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Recession: Surviving the Years of Lean Cows, By Olu Akanmu

Nigeria’s recession, our own years of lean cows, is characterised by very high inflation, declining real wages and accelerating unemployment and underemployment. It manifests on businesses in three ways, which are the massive contraction of market demand, rationalisation of demand and the trade–down of market and product preferences as consumers shop for value. There are nine ways a business can respond to recession and pull through this challenging period.

“and the cows that were ugly and gaunt ate up the seven sleek, fat cows.” – Genesis 41:4

“and the thin heads of grain swallowed the seven healthy, full heads.” – Genesis 41: 7

 

This article discusses what businesses can do to pull through the years of recession. The years of lean cows are the years of famine akin to the years of economic recession. When Pharaoh dreamt, in biblical history, Egypt mobilized to prepare for famine or economic recession by building strong national reserves of grains in its years of boom and abundance. With such strong national reserves or savings of grains, the biblical Egypt of Pharaoh was able to minimize the impact of famine on its people even when it lasted for seven years. There was however a country whose Kings did not save its grains in its years of fat cows because these Kings did not dream; they had no vision and lacked foresight. When famine, the years of lean cows, came, there was limited supply of grains available in the country. Grains became so scarce that there were long queues of citizens to buy the limited quantity of grains available from the national warehouse.

The King, out love for his people, decreed that the now scarce and limited national grains should be sold to the people at the same price or close to the price they used to buy in the years of fat cows. Grains had, however, become more valuable in that country because of its limited supply in the now years of lean cows. The queues for grains were so long that millions of the citizens who wanted the scarce grains were willing to pay far higher prices than the official price decreed by the King, reflecting the true value of the scarce grains. This created very significant rent-seeking opportunities in the sales of the scarce national grains. A citizen would also need to be well connected to access the grains even if they are the most economically efficient user of the scarce national grains. This was because the queues for grains were so long that no one was certain when it would get to their turn if they stayed on the queue, as the supply in the national warehouse got depleted.

As the grains supply got depleted by the day, their value to the citizens increased at higher premiums to the King’s official price. The state was now selling its grains at old prices, lower than their real value, at far lower revenue, which constrained its ability to replace the stock of grains it had sold, such that the national grains reserves began to fall rapidly, creating even further scarcity. Meanwhile, there were merchants in overseas countries where there had been good harvest of grains. Those merchants would like to bring in ships of grains to the country to sell in very large quantities. They could see the demand from the scarcity in that country but they lacked the incentive to bring their ships of grains because they had to sell at that large quantity at the official decreed price, far lower than the true value of their grains. Therefore, there was very limited private supply of grains into that country to complement the limited supply of the King. The famine and recession therefore got worse and became unnecessarily prolonged beyond its natural course. Extrapolating this analogy, it is certain that if the biblical Joseph were Nigerian, he would have advised against an inflexible exchange rate policy in our current economic situation.

Nigeria’s recession, our own years of lean cows, is characterized by very high inflation, declining real wages and accelerating unemployment and underemployment. It manifests on businesses in three ways, which are the massive contraction of market demand, rationalization of demand and the trade–down of market and product preferences as consumers shop for value. There are nine ways a business can respond to recession and pull through this challenging period. The first is in re-engineering your product and services for value to keep them at affordable prices for consumers. Toothpastes and packages of consumer goods are now getting smaller to keep them at affordable price points. You can also take out the bells and whistles in your product to keep them at affordable prices. Bells and whistles are product ingredients that may be twenty percent of your cost and deliver only five percent value to your customers. By taking them out, you can effectively shave fifteen percent off your cost, making your product or service more affordable.

…find customers who can replace the import content of their product with your own local product. Today, retail chains, with their shelves getting empty because of their inability to import, are looking for local agriculture processed products to replace previously imported ones. Are there such opportunities in your own industry or in adjacent industries where you can become an effective, cheaper and available local substitute?

The second way your business can respond is to make your route to market more efficient. Find partners who have a wider market reach and plug into their platforms. It will be cheaper than doing it yourself, especially if you are a small business and your scale is small. You may, for example, plug into established digital and e-commerce aggregation platforms to reach a wider market while developing your own websites for more people to reach you at a lower cost. The third way is to find if there are new value segments emerging in your industry or market because of the recession. Enter such value segments early to colonize and dominate them. Such emerging value segments will be usually small and may not be able to accommodate more than one or two brands profitably. The first brands to get in are the ones who can build a minimum profitable scale, while the third and fourth will have very little market left to harness.

Fourthly, your business can identify markets, sectors or segments that are resilient and realign your commercial investments around them. Despite the famine in Isaac’s time in the book of Genesis, Isaac sowed and prospered because he had the skills of finding wells in dry and famine ravished lands. Identify your more resilient markets and realign your commercial investments to focus on those need or geographic segments. The fifth way your business can respond is to rationalise your product scope, offering and store-keeping units, to make them efficient in line with market reality. Are there products or product lines that consume twenty percent of your working capital but deliver only five percent of revenue and have done so stagnantly over a long period? Such product lines are candidates for rationalization to make your commercial programme more efficient. You must however be careful to preserve your core strengths and market advantages, even as you rationalise your offerings to ensure you can take full advantage of next market upturns when the economy gets out of recession.

The sixth is to increase the local content of your product to make your business less forex dependent. This also ensures that you can keep your prices affordable. The seventh way is to find customers who can replace the import content of their product with your own local product. Today, retail chains, with their shelves getting empty because of their inability to import, are looking for local agriculture processed products to replace previously imported ones. Are there such opportunities in your own industry or in adjacent industries where you can become an effective, cheaper and available local substitute? The eighth way is to run tactical promotions to stimulate demand. Lotteries and lottery-leveraged initiatives interestingly become more appealing to mass market customers as economic situation bites harder. The ninth way your business can respond to recession is to explore export opportunities for your products, which will give amplified local currency returns even at relatively small scale.

Best wishes to your business in the new-year.

Culled from the Premium Times

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EMPOWER THE CORPS (ETC) a CDL initiative

Introducing Empower The Corps (ETC) a product of Credit Direct Limited (a member of FCMB Group Plc) which provides quick loans to NYSC corps members while in service. Are you a serving Corps Member accepted in your Place of Primary Assignment (PPA) and you need to urgently attend to some financial needs like start a small business, buy white goods for your room, pay rent, obtain a certification, attend a training, and learn a new skill or some other financial obligation? Look no further!

The Empowering The Corps (ETC) scheme has got you covered.

 

ETC Business Starter Package

 

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QUICK LOANS FOR CORPS MEMBERS….a CDL initiative

first Pix

Introducing Empower The Corps (ETC) a product of Credit Direct Limited (a member of FCMB Group Plc) which provides quick loans to NYSC corps members while in service. Are you a serving Corps Member accepted in your Place of Primary Assignment (PPA) and you need to urgently attend to some financial needs like start a small business, buy white goods for your room, pay rent, obtain a certification, attend a training, and learn a new skill or some other financial obligation? Look no further!

The Empowering The Corps (ETC) scheme has got you covered.

Second Pix

No matter who you are and what your needs are? We have 4 unique packages to help create an easy and convenient life for you while in service. Continue reading

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2015 in review

The WordPress.com stats helper monkeys prepared a 2015 annual report for this blog.

Here’s an excerpt:

A New York City subway train holds 1,200 people. This blog was viewed about 4,700 times in 2015. If it were a NYC subway train, it would take about 4 trips to carry that many people.

Click here to see the complete report.

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MAKE EACH PUNCH COUNT & 50 OTHER LESSONS I LEARNT

Dear Readers,

It feels good to be back blogging after a few days away, i have been trying to drop my thoughts on the Mayweather/ Pacquioa fight and how i felt, my BBM and Facebook page saw a lot of traffic after my comments on the poor fulfillment of the expectations of the match, but apparently I needed a bit to know on the game of boxing.

My big buddy Akpo’s Adonkie filled me in with this write up, thought I should share it..

Enjoy……….

I still don’t remember ever staying up all night for a boxing match except for this one. Not even when Mike Tyson was at his ‘baddest’. I was fascinated by two things: the hype surrounding the event with the possibility of the two fighters taking home a pay of about $100m each and the person of Manny Pacquiao. To me, he is quite an interesting character. He is a politician, having been elected to the Phillipines House of Representatives, a basketball player, an actor and a musician. He is the head coach of a basket ball team as well as oldest rookie drafted and the shortest player in the Phillipines Basketball Association. He is also a Lieutenant Colonel in the Reserve Army of his country.  He is the first and only eight division world champion in boxing. So I rooted for him as I usually do for the ‘under-dog’.

As for Floyd Mayweather, I didn’t think much of him except that he is a ‘showman’ through and through. My heart was with Manny Pacquiao all through the match but there’s no denying the fact that Mayweather won fair and square.

So what are my take-aways from this match and how can we apply it to real life situations? Here we go:

MAKE EACH PUNCH COUNT
Mayweather threw 435 punches to Pacquiao’s 429. Out of these, 148 punches connected for Mayweather while Pacquiao could only connect 81. Implication is that while both fighters threw almost equal amount of punches (Mayweather threw only 6 more punches than Pacquaio), the rate of connection for Mayweather was almost twice that of Pacquaio with the former having a 34% success rate while the latter had 19% success rate. Success in life goes beyond mere efforts. Nobody rewards you for efforts but results. Anyone can throw punches but only the truly successful will connect. The reward never goes to the one who made more efforts. The difference between success and failure can simply be the fact that you throw a bit more punches than competition. Continue reading

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The Music Issue (Can a Christian Artiste Sing Secular Songs?) by @LekeAlder

A few days ago, there arose a Twitter storm of apocalyptic proportions over news that a young “secular” artiste was invited to sing during a church service. The young artiste is a Christian and the song performed was from his title album, God Win. One must assume that a song titled “God Win” sang in a church setting seemed most appropriate, but these are curious times.

There are many choruses that echo the same sentiment, some using exact same words yet there were a lot of issues raised. The very notion that a non-gospel artiste had been invited to “minister” in church consternated many. And not a few were peeved that the artiste in question performed from the “altar” – a most holy place. And how can an “entertainer” be invited to minister to “the people of God”, some wondered, with righteous and not so righteous indignation. Even the Pastor was not spared. What was his motivation? There was no shortage of opinion, aspersions and castigations. And there was no shortage of exegetes misquoting scriptures. Were Jesus on Earth he would have had to up his signature command of nature to calm the storm. He couldn’t do a reprise. This was no watery issue. But lurking somewhere in the sea was the leviathan of the fundamental challenge as to whether a Christian artiste can even do secular music. It’s not exactly a new issue. The Amy Grants of this world faced that same challenge in the 80s. It’s as if someone somewhere is instigating topical conundrum in generational cycles.

An analytical perusal of the issues however shows a confliction in knowledge on many levels. The idea for example that the “altar” is “sacred” betrays a mix-up in understanding between the concept of the temple in the New Testament and the concept of the temple in the Old Testament. In the Old Testament the temple was a building. It was basically partitioned into two parts – the Outer Court and the Tabernacle. The Outer Court contained the Table, Lampstand and Altar of Incense. The congregation could enter here. The Tabernacle was in turn divided into two parts by a heavy hanging curtain – the Holy Place in which only priests from the tribe of Levi could enter; and the Holy of Holies in which resided the Ark of the Covenant. Only the High Priest could enter the Holy of Holies and he did so once a year, on Yom Kippur or Day of Atonement. The High Priest must make atonement for himself before he entered the Holy of Holies. He would die otherwise. The sacrifice was his life insurance policy. And since no one can enter the Holy of Holies to retrieve his body, tradition says a scarlet rope was tied on his ankle. Small bells were also sewed around the helm of his robe. A priest in the Holy Place tended to the other end of the rope. He would drag him out by the rope in case something went wrong. If the bells stopped jiggling the priest knew something was wrong. You served God with your life as High Priest. Continue reading

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ON A LIGHTER NOTE..Vol 17- AY’s Election result announcement

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FANI KAYODE THE 2 SIDED SWORD

They forget what they have said once money comes into the picture, the story changes and I wonder how can people be so weak and stupid. Hear the passion in his voice and see how much he said, a few years later with a position, money in the bank account, possibly security guards at his disposal the story is a lot different.

 

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LOUD SCREAMS FROM PICTURES

 

 

 

 

 

 

 

 

 

 

 

These apt words were attributed to one of the greatest American Presidents in living memory, Abraham Lincoln.

Whilst the words in the quote does not discriminate against anyone, myself inclusive, because, if truth be told, a person without, is different from a person with. This is a FACT!. Many have correctly spoken that one does not really know one’s character until you find yourself with power.

A very successful and influential Nigerian whom I was having a chat with yesterday on the state of affairs of Nigeria reminded me of this quote. He mentioned former President Olusegun Obasanjo may have been trying too hard to make amends for what may now be deemed his mistake of directing the nation to vote in as president, a man who once had no shoes.

When I responded to my ‘Egbon’ (a respected elder) with the words, ‘”sn’t that rather too late”, it was at this point he reminded me of one of Abraham Lincoln’s quote, the one posted above, it drive home his point. And boy, didn’t he just do that.

What my ‘Egbon’ was inferring to was that, Obasanjo may have had good intentions for Nigeria, by nominating and campaigning for the former deputy Governor and Vice President, however, the insight he did’t have was how Goodluck Ebele Jonathan’s character will hold up when absolute power was handed over to him.

The rest as they say is’HIs-story’…

….Jide Salu

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ASK YOURSELF THESE QUESTIONS

In life, there are two more questions you should constantly ask yourself, for most of you that carry out self-appraisals and personal retreats on how far you have come in life and how far you can go, you need to consciously probe yourselves with these questions:

1) Am I willing to serve others? You say you want to be a leader? Why? Until you answer that question with the right motives, God won’t promote you. Sometimes we just want to be in control. Other times we don’t want to pay the price for success. We just want the perks that come with it: a corner office with a good view, a higher salary, a respected title, status cars with full complements and the admiration of others. Jesus said, ‘Whoever wants to become great among you must be your servant.’ Leadership puts you in a position to take care of your own needs first–to set yourself up–before helping others. That’s always a temptation and it’s always wrong! You must genuinely care about people and help them to reach their potential. When you do that you’re honouring God and He will honour you.

2) Am I doing what I’m called to do? ‘We have different gifts, according to the grace given us’ (Romans 12:6 NIV). Samuel Johnson said, ‘Almost every man wastes part of his life in attempts to display qualities which he does not possess… and gain applause which he cannot keep.’ If you’re harbouring a mental image of the qualities talented people are supposed to have and you don’t possess, you’ll have a hard time finding your true strengths. Henry Ford remarked, ‘The question, “Who ought to be the boss?” is like asking, “Who ought to be the tenor in the quartet?” Obviously, the man who can sing tenor.’ To succeed in life, you must know what God gifted you to do.

What you stand for is what you would be known for. Set yourself on the pedestal where people would mirror their lives on yours, I drive to work everyday and see posters, flyers, wall drapes and massive large format prints for politicians who are seeking to become public servants but what worries me is “Do they really want to serve? Do they really understand what service is all about?” I worry much about this and pray they get their motives right.

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