Financial Planning to Meet Your Future Goals

All of us do some bit of planning to manage our income, savings, expenses, future liabilities (money we expect to spend in the future) whether we understand anything about financial planning or not. While we may be managing it well for now, it may not be the best way to do or it may not give us the best results. While financial planning may sound technical, all it means is how do you recognize your future earnings and liabilities today, list down your current earnings and expenses, see if there is shortfall between what you’ll need in the future and what can get to with current means and then plan your savings and investments to overcome that shortfall.

List Current Income & Expenses:

Start with your current income which should include your salary, salary of other working members in the family, any other income like rent, business income etc. Add it all up and remember to also deduct the taxes you’ll pay on each of the income to finally arrive at the net income for your family at present.

After having arrived at your family’s net income, deduct all expenses like household expenses for the year, tuition fees, loan EMIs or any other short-term liabilities (expected within next 3-5yrs) you foresee like renovating the house or a medical treatment etc. Post this deduction what you now get is the savings you have that you need to invest wisely for the future.

Setting Future Life Goals

The next step in financial planning should be putting down all your future financial liabilities, the time when they will arise, the amount you will need etc.

Goal 1: For instance, if you are a 40 yr old man and expect your daughter’s college education to be due after another 8 yrs and anticipate this may cost around 30 lakhs then, will you have the money to finance it? Decide on an investment and the amount that you need to make today to achieve this goal 8 yrs later.

Goal 2: Similarly, if you intend to retire at 60 yrs, you need say 1 lakh p.m to maintain your current lifestyle which is INR 50,000 in today’s value. Given the advances in healthcare, you can easily expect a 25-30 year long retired life. The money you need to live your retired life can be funded by a long-term low risk investment (like debt mutual funds, pension plans) made today. Set aside some money for such an investment to be made today.

Goal 3: You may set aside money for buying some health insurance that you’ll need during your retired phase or even earlier. The insurance premium needs to be funded from your current savings.

The goal setting process helps in understanding your future requirements, quantifying them and making investments in the right asset class to fund each of the goals when they become due.

Asset Allocation:

While asset allocation can be done along with goal setting, it is better to understand how asset allocation can impact the success of your financial plan. You can invest your savings in various asset classes like equity, debt, gold, real estate etc. Look at the investments you have already made like if you own a PPF or EPF account, money you have invested in bank FDs, home loans you are paying etc. From the current savings and investments, you have already made, calculate the percentage of allocation made to each asset class. For instance, all bank FDs, PF amounts, govt bonds, debt-oriented pension plans should be classified as debt. Any money invested in IPOs, company stocks, equity mutual funds should be classified as equity, loan EMIs should be classified as real estate etc.

As a thumb rule, 100 minus your current age should be allocated to equities and equity like product. If you are 40 yrs old, 60% of annual savings should be invested in equity like products and the balance in debt products. If your current investments don’t seem to reflect this, try balancing your investments by reducing the money you put in debt products like FDs and bonds and divert that money towards equity mutual funds or stocks.

Most people are not comfortable investing in stocks as it requires special research, constant monitoring and a lot of undue stress. Hence equity mutual funds are a better option since your money is professionally managed by fund managers who do all the research on companies before investing and continuously monitor the performance of the fund by buying good stocks and selling underperforming stocks.

Start Early

You must start your financial planning early because this will give you the advantage of compounding example whichever option you choose to invest in, your money will get to grow for longer duration with returns compounded every year.

Annual Review & Rebalancing

While a sound financial plan is a good starting point, following it with discipline and rebalancing your portfolio every year is very important. Since life circumstances change frequently, you must relook at your plan along with your financial advisor and make changes to reflect your new circumstances.

Investing In A Developing Economy – A Possible Solution To Global Financial Crisis

INTRODUCTION

If there were security problems in Nigeria, no businessman would go to the country to explore opportunities, companies like Celtel, MTN, Etisalat, would not have ventured into security risk country to do business. Those who spread rumour about security and corruption problems in Nigeria are saying so to stop others from making money in the country. Figures don’t lie. They are the biggest testimonies for how conducive Nigeria’s environment for business and opportunities are. If you want to do business in Africa and record good returns on your investment, I welcome you to come to Nigeria. The political environment in Africa, particularly in Nigeria is tremendous.

Dr. Hamadoun Toure,

Secretary General,

International Telecommunications Union,

Cited in the Punch Newspaper, May 13, 2008)

What is happening currently with the Nigerian financial system is far from being affected in any way by the global credit crisis. At global level currently, the banks are under-capitalised, but Nigerian banks are over-capitalised. And I do not think this is a problem at all. I believe that Nigerian banks are under pressure from other economies within Africa continent that are affected by the credit challenges.

– Gordon Smith,

Head of Research, Africa and the Middle East, International Consilium,

(Reported in the Punch Newspaper, June 30th, 2008).

The foregoing statements aptly connote two understandings of the state of Nigerian economy. These understandings show that, the economy is one of the fastest growing economies in Africa and in the world. Although Nigeria has had hash economic history, it has undergone and still undergoing economic reforms, which are aimed at making Nigeria the Africa’s financial hub and one of the twenty largest economies in the world by the year 2020. Needless to say that the country has experienced political instability, corruption, and poor macroeconomic management in the past, this was responsible for unpleasant and harsh economic situation. The government relentless efforts to reposition the economy have translated into a remarkable economic growth and development. Several mechanisms have been put in place to sustain this growth and development, capable of balancing the interests of stakeholders. Perhaps, this view must have influenced Gordon Smith submission. He described Nigeria as the most dynamic market in Africa, which is under severe pressure from some countries in Africa to serve as a cushion against the effects of global turbulence. He also noted that some countries like Ghana, Malawi, Mauritius, among others were depending on her at the moment due to global risk exposure and that the country’s economy, led by the consolidated banks, was far from being affected by the global credit crisis currently rocking the world’s financial giants. He stressed further that foreign investors, who will be patient enough to weigh the Nigerian financial system on the credit risk perspective relative to global events, will find the nation’s financial sector more interesting to invest and raise capital from.

Faced with numerous challenges, Nigerian government is determined to strengthen, diversify and make the economy attractive and investment-friendly to both local and foreign investors. The government has adopted total liberalization and globalization as the economic policy, instituted privatization and commercialization programmes of public enterprises, provided total security for business and people, extended invitation to domestic and foreign investors, abolished laws inhibiting competition, embraced and fine-tuned policies to ensure quick realization of growth and development of all sectors of the economy. The effort is already paying off as Nigeria is now the focus for foreign investment thereby increased exponentially Foreign Direct Investment (FDI). Scores of economic missions and delegations from developed and developing countries have visited Nigeria, thus accelerating the growth of the economy at a very fast rate.

It becomes pertinent to direct the course of this discussion to embrace the second understanding of the above statements made by Hamadoun Toure and Gordon Smith. However, it becomes more pertinent to enumerate the inherent investment opportunities in Nigerian economy before discussing the issue of security as raised by Toure.

INVESTMENT OPPORTUNITIES AND SECURITY ISSUE IN NIGERIA

No doubt, Nigeria is an investment haven with countless and lucrative investment opportunities including oil and gas, solid mineral, agriculture, tourism, telecommunication, power and steel, transport, trade processing zone, financial sector, real estate / property, manufacturing, sport and entertainment, and fashion industry. Investors have a wide range of opportunities to choose from. It is important to note that the rate of growth of investment is fantastic and exponential in any of these sectors. Investors are at advantage of presenting their products and services to already-made market taking advantage of the population of over 140 million.

In telecommunication, statistics reveals that mobile phone users in Africa were about 280 million, overtaking United States and Canada with their 277 million users in the opening quarter of 2008. With 70 million connections in 2007, the Continent became the fastest growing region in the world, representing a growth of 38 per cent, ahead of the Middle-East (33 per cent) and the Asia-Pacific (29 per cent).It was also revealed that the fastest growing markets are located in northern and western Africa, representing altogether 63 per cent of the total connections in the region. The record showed that Nigeria, Zambia, Tanzania, The Democratic Republic of Congo, Kenya, Algeria, Tunisia, Ghana and South Africa are highly competitive markets in the Region. The record further contends that two-third of Africa’s telephony are in their early phase of development, with penetration rates below 30 per cent at the end of 2007.In percentage terms, it was noted that Africa is the fastest growing market in the world, but also the second smallest in terms of connections after Middle-East.

As Nigeria accounts for 57 per cent of the West Africa mobile phones, the country is acknowledged as the leading and the fastest growing telecom market in Africa. With mobile phone users at 44,932,181 and 734,444 for GSM and mobile CDMA respectively, her contributions to West Africa and Africa’s telecommunication growth can not be overemphasized. While the overall economic growth rate stands at 7% per annum, the mobile telephony is about 35-50%. Assuming that each of these connections was busy for a minute in a day, the country telecoms market has the capacity to generate over USD 16 million per day (USD16, 666,667) and close to USD 6 billion per year (USD 5,833,333,300). This is why telecom companies such as Visafone and Etisalat quickly joined the likes of MTN, Globacom, Celtel and other telecoms service providers in exploiting opportunities in the country.

Early this year, one of the main GSM service providers with a subscriber base of over 15 million announced a profit after taxation of USD650 million (78 billion naira) for the year 2007.Putting all these together, one can easily understand Toure’s submission describing Nigerian telecoms market as the best investment destination in Africa.

Recognizing the fact that the Nigeria telecoms industry is enormous and there is need to further exploit the sector to its fullest, the Nigeria Communication Commission (NCC) and the Ministry of State for Information and Communications have made their positions clear by extending invitation to global investors for active participation in the sector as they are willing to grant pioneer status and license for prospective applicants for various undertaking such as Fixed telephony, Mobile telephony, Fixed satellite (VSAT),Paging, Payphone, Internet and other value added services.

With the above facts, one can safely conclude that Nigerian telecom sector offers fantastic and lucrative investment opportunities to global investors. And putting into consideration 40% GSM market growth rate in the first quarter of this year (2008), there is potential for high return on investment in this sector.

Agriculture, the dominant sector of Nigeria economy, engages about 70 per cent of the population directly and provides nearly 88 percent of non-oil foreign exchange earnings. It contributes about 41 per cent of the GDP of the country. The sector recorded an overall growth rate average of 7 per cent in the last three years, a major improvement from under 3 per cent in the 90’s.

Statistically, 91 million hectares of the country’s total land area of 92.4 million hectares is adjudged to be suitable for cultivation. Approximately half of this cultivable land is effectively under permanent and arable crops, while the rest is covered by forest wood land, permanent pasture and built up areas. Among the states, which have the most abundant land, areas are Niger (7.6 million hectares) and Borno (2.8 million hectares).

Agriculture crops in Nigeria are grouped into cereals, root and tuber crops, grains legumes and other legumes, oil seeds and nuts, tree crops, and vegetable and fruits. Governments and the Ministries of Agriculture have made land acquisition easy, encouraged agricultural practices, extended (still extending) invitation to foreign investors and have put in place several incentives to stimulate growth in the sector. Despite, the agricultural potential of Nigeria is barely being tapped and this explains the inability of the country to meet the ever-increasing demand for agricultural products and her rank as 55th in the world (although first in Africa) in farm output.

As the world experiences food crisis and persistent rise in fuel price, the country’s agriculture offers unlimited opportunities for foreign investors and the world at large to provide solutions to these crises. Foreign investors will find investments in cultivation of sugar cane, sugar beet, sweet sorghum, starch (corn/maize), palm oil, soybeans, jatropha, and algae. These products are lucrative as they are potential for biofuels, a good substitute for fossil fuel. Presently, there is a very high demand for these crops from the developed economies.

Solid Mineral is another sector with great investment opportunities. Nigeria is endowed with numerous mineral resources. Recent policy reforms have brought the solid minerals sector to the fore. The emphasis is on encouraging massive foreign investors’ participation in this sector as less than 0.5 per cent is contributed to the Gross Domestic Products from Solid mineral sector. However, the Ministry of Mines and Steel and the Ministry of state’s focal attention in the last one year is to strategically place the country in a better position to explore and exploit just seven minerals in the plethora of minerals so as to increase Gross Domestic Product to 5 per cent within the next few years. The seven strategic minerals are coal, bitumen, limestone, iron-ore, barite, gold and lead / zinc.

Coal can be found in Enugu, Benue and Kogi. Within these three districts 396 million metric tones can be demonstrated using JORC classification criteria, while an additional 1,091 million tones of inferred and hypothetical coal resourced for the areas studied is 1481 million tones.

Knowing fully that development of coal will assist in the realization of energy, the Government and the Ministries are inviting foreign investors to participate actively in the exploration and exploitation of the mineral. Companies such as Denver Resources and Western Metals have already committed US$10 million and US$15 million respectively for two coal fields in the country. Another Chinese firm, Grid Xin Yuan International Investment Company that is providing more than half of China’s electricity needs is also in the country, indicating their interest in the development of a coal field in Kogi State.

The Bitumen reserve in the country is estimated at more than 27 billion barrels of oil equivalent while iron-ore is estimated at over 5 billion inferred reserves with presence in Kogi, Enugu, Niger, Zamfara and Kaduna States. Gold in just 10 locations is estimated at 50,000 ounces, barites 10 million metric tones and limestone at 2.3 trillion reserves.

Talc with an estimated reserve of over 100 million tones can be found in Niger, Osun, Kogi, Kwara, Ogun, Taraba and Kaduna States.The colour of the Nigerian talc varies from white through milky-white to grey. The talc industry represents one of the most versatile sectors of the industrial minerals in the world. The exploitation of the vast talc deposits in Nigeria would therefore satisfy not only the local demands but also that of the international market as well.

The national demand for table salt, caustic soda, chlorine, sodium bicarbonate, sodium hydrochloric acid and hydrogen peroxide exceeds one million tones. A colossal amount of money is expended annually to import these chemicals. There are salt springs at Awe (Platue State), Enugu, and Uburu ( Imo State), while rock salt is available in Benue State. A total reserve of 1.5 billion tones has been indicated. Government, to ascertain the quantum of reserves, is now carrying out further investigations.

In the same vain, large bentonite reserves of 700 million tones are available in many states of federation ready for massive development and exploitation, over 7.5 million tones of barite been identified in Taraba and Bauchi states, and an estimated reserve of 3 billion tones of good kaolinific clays has also been identified.

Gemstone mining has boomed in various parts of Plateau, Kaduna and Bauchi States for years. Some of these gemstones include Sapphire, Ruby, Aquamarine, Emerald, Tourmaline, Topaz, Gamet, Amethyst, Zircon, and Fluorspar, which are among the best in world. Good prospects exist in this area for viable investment. Understanding that this sector requires urgent investment, the Ministry has directed miners who are still in small artisan levels to form cooperatives so as to benefit from World Bank US$10 million assistance. Apart from this, three Nigerian Banks have also established solid minerals desk with fund of over US$ 8 million each for the development of the sector.

Foreign investors will find this sector worth-investing on as Nigerian governments have put in place various incentives and strategies for investment such as 3-5 years tax holiday, deferred royalty payments, possible capitalization of expenditure on exploration and surveys, extension of infrastructure and provision of 100% foreign ownership of mining concerns.

Recognizing that only a sustained macroeconomic environment and a sound and vibrant financial system can propel the economy to achieve the country’s desire to become one of 20 largest economies in the world by the year 2020, on the July 6, 2004 the Federal Government through the Central Bank of Nigeria (CBN), under the leadership of its Governor, Professor Charles Soludo launched a 13-point reform agenda to restructure, refocus and strengthen the Nigerian Financial System. To complement this agenda, another comprehensive long-term reform agenda for the Financial System (the Financial System Strategy 2020-FSS2020) was launched. The grand objectives of these agendas are substantially being achieved. The country financial system now comprises of strong, efficient and internationally competitive banks with an eye for global markets, a capital market with highest returns on investment, in dollar terms, a sound and rewarding insurance industry and other competitive financial participants.

Gordon was right in his submission to have described Nigeria as the most dynamic market in Africa. His view that “foreign investors, who will be patient enough to weigh the Nigerian Financial System on the credit risk perspective relative to the global event, will find the nation’s financial sector more interesting to invest and raise funds from” x-rays the truth about the country’s financial sector.

The country’s banking system is the safest and the soundest it has ever produced in history. It is the fastest growing banking system in Africa and one of the fastest in the world. In fact, the most outstanding contribution towards realization of the country’s dream came from this sub-sector. Economic analysts have observed that it has taken Nigeria less than 3 years to achieve what it took South Africa 20 years to achieve in the area of banking. In a short word, a world-class banking system has emerged in Nigeria.

Statistically, banking sector contributes 10 per cent to the Gross Domestic Product (GDP) and represents 60 per cent of the stock market capitalization, while there was a reduction in the number of banks from 89 to 25, the number of banks branches rose by 33 per cent from 3383 in 2004 to 4500 in 2007. The total asset base of banks rose by 104 per cent from $ 26.8 billions ( 3.21 trillion naira) in 2004 to $54.7 billion ( 6.56 trillion naira) by mid 2007; capital and reserves rose by 192 per cent from $2.72 billion (327 billion naira) to $7.98 billion ( 957 billion naira); capital adequacy ratio rose by 42.6 per cent, point from 15.18 per cent to 21.6 per cent and ratio of non-performing loans total loan improved massively by 51.3 per cent, point from 19.5 per cent to 9.5 per cent. The sector has also remained one of the most profitable in the country’s capital market. It was noted that 13 out of 21 quoted banks on the Nigerian Stock Exchange recorded returns in excess of 100 per cent since January 2007.

According to the April 2008 edition of the African Business, (the best-selling Pan-African Business Magazine published in London) 18 out of 28 West African Companies with market capitalisation of more than $1 billion are Nigerian Banks. The magazine stated that First Bank Nigeria Plc with market capitalization of $7.4 billion remains the largest company in West Africa. Two other Nigerian banks namely Intercontinental Bank Plc and United Bank for Africa (UBA) remain the second and the third largest companies in the sub-region with market capitalization of $6.2 billion and $4.6 billion respectively.

Apparently, the rising tide of banks in the country from all indications has made the sub-sector very attractive, not only to local investors, but also to foreign investors, and in particular, foreign banks. For instance, the consolidation of Regent Bank, Chartered Bank and IBTC to form IBTC Chartered Bank attracted the interest of the Standard Bank Group, the largest financial institution in Africa with a market capitalization of $ 17.8 billion, whose subsidiary Stanbic Bank, also of South Africa has just sealed a Merger deal for the latest Merger in the country, Stanbic IBTC Bank Plc. In this direction, other foreign banks have started making enquiries with CBN of a possible Merger or take-over.

To further substantiate the opportunities the banking sub-sector offers the global investors, a cursory look into Intercontinental Bank Plc will reveal the success of banking system in the country. Intercontinental Bank Plc is known to be the second largest companies in West Africa to have recorded a phenomenal growth in gross earnings, which stood at $1.45 billion ( 173.5 billion naira) in 2008. This is an increase of 99 per cent over the $728 million (87.4 billion naira) in 2007, profit after tax grew by 102 per cent to $380 million ( 45.6 billion naira) as against $188 million (22.6 billion) in 2007, while the capital base rose to $1.67 billion from $1.31 billion. The bank deposit base soared to $8.75 billion ( 1.05 trillion naira), an increase of 126 per cent from $3.9 billion (468 billion naira) in 2007, while the total assets also recorded a quantum leap to $14.2 billion (1.7 trillion naira), representing a growth of 108 per cent from $6.86 billion( 823 billion).

The bank is also in strategic partnership with BNP Paribas, the world leading energy financing bank, Afrexim Bank; Export Development Canada (EDC); Finance for Development (FMO); China Exim Bank; Export-Import of United States; International Finance Corporation in financing projects in different sectors of the economy. However, it is relevant to say that the success recorded by Intercontinental bank is a good example of the Nigerian banks’ strength and prospects, and a testimony to opportunities available to global investors in the country’ financial sector.

Apart from the above, Nigerian Capital Market offers viable opportunities as it is positioned to help companies to raise capital, and to generate high returns on investment. Its total market capitalization has grown by over 4000 per cent to $100 billion (12 trillion naira) in March, 2008, up from $2.39 billion (287 billion naira ) in August 1999.Among emerging markets, the Nigerian Capital market remains one of the most viable in terms of returns on equity. Historically, the market has delivered 28 per cent returns.

Insurance industry is not an exemption to this growth and development the country’s financial sector is witnessing. Although there are few black spots on the regulatory handling, the industry has equally recorded success in their reforms and operations. With the inflow of robust capital, insurance companies are now faced with the challenges of delivering returns to shareholders, maximizing value and exploring overseas markets. Their presence can be felt in countries like Ghana, Liberia, Sierra Leone, Sao Tome, South Africa among others.

Although Goldman Sachs’ report titled “New Market Analyst” with issue number 08/09 released on March 13, 2008 (cited in the Thisday newspaper March 19,2008) posited that Nigeria is a better economy than South Africa, International Monetary Fund (IMF) reported that Nigeria and South Africa got close to 50 per cent of the $53 billion private equity and debt flow to Sub-Saharan Africa in 2007. This underscores the growing confidence of International bodies and foreign investors in country’s financial sector and economy at large.

Furthermore, Fitch Rating Agency and the Standard and Poor rated Nigeria BB-(minus) in the area of sovereign credit, high in development of local currency debt market, and low in the areas of debt to GDP ratio and inflation. The opportunities for growth in Nigeria financial sector are still strong as the underlying fundamentals driving the growth are still present. All these and more, position the financial sector and the country at large as a leading and most dynamic market in Africa and present viable investment opportunities to global investors.

Needless to say that the opportunities presented above are typical examples and an evidence of opportunities awaiting foreign investors in other sectors of the economy.

Nigeria is the largest producer and exporter of oil in Africa (although recently placed second behind Angola in the latest OPEC report as a result of Niger Delta Crisis) with a production of 2.5 million barrels and above a day. Besides, the Nigeria is the 7th world’s gas reserve holder and the highest flaring nation in the world, with the potential to become a major player in LNG export. It has annual gas flares’ capacity to generate over 12000 MW of electricity needed to catalyze the growth of any economy. Although it currently flares an average of 1.2 TCF of gas annually, the sector has the potential to generate great returns on investment.

One of the greatest opportunities awaiting foreign investors is Real Estate / Property. For instance, Lagos Metropolis with a population of about 18 million has attained mega city status. The State has one of the highest urbanization rates in the world according to the World Bank. Consequently, there is an insatiable demand for housing delivery, which has necessitated the introduction of the New Private Estate Developers Scheme. Under the programme, the government will make large parcels of land ranging from 1 to 25 hectares available to corporate organizations capable of undertaking development and delivery of housing units. Such organization must however demonstrate that they have the financial capacity and technical expertise to deliver quality and affordable housing units.

Among other sectors of the economy that foreign investors will find viable and worth-investing on are Transport, Sport and Entertainment, Tourism, Power and Steel, Export Processing Zones, Privatization. And available records reveal that the rate of returns in these sectors is as high as in the sectors discussed above.

Apart from the opportunities mentioned above which our office is strategically positioned to maximize opportunities for the benefit of prospective investors. We also offer consultancy services in the areas of general management, manufacturing, marketing, finance and accounting, personnel, research and development, packaging, administration, international operation, specialized services and other value-adding services. And our strategic partnership with national and international companies put us in position to deliver quality service and high returns on investment.

Nevertheless, there have been fears raised by international observers, agents and bodies that Nigeria is a high-risk nation for investment and other business transactions. This development is attributed to security, multiple taxation, epileptic power supply, bad roads and poor work environment.

It may appear that doing business in Nigeria is challenging because of the activities of a few untrustworthy Nigerians who are unscrupulous. But such are simply characterization of human nature; as it can be found anywhere else in the world. It must be said emphatically that the world has been biased in their judgment and treatment of Nigeria security issue. There have never been terrorist attacks, suicide bombings or kidnapping until recently when the issue of Niger Delta came on board.

Niger Delta region-the source of nation’s oil wealth- has become an area of perennial tension, agitation, and recently, militancy. However, a confluence of factors such as environmental damage by oil exploitation, failure to develop the region, lack of job opportunities and sense of deep deprivation from the low share of derivation revenue accruing to the states in the region, has led to the present situation. Acknowledging their situation, the Federal Government has organised a Summit, to be chaired by Professor Ibrahim Gambari, the United Nations Under Secretary General, to provide everlasting solution to the crisis. Frankly speaking, Nigeria is a safe and investment-friendly place and Nigerians are accommodating and industrious.

Cyber Crime is another fearsome crime, which often put-off prospective investors from involving or investing in the business opportunities in Nigeria. This crime was actually imported into the country by expatriates. It has never been part of Nigeria culture. It is perpetrated by a few section of the population. Their operations are carried out via Internet and their targets are people who transact business via the medium. They pose as government officials and sometimes as businessmen with United Kingdom identity who deal in digital products. However the list of their tricks and operations is not exhaustive. With the help of Economic and Financial Crime Commission (EFCC), Independent Corrupt Practices and Related Commission (ICPC), and other Anti-Criminal Agencies, Cyber Crime and their perpetrators are under control and disappearing.

The grand objective of the present administration, as encapsulated in VISION 2020, is to make Nigeria a major industrial and economic power, and one of the 20 largest economies in the World by the year 2020 by providing enabling investment and business environment and maximum security for active participation of local and particularly, foreign investors. The realization of these aspirations had informed the radical and pragmatic reforms designed to increase the attractiveness of Nigeria’s investment opportunities and foster the growing confidence in the economy. In this direction, the Federal Government has provided incentives and strategies for investment such as 3-5 years tax holiday, deferred royalty, possible capitalization of expenditure and provision of infrastructures such as road and electricity, just to mention a few.

African economy is witnessing the strongest growth in 30 years; no doubt, Nigeria is one of the major contributors to this development. Most commentators have observed that the opportunities for business and investment in the country look increasingly rosy with GDP growth of 7 per cent in 2007 and 13 per cent in the next 12 years. The International Monetary Fund (IMF) forecast of 9 per cent growth rate for Nigeria in 2008 (which is second to India 10 per cent and ahead of China 8 per cent) lays credence to their observations.

Furthermore, the increase in Foreign Direct Investment, the entrance of multinational companies, the strong financial sector, the favourable and tremendous business environment, the government support, the abundant natural resources, and the population of over 140 million people, among others, put Nigeria in a comparative ( and possibly absolute) advantage over other African countries.

Just as it is difficult to ignore China as a market in the global arena, (one out of every five persons in the world is Chinese) so is it very difficult to ignore Nigeria as a market in Africa (one out of every three persons in Africa is Nigerian). With a population of over 140 million people and its economic potential, Nigeria still remains Africa most important market.

IMPACT OF GLOBAL FINANCIAL CRISIS IN A DEVELOPING ECONOMY

Unlike China and India, African economy(developing economies) is yet to be integrated into the world economy. This is as a result of slow rate of integration and globalization at which the economy is being fixed into the global economic and financial system. Consequently, developing economies will only suffer a limited financial impact from the credit crunch. However, this is not to say that developing economies are in isolation and totally free from the crisis.

To grant a point, this paper will continue to use Nigerian economy for its analysis as it represents a paradigm of a developing economy with valid and considerable variables.

According to the report from a recently concluded Bankers Committee Meeting, which ended on October 20 th, 2008 , the Nigerian banks are safe as they operate at 22 per cent capital adequacy ratio( 14 per cent above the world 8 per cent requirement) and the financial sector is far from being affected by the current global financial crisis. The report also posits that any bail-out scheme is unnecessary as the situation that warranted bail-out schemes in developed economies- poor quality assets and heavy loan losses resulting from exposure to inadequately collateralised mortgage loans- is absent in Nigeria. To underscore its point, the report noted that, as the Direct Foreign Investment in Nigerian banks is comparatively low and the banks connection with their foreign counterparts is loosely fixed, the impact of the crisis will be limited and indirect.

Conclusion

The words of Mr. Dominique Strauss-Kahn, the Managing Director of International Monetary Fund, at a meeting in Washington D.C are the corner stones of the concluding thoughts of this paper. He stressed as follow:

We meet at an extra-ordinarily difficult time- a time of uncertainty and insecurity, with a danger that those fears push us away from- not towards- a more inclusive and sustainable globalization….At its best, multilateralism is a means for solving problems among countries, with the group at the table willing to take constructive action together. When multilateralism is dysfunctional, globalization can be a Babel of Tower, with competing national interests colliding to benefit none. The new multilateralism, suiting our times, is likely to be a flexible network, not fixed system. It needs to maximize the strengths of interconnecting actors, public and private, profit-making and civil society Non-Governmental Organisations (NGOs). The multilateralism must respect state sovereignties while solving interconnected problems that transcend borders…The private sector cannot restore confidence on its own. Macroeconomic policy measures by governments cannot restore confidence on their own. Piecemeal measures on financial markets will not restore confidence on their own. What will restore confidence is government intervention which is clear, comprehensive and cooperative among countries..The world must act quickly, forcefully and cooperatively to contain the ongoing financial and economic downturn.

Thus, the position of this paper is that the confidence will only be restored if “government intervention which is clear, comprehensive and cooperative” is complemented with investment in developing economies with less or no crisis impact as “flexible multilateralism” and cooperative and sustainable globalization is solution that suits our time, not” economic isolationism”.

Making Monopoly Better by Youth Financial Education

From an early age, we are taught the wrong things about money and business. Consider the very popular board game Monopoly(R). The game was developed by an engineer at the beginning of the 20th century. In a world of Robber Barons and at the genesis of Scientific Management as a management science, it is possible that a strictly win-lose game is an accurate teaching tool about business. To me, this is a grossly inaccurate way to teach young people about business in a Knowledge Economy, where success is much more about fostering cooperation, sharing ideas and mutual success. Today’s business environment is all about fostering win-win relationships. It’s a great time to be running a business.

I love Monopoly(R) but I have found a few minor rule changes can make it a much more accurate depiction about business today. It also makes the game move more quickly and allows for teaching lessons of negotiation and the art of creating win-win solutions in business.

Rule 1) All rents are paid by the bank

Rents are not paid by other players. When a player lands on another player’s property, this simulates the market giving buying signals to the owning player.

Rule 2) Making Payroll

Every time a player passes “Go”, the player must pay 10% of the purchase price of all owned properties (both mortgaged and unmortgaged). This simulates making monthly payroll and teaches the player the importance of cash-flow management.

Rule 3) Partnered Ownership.

Players can partner to form monopolies and divide the proceeds as agreed. Property ownership is no longer an attrition game. Deal making is encouraged much earlier in the game. In the traditional game, many players wait until nearly all the properties are acquired to begin making deals, which draws the game out. In business, jumping on opportunities quickly is vital to success.

Rule 4) Private Lending

Players may lend money to other players under whatever terms mutually agreed upon. Successful business people know that a lack of money is rarely an obstacle when the opportunity is great. Part of the art of deal making is assembling the team that has all the necessary resources. Often, one party brings funding.

Rule 5) Ending the Game

The game ends when the last hotel is sold and therefore, the market has achieved “saturation”. This teaches the importance of taking action quickly and encourage deal making as soon as possible.

A few simple rule changes like these can reinvent Monopoly(R) and make it a much better learning tool.

Financial Freedom – The Aspiring Entrepeneur

The Aspiring Entrepreneur

Your desire for financial freedom sets you on the entrepreneurial path of innovation.

You have the desire to gain financial freedom by investing into the ideas and ways that make money.

Success requires a plan for how to monetize that desire into a profitable business.

Be resourceful to make things happen:

*find out what you need to know

*take advantage of every opportunity

Online Business Opportunities

The traditional forms of going into business are too costly in money, time and effort.

Attain income, equity and lifestyle goals without the high start-up costs of the traditional “bricks and mortar” business.

Set goals to develop an online business through daily and weekly routines.

A useful, information website influences its popularity and profitability.

Pursue your financial goals through your knowledge, skills, experience, hobby or passion!

Gain access to a vast selection of products, services and information to sell and promote in a global marketplace that is not restricted by geographical boundaries.

Put the initial effort to establishing an online home business then, reap long-term benefits of ongoing income with minimal effort.

Extra Income

Extra income makes many things possible.

For a start, it improves your lifestyle quality.

It offers the flexibility to work when you want and how much you want.

It provides the opportunity to develop multiple income sources in a global market.

And, it helps pay off your mortgage, clear outstanding debts, build savings and investment or to go for a holiday.

Pick a Niche

A niche that appeals to you, has a lot of interest and a targeted audience becomes a financial asset.

The right niche that benefits readers become customers.

They also become repeat customers through other related products.

Other financial opportunities that relate to your niche can also be created via e-books, books, CD’s, DVDs and vlogs that will earn you money 24/7 all year round.

Three things to consider when choosing a niche:

1. Your interest in a particular niche

2. Popularity and competition

3. Ability to make money

Become an Expert

The right niche is all about building your brand of specialization.

Effective marketing and promotion creates trust and gives you an edge over your competition.

More pages on your website, the more ads, more affiliate links will bring more visitors.

Every page will make you money and you will be earning from more than one source.

Write to:

*inspire

*achieve your goals

*make money

Affiliate Programs

Joining affiliate programs that relate to your niche:

*is cost-free and risk-free

*no inventory

*you don’t have to establish any kind of credit card processing system

*no shipping or dealing with customers

Join affiliate programs that relate to your niche and place their ads and affiliate links to your website.

Affiliate products include electronic, downloadable products like e-books (from ClickBank) and, tangible products (from Amazon) that are shipped by the merchant and sent to the customer.

Those who click on the affiliate link and make a purchase will make you money.

You focus on driving traffic to your website.

The best affiliate programs provide the various marketing material, banners, text-links, training and support as well as your own log-in area and statistics.

Drop Shipping

With drop shipping you basically act as a middle-man between the customer and the drop ship supplier.

You don’t need an office or warehouse.

You can sell niche products on your website or, through eBay or Amazon.

Focus on marketing, promotion and customer service.

Drop-shipping is also beneficial for the “traditional bricks and mortar” retail shops.

With a Drop-ship supplier, you do not have to:

*buy any product upfront

*you do not have to stock inventory

*there is no order fulfillment

*no up-front costs

*no shipping

Initiative

Initiative opens the path to personal achievement.

It is based on the ideals of:

*goal-setting

*action

*persistence

*problem-solving

*creativity

“Opportunities don’t happen. You create them.”

-Chris Grosser

What It Takes To Achieve Financial Freedom

What does it take to achieve financial independence? Well, the truth is that there are and there have been many ways through which people have achieved financial freedom.

While success in the past might have come from social and political connections for instance, in today’s business environment for instance, success comes from taking advantage of today’s better circumstances; you don’t need to know anybody to excel in business! Let me explain:

The Ease of Starting a Business in Today’s Business Environment

Many things have made starting a business easier than it has ever been; the development of technology is key among these things. More precisely, starting a business is many times easier today than it was 20 years ago because of advancements in communication have made it easier and convenient for businesses to connect and communicate with buyers. The internet has particularly made it easier to access information about anything. This is undeniably important in starting and managing any business.

Technology has had a tremendous positive effect, an effect millions of people are taking full advantage of to start and grow their businesses. Avenues such as mail, text, and instant messaging, video, live streaming, social media, and other budding tools have been among the most fascinating things technology has given the business world, giving it a major face lift.

That’s not all; many aspects of starting and conducting a business have radically changed. For instance, the way businesses engage in transactions and marketing to consumers has taken on a completely new life of its own. One of my friends described technology five years ago; he said, “Technology is support brought to us by nature that we simply can’t refuse. It makes it a lot easier to start a business and feel safe doing it. “

A lot of this fundamental shift in the way we conduct business today goes back to the constant change in technology and the way people go about exchanging money. Below are two of the numerous areas where we have experienced major changes in how we do business.

We shall discuss them in a bit more detail so we can get a glimpse at what tech has changed.

The Internet

Twenty years ago, the widespread public use of the internet was still in its infancy. People were still getting over the wow-factor of building websites, using basic functions of the internet, learning new ideas, acquainting themselves with the use of email, and corporations were really competing to control the online marketplace. Google, Facebook, Amazon, and others emerged as central hubs of contemporary commerce in the digital domain.

Since then, we have seen the coming of age of technologies such as social bookmarking, social networking, search engine optimization, and other types of digital traffic generation. Today, these opportunities exist as a standard basis of operation in an enduring effort to grow sales volume on the internet.

The blogosphere, affiliate programs, and email lists that have auto-responders have come up as equally worthwhile avenues businesses can use to reach out and market to consumers. Currently, the internet has realized profits worth billions from the number of business transactions occurring online.

Modern business owners have a completely new perspective and outlook on marketing to consumers, and one demonstration of this is through the shift from traditional print advertisements and the ongoing efforts to create and develop company websites. The search for new ways to take advantage of the internet to produce new means of tapping into untapped online traffic continues.

POS Systems

A few decades ago, we had very little expertise on mobile payments or any experience with touch-screen product access especially in retail establishments. The emergence of modern point of sale systems (POS) has done a lot in offering modern retailers a great deal of benefit in optimizing their sales volume. By giving clients direct to on-site products and many payment options, POS systems make it cost effective and efficient to run a retail business.

Automation, a method that allows for inventory control measures, has completely revolutionized the current means of tracking and ordering inventory. Other developments such as mobile payments are still spreading fast.

That’s not all; with technology, new types of products have come into existence. Books are no longer the print books we used to have back in the days for instance; there are various digital versions of books (e-books), which are increasingly being consumed daily. This obviously requires a different method of product access and delivery to the customers (all done electronically), a phenomenon that has opened doors for limitless options on what someone can sell. Gone are the days when you could only stock physical goods when running a business- digital goods are taking over and presenting with them new forms of efficiency that allows businesses to run somewhat on autopilot and on minimal costs while targeting customers all over the world. That was unheard of in the past! What’s even more interesting is the way payments are processed; it is just in ways many of us could not fathom a few years ago. You can receive payment from someone living in a different country without having to go to any bank and feel safe that your money is safe. The revolution of payments (which is automated) allows businesses to accept payment for goods and services day in day out from anywhere in the world (it doesn’t matter whether their offices are closed- with a website and payment systems set, everything takes place seamlessly).

We could go on and on about how technology has developed because it evidently has, in hundreds of ways. Technology has made it starting a business a lot easier than it was two decades ago.

For instance, because advances in communication have made it possible for information to travel quicker and more effectively, distance barriers have disappeared and many businesses are wholly exploiting options such as outsourcing overseas. Businesses can now outsource duties like telephone customer service, live chat, blog and article writing, and computer programming, and this is just but one of the numerous aspects of outsourcing. Moreover, businesses can now offer live support through a wide array of digital channels like mobile phones (Skype, WhatsApp etc. ), live chat on their website, phone calls, social media and much more; the options are just limitless on how to reach out to past, current and potential customers to maximize sales and customer experience. Much of this can be done on the move; you don’t need to be seated in an office to offer support; you could be out and about, at home, touring the world, in a different continent etc. , which essentially means you don’t have to babysit the business to make it successful!

Technology has also made it easier to seek help or support. With the internet, the possibility of reaching hundreds of successful entrepreneurs and mentors is now possible through many platforms such as social media. By doing something as simple as typing words on the internet, you can reach many mentors who are willing to help startups in different and unique ways.

Many people out there have taken full advantage of the change we have today and the current opportunities to create wealth from entrepreneurship.

It is your prerogative to take advantage of the current state of affairs – the ease of doing business today; it has not always been like this!

A Stroll Down Memory Lane: The Business Environment of Yester Years

Let us take a trip down history and for comparison purposes, look at the state of doing business in the past.

First, in the past, there was a clear line between professional and private life. There were no phones, fancy tablets on which to check the stock market information at the comfort of your home, or laptops to carry work from your office to your house.

Before the 1990s, it was not easy to run business when you are away from it as we do today thanks to smartphones. Making calls outside payphones at gas stations was the norm and calling your employees or partners each time you had something new was obviously not easy back then.

It was even tougher getting work from different places; this is contrary to the online leads we have today. In 1994, there was a telemarketer. Business leads came through calls and perhaps referrals from a partner. Imagine that! It would take forever to grow, I imagine.

Globalization has also changed the business scene. In the past, only large businesses had the capacity to trade abroad. It was even more difficult to operate a business in more than one country.

In the past, licensing and other regulatory measures were tedious thanks in part to vexatious government bureaucratic tendencies that would make one hate themselves for thinking about starting his/her own business. At least today, governments have changed some policies and adopted others that make it easier to conduct business in multiple countries.

Because of a lack of efficient communication and other technology such as the internet, in the past, it was difficult to access support from experts or contact mentors. In the past, you would have to go through the trouble of meeting someone (usually marred by transport problems) to ask for technical help and guidance.

Looking at these things, you will undoubtedly agree with me when I say the internet has changed how entrepreneurs start and conduct business.

Nonetheless, things are not perfect, at least not for many people. Here is what I am talking about:

Doing Business Today: Modern Business Challenges

Even with the world having gone through massive changes such as those we have discussed – technology making it easy to start and manage businesses and expert mentors all over the world (often a click away) ready and willing to help – most of us are still not feeling confident or positive enough to start our businesses. For some, it is not a mere lack of confidence; they lack capital while others lack additional financial support from local lenders. They have very good business ideas but cannot implement them simply because they lack the funds to do so. Other people have enough capital but cannot lay out any good business idea.

I have personally met a few who have very good business ideas and the capital to start a business, but they never do so because “they find it difficult to leave their corporate jobs. ” They also claim not to have enough time to start a business from scratch, or merely stick to the “I think it’s too late” platitude.

This means that even with the world having changed, excuses, obstacles, and different kinds of pitfalls continue to exist; however, one thing is for sure, the starting-a-business challenges that may affect you today do not compare to those of starting a business in the past.

Who Wins & Who Loses

The truth is; it is much easier to start and grow a business to unfathomable levels than it is to climb the corporate ladder; there are many startups that are less than 5 years old that are averaging over a million dollars a year with very few employees to support the business. The question is; how long do you think it will take for your 9-5 to pay you a million dollars or even half of it? You decide!

Even with the current opportunities; there will be winners and losers in life. The winners are those that will choose to take the leap of faith and start taking action as far as starting their own businesses goes (you don’t have to quit your day job!) and losers will be those who decide to play safe.

With me acting as your guide through the maze of everything you need to know in respect to starting a successful business, I believe you will see things differently and take full advantage of the currently existing favorable business environment even when it has its fair share of obstacles you will undoubtedly have to tackle.

The solution to every obstacle is often simple. It only requires that you change how we think, and ultimately, how we do things. As entrepreneurs in the pursuit of real financial freedom, we have to realize that we are working in a rat race kind or world; we therefore need to change our way of doing things. It is impossible to imagine the joy that comes with knowing we have escaped the rat race and are making more money, working less hours on our terms, all the while making a difference in people’s lives.

START by changing the thought that working hard at our day jobs – usually in the corporate sector – is all we need to make it in life or is the easier option to achieving our ambitions and financial freedom.

With my little wealth of experience, I have realized that working hard for somebody else is like the proverbial hamster wheel for many people. You work round the clock, and your rewards (compared to your work value), which may be just above peanuts, never seem to be enough and a promotion is never a guarantee.

I can still recall a close friend telling me that after she started thinking about starting a business of her own, she would quickly dismiss the ideas simply because she lacked confidence to pursue that dream.

One day, she went to one of her directors with a load of ideas about how to increase productivity in her company by streamlining the sales department. The director only turned to her and said softly, “the day you become a director of your own company is the day you get to implement this. ” She said that it was in that moment that she decided to start her own company, and she did.

She went into the corporate world because of her high ambition; she also wanted money and respect. She worked her way up only to find out the truth about the ‘glass ceiling. ‘ She was working up to 80 hours per week for peanuts.

Starting your own business is the only guaranteed path to financial freedom. It worked for my lady-friend (she now owns a therapy complex) and it will undoubtedly work for you.

She merely followed simple rules that people who win, or rather, people who make it and become wealthy follow. The people who win at life and business are those that:

1. Desire to start early so that they can gain enough experience and in good time.

2. Have the passion to learn the ins and outs of a business.

3. Are eager fast learners and observers; if they are not fast learners, they are willing to do whatever it takes to learn.

4. Know how to adapt to any given situation because they have their eyes firmly on the prize.

5. Strive to achieve continuous personal development at all levels.

6. Seek mentors and do not necessarily try to reinvent the wheel. They listen to the experts and make good wise decisions based on expert guidance.

7. Seek help of like-minded individuals. In the world of business, no man is an island.

As for the losers, those who lose even with the opportunities that exist today are those:

1. People who are afraid to try new things.

2. People who are lazy, and don’t have sense of personal responsibility.

3. People who are unobservant.

4. Who are close minded

5. Who refuse to learn and read books, attend seminars.

6. Who are too proud because they think they know everything already.

I can sum up the above in this quote:

“To get what you want, you have to deserve what you want. The world is not yet crazy enough place to reward a whole bunch of undeserving people. “

-Charles T. Munger, billionaire business partner of Warren Buffet

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