT rate, rising from 10% to 27.5% in 2025, affecting profits from asset disposals.
Withholding Tax (WHT) Regulations: New WHT regulations effective January 1, 2025, will impact various transactions, necessitating compliance to avoid penalties.
STRATEGIC ACTIONS:
Tax Planning and Compliance: Engage with tax professionals to understand obligations and optimize tax positions within the framework of Islamic ethics, ensuring compliance with new regulations.
Business Structure Assessment: Evaluate company structures to determine eligibility for tax exemptions or benefits, particularly for small enterprises.
Asset Management: Plan asset disposals strategically to mitigate the impact of increased CGT rates.
2. EMBRACING ISLAMIC FINANCE FOR RESILIENT GROWTH
Islamic finance principles offer sustainable financial solutions that align with the current economic climate.
STRATEGIC ACTIONS:
Access Shariah-Compliant Financing: Utilize Islamic banking products such as Murabaha (cost-plus financing) and Mudaraba (profit-sharing) to fund operations without incurring interest, adhering to Islamic prohibitions against Riba.
Establish Cooperative Societies: Form Islamic cooperative societies (Musharaka) to pool resources, providing members with access to capital and investment opportunities.
Invest in Sukuk: Participate in Sukuk (Islamic bonds) to support infrastructure projects, offering stable returns compliant with Islamic law.
3. DIVERSIFYING REVENUE STREAMS
To mitigate economic uncertainties, diversification is crucial.
STRATEGIC ACTIONS:
Agribusiness Ventures: Invest in halal-certified agricultural projects, leveraging Nigeria’s arable land to produce and process food for local consumption and export.
Digital Economy Engagement: Develop e-commerce platforms offering halal products and services, expanding reach and accessibility.
Halal Product Exports: Explore international markets with a demand for halal-certified goods, capitalizing on global Muslim consumer bases.
4. STRENGTHENING COMMUNITY NETWORKS AND PARTNERSHIPS
Collaboration within the Muslim business community enhances resilience.
STRATEGIC ACTIONS:
Form Business Associations: Create networks for sharing best practices, resources and collective bargaining, fostering a supportive business ecosystem.
Implement Mentorship Programs: Facilitate knowledge transfer from experienced entrepreneurs to emerging business owners, promoting growth and sustainability.
Collaborative Marketing Efforts: Jointly promote halal brands to increase market presence and consumer awareness.
5. PRIORITIZING ETHICAL PRACTICES AND CORPORATE SOCIAL RESPONSIBILITY (CSR)
Upholding Islamic ethical standards builds trust and community goodwill.
STRATEGIC ACTIONS:
Fair Pricing Strategies: Set prices that reflect fairness and compassion, especially during economic hardships and avoiding exploitation.
Community Support Initiatives: Allocate resources to CSR projects, such as education and healthcare, enhancing societal well-being.
Environmental Stewardship: Adopt sustainable practices, reflecting the Islamic duty of caring for the environment.
6. LEVERAGING TECHNOLOGY AND INNOVATION
Adopting technological advancements is vital for competitiveness.
STRATEGIC ACTIONS:
Digital Payment Integration: Implement mobile and online payment systems to facilitate transactions and broaden customer reach.
Invest in Digital Marketing: Utilize social media and digital platforms to engage with consumers, highlighting the value of halal products.
Operational Automation: Incorporate technology to streamline processes, reduce costs and improve efficiency.
7. BUILDING RESILIENCE THROUGH RISK MANAGEMENT
Effective risk management ensures business continuity.
STRATEGIC ACTIONS:
Establish Emergency Funds: Maintain financial reserves to address unexpected challenges, ensuring operational stability.
Diversify Supply Chains: Develop relationships with multiple suppliers to mitigate risks associated with supply disruptions.
Utilize Takaful (Islamic Insurance): Protect assets and investments through Shariah-compliant insurance solutions, sharing risk within the community.
8. UPSKILLING AND HUMAN CAPITAL DEVELOPMENT
Investing in human resources drives business success.
STRATEGIC ACTIONS:
Employee Training Programs: Enhance skills in areas such as digital literacy, customer service, and compliance with tax reforms.
Support Islamic Education: Encourage understanding of Islamic business ethics, integrating faith into professional conduct.
Promote Work-Life Balance: Create supportive work environments that respect religious practices and personal well-being.
9. ADVOCATING FOR POLICY REFORMS AND REPRESENTATION
Active engagement with policymakers shapes a favorable business environment.
STRATEGIC ACTIONS:
Participate in Policy Dialogues: Engage in discussions to represent the interests of Muslim entrepreneurs, influencing tax policies and economic reforms.
Promote Halal Standards: Advocate for clear halal certification processes to boost consumer confidence and facilitate market access.
10. FOSTERING UNITY AND FAITH-BASED RESILIENCE
Drawing strength from Islamic faith supports perseverance through challenges.
STRATEGIC ACTIONS:
Strengthen Community Bonds: Encourage unity and mutual support among Muslim entrepreneurs, fostering a collaborative spirit.
Emphasize Patience and Trust in Allah: Cultivate resilience by relying on faith, understanding that challenges are opportunities for growth.
Integrate Islamic Values in Business: Ensure all business practices reflect Islamic ethics, promoting justice, honesty and compassion.
WRITTEN BY: Abdulmalik King Suleiman
Project Director, AMDC
+234 806 617 4070
abdmaleek1975@gmail.com
SOURCE AND STATISTICS: INVEST NAIJA, ANDERSEN NIGERIA & KPMG