This year has forced all Nigerians to become economists, our collective finances as a country and as individuals have been diminished considerably. Sadly, there is no shortcut out of this difficult situation we find ourselves. We have to build industries from the ground up and begin to create products and services of real value. The key question is where to start? We are at least 15-20 years behind in kick-starting our industrial revolution, yet we must be resilient and pursue this aggressively. Nigeria’s financial health is as important as individual financial decisions of citizens. In order to survive this time, conservative spending is key as well as rigid financial planning. For those who are unsure of a course of action, there are experts who are able to give recommendations such as Omilola Oshikoya. She is a wealth planner with over 12 years experience in financial services. Her signature event series on navigating our economy ‘Don’t be Afraid’ distinguishes her from others in her field. It reflects an understanding of what many of us are feeling which is fear. Our economy is volatile yet we must all act regardless of what we fear to lose. We must all ‘Do it Afraid’
Prior to the 2016 economic downturn what have been the challenges in remaining financially solvent?
As a country, we made many mistakes in the past. After the discovery of oil, we depended on oil and neglected the other sectors. Therefore we have been susceptible to boom and burst cycles. We are rich in natural and human resources however instead of processing our resources and turning them into high –value products we sold them to countries that would buy from us cheaply and turn them into high value products and resell to us at a premium. Basically “we sold our birth right for a pot of stew”. We really shouldn’t be focused on trading our commodities instead, we should begin to process our resources and turn them into high value products. For instance our oil can be processed into diesel, plastics, fertilizers, cosmetics and more. Instead of exporting our cocoa, we can process it into chocolate and cocoa butter.
Furthermore, when the economy was doing well, we did not invest in infrastructure, or in sectors such as power, healthcare and education. Our leaders also embezzled most of our funds. All this has had adverse effects on our economy.
For individuals, a lack of financial intelligence and financial literacy is a major problem. It should start from childhood. Financial literacy should be taught in schools and at home. Companies should also invest in their staff through wealth and personal finance training. This would improve the staff turnover rate, as their staff would be able to live on what they earn instead of moving jobs for more money. It is not what you earn but how you spend it that matters. For the bottom of the pyramid, a lack of financial inclusion is a big problem.
What are the major financial/economic challenges facing Nigerians in 2016?
There are a lot of financial and economic challenges Nigerians will face such as rise in cost of living, loss of income and loss of jobs. Nonetheless, a lot of people are talking about the challenges, and I would rather focus on the opportunities. For example, a lot of people have lost their jobs in the last couple of months as a result of the economic crisis. As a result, the unemployment rate, which was already at a very high rate, is worse. However, I believe this is also a great opportunity for Nigeria and also Nigerians. A new generation of entrepreneurs will emerge as a result of this crisis. Also sectors that have been neglected will be revived. For instance, in March I hosted the “Don’t be Afraid” Agribusiness Entrepreneurship Workshop supported by the Bank of Industry and International Institute of Tropical Agriculture (IITA). So much has happened since the workshop, one of the speakers has facilitated the sale of 200 hectares of land to some of the attendees. So many new agribusinesses are being created. Also retailers like supermarkets are finding it difficult to import products due to the exchange rate therefore they are seeking made in Nigeria products and this is a great opportunity for Nigerian manufacturers. For Nigeria this is an opportunity to diversify its economy through the development of other sectors such as Mining, Agriculture, Manufacturing and Technology.
In maintaining good personal and business finance what is more crucial, a responsible individual or an enabling environment?
I believe both are important. You need to be financially responsible and have financial discipline as an individual however an enabling environment is also important. For instance, we spend so much on electricity and therefore the cost of living and the cost of doing business in Nigeria is high compared to other economies. These funds could have been diverted into savings, investments or even to create new businesses or grow existing businesses. In Rwanda it takes an average of four days to register and start a business but in Nigeria it takes about 28 days.
There are many categories of people who will be affected by the economic changes, what is your advice for someone who earns a steady salary?
The first thing I would say is “DON’T BE AFRAID”. A lot of people are currently living in fear due to the fact that they may lose their jobs. Focus on being productive and excellent at what you do. Also even if you lose your job, there are still many opportunities. At the beginning of the year I spent some time praying to seek God’s direction. He said He was improving the economy through small businesses. People who lose their jobs in this time would start new businesses. Entrepreneurship is the engine of any economy. A successful entrepreneur creates jobs and wealth.
Furthermore, if you are in debt, this is a good time to ensure you begin to pay off your debt and do not incur any more debt. It is very important to budget and save and cut out excesses. Often times it’s the little things that cause the biggest problems. This is also a good time to invest because stock prices are low. However it’s important to have a long-term view. Stock prices may continue to fall therefore if you are not knowledgeable in the stock market, you may consider investing in a mutual fund. If you don’t have an emergency fund, this is a good time to create one. You should have three-six months of your monthly salary or expenses saved.
How can one operate a business efficiently in light of the recent economic challenges, especially as operating costs have increased?
I remember a particular company that I worked in during the 2008 financial crisis. While other financial institutions were firing staff, they were able to maintain the salaries of their staff neither did they sack any staff member. They never deffered on payments of salaries throughout the financial crisis. This is because when the economy was doing well and they were making money, they were prudent, conservative and also diversified their business. So they had multiple streams of income.
My advice would be to minimise your costs as much as possible. For example, you find that in work places, it is common for employees to close late. Some leave work as late as 10pm on average. Unfortunately some of these staff are just marking time and are not being productive. These sorts of companies should allow their staff to go home earlier or even consider working from home, this would reduce cost of power or diesel and also their staff would be more productive which could generate more income.
Through your experience as a wealth coach in Nigeria, are people in this country responsible with their earnings? There is a point of view that Nigerians spend outside of their means; do you find that to be true?
I think it would be unfair to categorise everyone, as there are some Nigerians who are financially responsible and disciplined. Nonetheless there is a lot of pressure on Nigerians particularly the youths to live beyond their means. Social media doesn’t help as a lot of our youths are under pressure to ‘keep up with the joneses’. They are under pressure to drive the latest cars, wear expensive clothing and jewelry, have extravagant weddings etc. These youths also see the excesses of some of our political leaders, local and global entertainers and online personalities. They want to also live the same lifestyle and show off on social media. Young women want quick money and would compromise on their values to get it.
Furthermore, easy credit also doesn’t help. In the past Nigerians, would save in order to meet a financial goal however now there are facilities available to meet those goals. For example, many people obtain loans to go on holiday, buy cars, phones and even to finance weddings.
What is your general advice for navigating 2016’s economy?
Continue to invest in yourself. Personal development is important, also to minimise expenditure as much as possible. Finally, don’t stop giving. During a crisis, a lot of people tend to hold on tightly to what they have or own however there is a universal law that the more you give the more you receive. There are so many people who need help. For instance there are internally displaced persons as a result of the insurgency in the North. Furthermore, many families are out of an income due to companies downsizing. This is a time to be our brothers/sisters keeper.