World Economic crisis, Where is Nigeria placed? Or are we immuned?

[The Dude]

In recent times, the global economy (USA and UK Economies) are rocking on troubled waters. The various Governments are strugling on mortgage crisis which has as a result threatened their future streght and values. American Dollar is geting weak by the day and their banks crashing. In this unsettled scenario, Nigeria is rocking on the precepts of mega banks which deep down in our minds are mostly operating a window dressing or rather cosmetic accounting.

I am most concerned at what all these have in stock on Nigerian Economy now and the future. This matter needs to be addressed and fast. Where lies our faith and what is our shock absorber? World oil/crude prices are constantly on the rise for years now but we do not find this boost translate to the common man as hardship is the order of the day. Digress a bit to the FESTAC days and liken it to the green days we are experiencing in today's Nigeria. Is oil really a blessing to Nigeria?

Please discuss.

[juliusdudu]

The minister for finance assured us during the vanguard award that there is no cause for alarm but what about the 350 Naira cost of rice, i think there is a serious problem at hand

[zainabusman]

Originally Posted by The Dude

In recent times, the global economy (USA and UK Economies) are rocking on troubled waters. The various Governments are strugling on mortgage crisis which has as a result threatened their future streght and values. American Dollar is geting weak by the day and their banks crashing. In this unsettled scenario, Nigeria is rocking on the precepts of mega banks which deep down in our minds are mostly operating a window dressing or rather cosmetic accounting.

I am most concerned at what all these have in stock on Nigerian Economy now and the future. This matter needs to be addressed and fast. Where lies our faith and what is our shock absorber? World oil/crude prices are constantly on the rise for years now but we do not find this boost translate to the common man as hardship is the order of the day. Digress a bit to the FESTAC days and liken it to the green days we are experiencing in today's Nigeria. Is oil really a blessing to Nigeria?

Nigeria is not immune. However like all major oil exporters we are benefiting from the high oil price. Just check out the reserves of the likes of Abu Dhabi etc. Sovereign funds are what is bailing out some American banks and brokerage firms. Even the swiss giant UBS was not left out of a bail out by a sovereign fund.

I dont agree with u all that what we are seeing in the banking sector is all window dressing. I am sure u have participated in some of the bank PO's. Nigerians have suddenly embraced the stock market. If u look at the FBN public offer, more than 50% of the applicants wanted to buy 10,000 units or less. First bank really raised that money. So it will not be surprising if their PAT went up.

Secondly, all the banks are now offering more consumer loans and we know what that can do to the bottom line. Two years ago there was no Naira credit card. Today u can get an Ecobank credit card. No collateral.

I do agree with u that with all the oil windfall the life of the ordinary Nigerian has not gotten better. The rich are getting richer like many in this forum! But the poor man in the street does not know the difference between now and when oil price was less than $20/barrel. For me this is the biggest failure of our government.

If we cant fix our problems now when oil price is high when will we?

My advice to all is tighten ur belt. Help each other and as much as possible buy made in Nigeria goods. That should be ur contribution to our economy. Buy Nestle, Cadbury, PZ, unilever, Dangote Sugar, Flour mills etc goods.

[The Dude]

Zainabusman,

Thank you for your contributions however, note that there is a struggle for public funds between the banking industries and the capital market today. The capital market seems to be on the winning side as can be seen so far. Public offers being oversubscribed is not a measure of our economic strength and stability. Mind you, a good number of Nigerians still believe that shares are sold only through public offers, which can explains the surge. I worked in a stock broking firm in Nigeria before leaving for further studies in the UK, so I am talking with experience. The awareness is there but not properly robbed in as is expected.

The issue of Credit crunch is biting hard on the western governments and the way it is going, they will have a taste of hardship in areas like servicing their debts (Housing & personal). Nigeria doles out consumer loan/credit to individuals, distributing credit cards etc as Juliusdudu mentioned. Are these loans investment related or otherwise? An economy cannot grow if money is taken from the Bank in Nigeria and invested in the capital market in the same country. It is like taking money from one pocket & placing it on the other.

My question remains; Where is the position of Nigeria in the scheme of events globally or have we defiled the Economic laws?

[agbawan]

very typical
i do agree that nigeria is not immune to the global economic crises
at least most foreing investors have ran

[Michael]

Originally Posted by The Dude

Zainabusman,

Thank you for your contributions however, note that there is a struggle for public funds between the banking industries and the capital market today. The capital market seems to be on the winning side as can be seen so far. Public offers being oversubscribed is not a measure of our economic strength and stability. Mind you, a good number of Nigerians still believe that shares are sold only through public offers, which can explains the surge. I worked in a stock broking firm in Nigeria before leaving for further studies in the UK, so I am talking with experience. The awareness is there but not properly robbed in as is expected.

The issue of Credit crunch is biting hard on the western governments and the way it is going, they will have a taste of hardship in areas like servicing their debts (Housing & personal). Nigeria doles out consumer loan/credit to individuals, distributing credit cards etc as Juliusdudu mentioned. Are these loans investment related or otherwise? An economy cannot grow if money is taken from the Bank in Nigeria and invested in the capital market in the same country. It is like taking money from one pocket & placing it on the other.
My question remains; Where is the position of Nigeria in the scheme of events globally or have we defiled the Economic laws?

Credit increases spending and excessive credit may lead to excessive spending, this could also lead to over production or unsustainable levels of production and when this happens there would have to be a cut back to re-establish equilibrum. In The U.K and The U.S a new equilibrum is being established.
Moving to Nigeria where credit is relatively unavailable, we buy based on what we have and grow ever so slowly, however there was a masive supply of credit to the capital market in the past which also led to overspeculation and its attendant effects of volatile swings and heart stopping corrections. The supply of funds has contracted and the market is barely liquid at attractive prices.
Taking money from the bank and putting it in the capital market is not the same as moving money from one pocket to another, rather it is changing the momentum of the money from either cash for spending or, short term savings to a long term investment.

Money in your pocket is basically for immediate spending.

[olusolakemmy]

certainly no country is immune from this economic crisis, not even nija

our leaders are very skillfull in shielding the truth! so the minister can tell you that we have o business with the global economy crisis.

90% of our income is from oil, the price is dipping, our major customers are experiencing difficulty at the moment plus the promises of goiing green! Auto industry players are working hard to make something in that regard.

the issue is that our problem is not usualy apparent until it is so big! we dont have a goverment that is capable of detecting discrete or minute problem of any kind and take a proactive measures to guide against it. By the time we begin to feel the brunt of the global economy crisis, i hope we at the level of this forum will be spared!!!!!!!

so we need to teach ourselves the technique used to shield oneself when the goverment cant

[anekwlc]

Originally Posted by olusolakemmy

certainly no country is immune from this economic crisis, not even nija

our leaders are very skillfull in shielding the truth! so the minister can tell you that we have o business with the global economy crisis.

90% of our income is from oil, the price is dipping, our major customers are experiencing difficulty at the moment plus the promises of goiing green! Auto industry players are working hard to make something in that regard.

the issue is that our problem is not usualy apparent until it is so big! we dont have a goverment that is capable of detecting discrete or minute problem of any kind and take a proactive measures to guide against it. By the time we begin to feel the brunt of the global economy crisis, i hope we at the level of this forum will be spared!!!!!!!

so we need to teach ourselves the technique used to shield oneself when the goverment cant

Good Talk but what is the best investment strategy at this period of time? How can one equip himself for worse economic crisis? I was reading an article that says that if the crises continue, individuals with Cash and Food will be the king and they went ahead to advice people to review what they put their cash for now. It must be a need and you hold on luxuries. It must be essential viable assets not a liability and this seems to be what we are seeing in the market. People are cautious irrespective of the good value of some stock. People don’t want to end up with assets with no cash to run their daily life like most mortgage firms in U.S.A.
you need to be informed at all time [thanks to this forum] ……………………………………………………

[Michael]

Originally Posted by anekwlc

Good Talk but what is the best investment strategy at this period of time? How can one equip himself for worse economic crisis? I was reading an article that says that if the crises continue, individuals with Cash and Food will be the king and they went ahead to advice people to review what they put their cash for now. It must be a need and you hold on luxuries. It must be essential viable assets not a liability and this seems to be what we are seeing in the market. People are cautious irrespective of the good value of some stock. People don’t want to end up with assets with no cash to run their daily life like most mortgage firms in U.S.A.
you need to be informed at all time [thanks to this forum] ……………………………………………………

Excellent Talk! For those who planned to buy new cars before Christmas, I urge you to wait till after the new year, when the new models will be out on promotions and as such we should expect cheaper prices. One Good thing about the meltdown is that it has given us a practical course in A level Economics

[knightofdelta]

Originally Posted by Michael

Excellent Talk! For those who planned to buy new cars before Christmas, I urge you to wait till after the new year, when the new models will be out on promotions and as such we should expect cheaper prices. One Good thing about the meltdown is that it has given us a practical course in A level Economics

There is no better way to put it...

[Michael]

Originally Posted by olusolakemmy

certainly no country is immune from this economic crisis, not even nija

our leaders are very skillfull in shielding the truth! so the minister can tell you that we have o business with the global economy crisis.

90% of our income is from oil, the price is dipping, our major customers are experiencing difficulty at the moment plus the promises of goiing green! Auto industry players are working hard to make something in that regard.

the issue is that our problem is not usualy apparent until it is so big! we dont have a goverment that is capable of detecting discrete or minute problem of any kind and take a proactive measures to guide against it. By the time we begin to feel the brunt of the global economy crisis, i hope we at the level of this forum will be spared!!!!!!!

so we need to teach ourselves the technique used to shield oneself when the goverment cant

Madam thinks our stock market is strong while the US stock market is weak. I wish she could go into a more detailed explanation.