DIGITAL ASSETS MANAGEMENT
National Wealth and National Development
Dr Nicky Okoye
Nigeria’s nominal GDP, in my opinion, is not a true reflection of the purchasing power of the Nigerian people. Those who depend solely on nominal GDP are either uninformed or know and are pretending they do not know that millions of Nigerians who live across Nigeria’s vast heartland do not need to convert their purchasing power in naira into US dollars to spend it. In addition, valuing the productivity of the majority of Nigerians, you have to do it in local currency, the Naira, as most of us are not paid, nor is our labour valued, in US dollars. In this respect, the cost of living in Ifitedunu, Dunukofia LGA, Anambra State, which is my hometown, cannot be equated with my cost of living in New York City, USA. However, as ridiculous as this sounds, nominal GDP calculations equate the cost of living in New York, Paris, or London with the cost of living in my hometown, Ifitedunu, Dunukofia LGA, Anambra State. Whenever I go home, I can live (feeding only) comfortably off thirty-five thousand naira, for one entire week, which is less than thirty dollars ($30.00) equivalent. My country home is fully paid off, so I have no mortgages. The family farm produces all kinds of food crops from which I can take my pick. The generous village folks would always bring the new yams from time to time, and they do not charge crazy city prices. This is what nominal GDP calculations are doing, and African economists have not raised an objection to this. To be honest, most reports I have read that attempt to define and calculate the wealth of Africa’s many nations and communities are simply very wrong and, at best, misleading.
Purchasing Power Parity (PPP) is a much more accurate basis for calculating a nation-state’s GDP. This formula accounts for the cost of living in the local environment and then produces an average for the entire nation-state. As most rural populations across Nigeria’s heartlands will most likely live as I do when I am in Ifitedunu, then it is safe to say that our low cost of living should be taken into account. Using PPP – GDP calculations may not provide you with the exact position of the national wealth of a Nation, but it does define a much more accurate picture of the purchasing power of the people in relation to their realistic local environmental costs. In other words, PPP is a much more accurate standard to use when defining a market penetration strategy for a new product or service entry into a particular nation-state.
The Value of National Assets is almost totally ignored when calculating the wealth of a nation-state. I will address this much more when I address the five pillars of Understanding the Next One Hundred Trillion Dollars. Sometimes I wonder what the value of Nigeria’s total asset portfolio would be if it accounts for all assets. In this case, we are talking about our total assets for all Nigerians and not necessarily just the Federal Government; after all, when calculating GDP, economists do not focus exclusively on Government spending. In order to get a more accurate calculation of Nigeria’s total asset portfolio, you will have to include all of Nigeria’s real estate assets, all lands, including farm lands, all industrial estates, all mineral resources, all oil and gas resources, including proven reserves, music files, intellectual property, services capacity, etc. Nigeria’s total asset position will be monumental. By now, we should have taken the necessary steps to evaluate our own National capacities and our Nation’s capabilities ourselves, and, in turn, to demand that we be heard internationally and that our more accurate figures for calculating our national economies be accommodated. It is my hope that this process can start now.
Collateralization for loans and lending has always been based on assets, and in some cases, verified cash flows. In any event, the verified revenues or cash flows can be used to repay the debt, whereas the collateral is always held in escrow as a hedge against default. This collateralised hedging is almost always used to secure loans and debt facilities at the individual, enterprise, and even nation-state or sub-national levels. In many cases, when nation-states borrow, international financial institutions typically use tax revenue ratios relative to GDP. These institutions also use VAT (Value Added Tax) collectables, customs duties, and royalties or revenues from the sale of crude oil, natural gas, or mineral resources. In this respect, these institutions can indicate how much the particular National government in question can afford to repay its debts over a given period. If we discount the illegal activities of unscrupulous government officials, a strong asset base can extend a nation-state’s ability to borrow and invest further in infrastructure development and the creation of new jobs. This would mean that a strategic approach to valuing assets and using them as collateral in project-tied funding mechanisms can unlock monumental value for African nation-states. This is what our Digital Asset Markets Strategy is all about. We advise that we all move slowly, as we do not want this approach to be abused. As we implement a Digital Asset Markets Strategy for Nigeria and subsequently Africa, we can reposition Nigeria and Africa over the next ten years as the basket of global productivity, monumental wealth and exceptional real value. When you relate this approach to a large, expanding, productive youth population, then Nigeria and Africa will become unstoppable in the 21st century and beyond.
The Five Pillars for Understanding the Next One Hundred Trillion Dollars
1. Digital Asset Markets Strategy: The Digital Asset Markets, and developing a Digital Asset Markets Strategy for National Development, Sub-National Development, Enterprise Development and Community Development, will define the next twenty-five years like never before. Valuations of assets, nation states, and even enterprise balance sheets will all have to be reappraised within this new digital asset industry framework.
2. Global Population Growth: The growth patterns of the World’s geographical populations are instructive and are leading indicators of the next geographical areas that will experience explosive economic growth. Positioning for these growth patterns, as they relate to purchasing power, consumer trends, and market dynamics, will be significant in the coming years.
3. China Strategy: The Case for China and the need to position national development strategies in line with China’s growth trajectory will become paramount. In much the same way, the Chinese sent hundreds of thousands of its people to study in the West, and these newly minted intellectuals came home to China to reposition China; we as Africans, must prepare to send our next generation of engineers to China for similar educational exchanges and deep study of the Chinese model for innovation and development. A China Strategy is fundamental, and I will take this out as a separate topic for future articles in this series.
4. Africa Content Strategy: The Case for Africa, and the repositioning of Africa’s greatest assets, which include Africa’s human resource capacity, must be integrated into all National Development plans. In addition, Africa’s digital asset classes and future digital asset markets will need to take centre stage in filling the funding gap for Africa’s development. More on this in future series.
5. Technology and Innovation: Access to 21st-century technologies will define the winners and losers in the struggle that Leaders will have to undertake to position their nation-states to benefit from the value which will be created from the Next Hundred trillion Dollars in global GDP. Some of us will focus on designing and developing new technologies through innovation, as China is currently doing, whereas other nation-states will focus on positioning their engineers to study under the best in the World to gain valuable insight and knowledge, as China has done in the past. Technology has always made a difference, whether it is on the battlefield, as the French Dictator, Napoleon, could not defeat the slave armies of Haiti. I attribute that mostly to the fact that the technologies available to both sides were almost on par. This resulted in Haiti’s independence in the year 1804 after the slave army, led by Toussaint Louverture, a formerly enslaved man, who rose to become a feared, powerful general and military genius, leading to the defeat of the French armies under the command of the mighty Napoleon of France, during the prime of his military career, for that matter. Again during the invasion and conquest of Africa, where European colonisers used very small and insignificant numbers of armed troops to defeat and overwhelm almost all of Africa’s tribal forces, this can only be due mostly to the invention and use of the highly technical “Maxine Gun”, a machine gun, way ahead of its time, that could kill thousands of African warriors in one battle, who only had spears, bows and arrows to fight back.
•Nicky Okoye
Global Investment Advisor
Founder Global Investment Advisory Community
