Could a return to insourcing in Nigeria's retail sector be a step back for best practice?
Every year, our Nigeria regional group develop a local market report. The 2019 report, published last month, was developed with Estate Intel using data collected through engagement with over 200 facilities managers and space occupiers.
The retail sector was a highlight of this year's report as it was found that, while outsourcing continues to rise in office environments, the same cannot be said of retail. Over five years ago, most of the country’s shopping centres outsourced facilities management. Recent times, however, have seen a move towards insourcing as “it enables facilities managers to better control and monitor costs.” The report revealed that almost 40% of the country's retail property now has facilities managed internally, including properties run by leading companies such as Persianas Investment (The Palms) and Resilient Africa (Delta Mall, Owerri Mall).
Like elsewhere, meeting international best practice is an ongoing focus of the Nigerian facilities management industry, but many organisations work in silos, which makes it difficult. This begs the question of whether the increase in insourcing, as more retail properties take this approach, means fewer looking to external expertise to help raise the bar, preferring instead to go it alone, using only their internal skillset. On its own this isn't a concern, but when taken with the report's other finding – that low barriers to entry and an unskilled workforce are also an issue facing the sector – the combined effect could mean a misalignment with best practice and at worst, it could impede the drive for excellence in facilities services in Nigeria.
At IWFM, we are advocates of 'best value' facilities service however they’re structured, by which we mean services that offer the best quality for good value and work for the organisation in question. However, with best practice being something the Nigerian facilities management industry is still striving for, might this point toward a need for outsourcing – at least part of the solution – alongside in-house development programmes until it is met? After all, outsourcing can provide organisations, however experienced, with a pool of qualified sub-contractors to help support best practice and improve overall service quality.
If we look at the residential sector and a previous study by Estate Intel, which saw that prospective home buyers were willing to pay 14% more for a property to access quality facilities management, there's a signal that, if correctly informed, commercial property owners could do the same.
There are also a variety of factors facing the Nigerian facilities industry that can't be easily controlled. For example, 'blackouts' and power cuts are still a norm throughout the country due to gaps in infrastructure, which means most commercial properties require back-up diesel generators. But while the privatisation of Nigeria’s power supply, which commenced under the previous political regime, was expected to improve the distribution of power, that hasn't been the case. This, in turn, means that while organisations may see where they could save cost, it's not necessarily realistic to expect them to do so.
The question is: Does the increase in insourcing and the uncontrollable inefficiency in some areas of the industry in Nigeria fuel a distrust for external providers? And if so, what are the implications for the future of facilities management in Nigeria?