— being the text of a lecture delivered by Oguh Mark, on the occasion of the Feast of St. Joseph organized by the Catholic Men Organization of St. Thomas Catholic Church, Onilekere, Lagos on May 1, 2017.
Most of us agree that corruption is at the core of what has held Nigeria back from economic and advancements. Little wonder then that it was the formula the present administration employed to win the 2015 national elections. The major driver of the level of fraud, corruption and illegality in our society today is the “fear of the future”. People steal, engage in various illegal activities that destroy the very essence of humanity, just because they want to amass wealth to safeguard the future of their families. Real men don’t act in fear of the future, they shape the future. The immediate past President of the US, Barack Obama once said “we did not come to fear the future. We came here to shape it”.
The get-rich-quick syndrome that pervades contemporary society follows from the lack of interest in hard work and an absence of a defined path to personal wealth creation. When you read the stories of wealthy people in other parts of the world, you can trace the source of their wealth to hard work and focus. Over here, they are but a few who can confidently tell stories of how they rose from grass to grace. This is because such wealth are not supported by any dint of excellence, planning and vision.
The best way to deal with the fear of the future is to confront it. H. Jackson Brown Jr. said; “The best preparation for tomorrow is doing your best today”. Our best, as Christians (Catholics) is to work towards financial security of our families like the “good and faithful servant” (Matt. 25: 14-30).
God expects us to find and exploit profitable opportunities within our environment making sure that our pursuit of material wealth and wellbeing of our families is impacted and guided by our faith and belief in the teachings of our Lord Jesus Christ. It is unfortunate to note that many, today, see the virtue of honesty as a recipe for failure and poverty. Nigeria is so richly blessed that it can accommodate all our legitimate needs for comfort and convenience. Today, there is even no boundaries to investments. With the global linkages and integrated financial markets, investment horizon has expanded beyond borders.
Nigeria’s population of over 170 million people is predominantly of young and middle aged people, making it the 7th most populous nation in the world, home to a large number of young and active people, and diverse demography. Nigeria is Africa’s largest economy, a member of regional and global trade blocks and is endowed with superb natural advantages including abundant supply of natural resources, wide expanse of arable land, and a fast developing stock market. Unfortunately, she is challenged by weak legal and justice system, poor communication and transport infrastructure, corrupt leadership and followership, and weird governance culture built on dishonesty and widespread official and personal misconduct.
Unfortunately, Nigeria’s huge consumer and service sector which runs into trillions of naira is mostly met by importation. This situation on its own, presents a huge opportunity for investment in the micro, small and medium enterprises that are focused on manufacturing and services. Growing demand for consumer goods and services should be met by local manufacturing rather than imports. Developing a cautious culture of investment is the only way to exploit the opportunities that litter the space. Investment is the use of money to make more money and it can bein the form of portfolio investment, and or direct investments.
Portfolio investment is a passive way of participating in economic activities by buying and owning interests in economic assets that generate financial rewards in the form of interests, dividends, capital value appreciation etc. By this means, you make your money work for you. Direct investment (entrepreneurship) is about active and direct participation in economic activities such as owning and running business enterprises in any sector like general commerce, manufacturing, the real sector, financial and non-financial services, entertainment, agro-allied business, transportation and logistics, food and restaurant, fashion, garment care and cosmetics, etc.
Rt. Hon. Priti Patel (MP). Secretary of State Department for International Development(DFiD) once said; “Entrepreneurship is the cornerstone of any vibrant economy. It is the motor that drives investment, job creation and economic growth”. I cannot agree more. I dare add that entrepreneurship is the hand that rocks the cradle.
Some of the variants of investment vehicles that can be exploited include (i) financial products such as Banking products, insurance, fixed income securities, Equity-linked investment, and Real Estate Investment Trust (REIT); (ii) Physical or real assets such as real estates or its value chain, transportation and haulage, plant and machinery acquisition; and (iii) direct investment which includes entrepreneurship in the manufacturing or agriculture and farming space, venture capital and general commerce.
Like everything good, all these investment apportionments have their respective risks and rewards. Some of the risks are operational, environmental or social risks, market risks, political and economic risks and deficiency in managerial acumen.
Investing right requires the following prerequisites:
- A clear definition of investment goals and strategic objectives. You must answer the question, why am I doing this? The goals may be long term stability or short term liquidity. There must be a balance between these two. Short term liquidity helps to position you to take advantage of unexpected opportunities and make the best of them.
- Discipline, consistency and dynamism are critical success factors. Saving money is not an easy task. Without savings there can be no investment. Only a disciplined character can stick to and stay the course of investment plans and not be lured to everything that springs up in the name of making money. Wealth creation requires a consistent, but dynamic disposition.
- Know Your Environment (KYE). Good investors know and observe the relevant laws, guidelines and rules governing their trade. They are fully aware of the strength of competition, markets, government policies, as well as international and local developments that may impact the value of their investments.
- Basic knowledge of financial management principles, portfolio planning, target-setting and tracking modalities must be in place. Concepts such as portfolio diversification which is essential for managing portfolio risk must be well understood.
The best source of investment funds is dependent on a number of factors including; the nature of the investment product, the business model or financial objective of the investor, stage of the business or the investment in the business life-cycle, risk appetite of the investor, the tax environment and incentives available. For start-ups, equity is the best. Xavier Rolet, CEO, London Stock Exchange Group commented in a publication on (Companies to inspire Africa 2017) as follows; “Equity capital is demonstrably more effective at helping dynamic start-ups and high growth companies become the major companies and employers of tomorrow than traditional sources of debt finance has proved to be”. I cannot agree more.
As Nigeria struggles to come out of recession, agriculture, telecommunication, solid minerals, real estate, education, manufacturing and transport remain attractive sectors where opportunities abound.
The Federal Government of Nigeria, through its development financial institutions like the Bank of Industry (BOI), Nigerian Export-Import Bank (NEXIM Bank), the Central Bank of Nigeria, etc, has put in place a number of initiatives to promote investment and entrepreneurship. These include (i) the Agric Credit Guarantee Scheme (ACGSF); (ii) Export Expansion Grant (EEG), (iii) Entrepreneurship Vocational Advancement Fund; (iv) Micro Small and Medium Enterprises Development Fund (MSMEDF); (v) Rediscount and Refinance Facility; and (vi) Small and Medium Enterprises Equity Investment Fund (SMEEIS). These funds are accessible only if the entrepreneur and the business meet the prescribed guidelines and standard operating procedures. SMEs will require technical support and assistance to prepare their businesses to qualify for and attract these facilities.
In order to achieve financial stability in the long term and in the manner consistent with our faith as Christians,
- Families must pull their resources, plan and execute together. There should be no financial secrets between couples.
- Make and use family budgets.
- Build reserves – make money, save, don’t spend all, and create wealth. A strong savings culture is a prerequisite for wealth creation.
- Teach your family, especially your children, financial discipline. You have to catch them young.
- Invest in your children, especially their education and spiritual upbringing. Don’t leave it to your wives only.
- Seek professional and technical advice when making investments. Don’t do business blindly. Don’t just copy others because they seem to have succeeded. Photocopies are never as good as, let alone better than originals. That is the same way ideas, dreams and passion work.
- Make sure you do the financial arithmetic before you commit money to any idea. You must know the risks – what can go wrong – and the extent of damage it can cause you. In addition, the actions to mitigate such risks must be known and confirmed.
- Don’t be afraid to take decisions. All you need is to identify the best and the worst cases and how to mitigate the risks.
- Where necessary, take outinsurance policies to share the risk and the rewards.
- Be careful when applying for bank loans especially if you are a start- If you must take a bank loan, seek advice from your knowledgeable financial advisors. Use more of equity. You can pull resources even as members of CMO. Most times, Nigerians want to own 100% of nothing than owning less than 100% of something.
- Businesses that survive in the long term apply the virtue of justice. Be just and equitable in your business practice. Honesty, integrity, accountability and transparency will benefit you in the long run.
NB: Mark Oguh, a Fellow of Institute of Chartered Accountants of Nigeria and a Financial Management Expert wrote in from St. Anthony’s Parish, Gbaja, Surulere, Lagos. Contact email@example.com
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