I will like to start these series of articles by trying to focus on the broad theme somewhat. It is a blessing to be focusing on wealth creation at this time in particular when Nigeria is faced with certain challenges that could easily be one that would create the next sets of very successful and wealthy entrepreneurs. As we all know the country (as we have been told) came out of a boom era with a lot of our resources frittered away. This may also be a reflection of individuals who may have thought that revenues will continue to flow in the way they had up until 2015. It is also possible that we as individuals may seem to be faced with increasing costs now while not immediately being able to increase our revenue.
The question will probably be “why is that so?” We will attempt to go through these. In addition, we will talk about broad benchmarks for wealth creation and how to be target focused as our benchmarks can determine our input and the resultant impact, in terms of output. We will address entrepreneurship, organisations, innovation, strategy, competition and mindset in creating wealth. Are there principles that we should follow? If we all begin now, will we look back in 20 years and say yes we have imbibed wealthy principles and are truly wealthy? Or would we have fallen by the way side to short term demands and pressure? We will focus on definition of broad terms that drive our performance. I will focus on the practicality of things.
Let’s start with Gross Domestic Product (GDP). This is the monetary value of all the finished goods and services produced within a country’s borders within a time period. This is expected to be the market value of all the goods and services produced in that country.
Why are we looking at this? Because it measures what Nigerians have produced. If we have been productive it will increase and if we have not, then it would reduce. Nigeria, according to the World Bank information, has the largest GDP in Africa and therefore the largest economy at $568.51bn compared with South Africa’s GDP of $350.6bn, (2014). However, the number of people that generated that value were 173.6 million Nigerians and 52.9 million South Africans. Meaning that while Nigeria generates a GDP per capita of over $3000, South Africa generates over $6000. This means that an average South African is twice as productive as a Nigerian. These are basically interpretations and focuses on numbers that may not be specific to individuals as some would exceed that while others would generate less.
The GDP growth rate for Nigeria averaged 6 per cent in 2014 and just over 2.5 per cent on a quarterly basis since then while South Africa’s has been above 2.5 percent since 2014 and has averaged less than one percent on a quarterly basis since then. What this means is that there has been no appreciable growth. The focus for us is if I checked my income over the same period in dollar terms (and backing out inflation impact which we will discuss next) would I have seen an increase? Why use another currency in this case? The answer is that we are now global and must think global always. Also, anybody in the world can eat into your market shares (if you are a company) or take your job if you are an employee.
Why this bench mark? Because I want each individual to continue to focus on growing better and faster every year. That is the first way to grow wealth, focus on increasing your wealth (i.e. your reserves, your savings and your investments) not just your income every year. Note that your wealth is an accumulation of your savings and investments not just the revenue you have earned. So the more I generate increased revenue, if I am disciplined, my wealth will continue to increase.
By LLOYD ONAGHINON
Onaghinon is a banker with background in financial control, project finance, private equity, corporate and business banking. His academic background is economics, accounting, finance and management and is a Chevening, Cranfield University and University of Lagos Alumnus