Publications detailing the review of business processes, technology and people towards competitive advantage attainment in Nigeria.

1. ...advancing business
Enterprations
Weekly
Strategy
Spending
Escaping Recession
without investing,
saving
www.enterprations.com

2. 2 March 2017 Enterprations Weekly Strategy
Clown (Red);
Humouristic (Yellow); Exciting (Green);Supportive
Nigerians are
still in known
unknown
situation
n a country, there is a period of booms, recession,
slump and recovery. The impacts of these periods are
felt differently. In this special series on EnterprationsIWeekly Strategy, the influence of the ongoing economic
recession on Nigerians was examined apropos what will
take the country out of it. Economists have hinted that
during the boom period unemployment is usually at low
level, production and consumption are high and people's Eurostat European Commission's submission in 2009 that
standard of living is relatively soaring. Specifically, most disposable income is reduced and consumer confidence
macroeconomic indicators are positive. On the other hand, usually falls. According to the body, a slowdown or
a recession period comes with slow economic activities contraction in economic activity often results in fewer
across sectors, industries and among the individuals. Then, luxury purchases being made. For the semi-durables,
which indicators are capable of taking Nigeria out of its Nigerians are buying clothes and shoes while rent fee is
presenteconomicslumpspending,savingorinvesting. being catered for under the housing category of essential
Despite the economists' solemn declaration in goods andservices.
support of saving and investment as key indicators to On gender status, male respondents believed that Nigerians
sustainable economic growth, our findings show that are spending more on food, household services, public
Nigerians are engaging in spending activities more than transport, clothes and shoes, and house rent while female
saving and investing.Though, the spending is not on luxury were of the view that leisure goods, food, and house rent are
goods and services but on less expensive and essential being expended on the most by Nigerians. Across the
ones. Gregory Mankiw, Harvard Business School's gender, it clearly shows that food purchase and payment of
economist, has reflected that within macroeconomic house rent are important to Nigerians.This could be hinged
indicators “the saving rate is a key determinant of the on the fact that Nigerians are facing three actions spending,
steady-state capital stock. If the saving rate is high, the saving and investing. Each could lead to more than one
economy will have a large capital stock and a high level of possible outcome with different probabilities. It is,
output. If the saving rate is low, the economy will have a however, necessary for them to be rational in their
small capital stock and a low level of output.” Another procedure in identifying all possible outcomes and
economist has also noted that business and capital determine positivity and negativity of such outcomes. In a
spending play a crucial role in rejuvenating and revitalizing nutshell, Nigerians are choosing the action with the highest
a slumping economy like Nigeria. Therefore, spending in valueinrespecttowiththeirrelativeincomelevel.
the form of industrial production and capital formation are When the online respondents were asked about the
first signs of escaping recession not necessarily consumer impacts of the recession on their spending decisions,
spending. majority stated severity of it on their food, household
From the beginning of this year, majority of our services, public transport, clothes and shoes, and house rent
respondents described their monthly income (salary and consumption and usage. Based on location, the severity is
other sources) as being the same, equivalent to what they being felt the most by Nigerians residing in Ibadan while it
earned late 2016. This resulted in spending on less is moderate, normal and almost negligible in other
expensive goods or services and essential ones. Spending locations. In Lagos, it has a positive effect. However, the
was significant on non-durable goods than durable ones. recession is having a significant impact on saving and
Food, household services, and public transport are the most spending decisions of the majority. Nigerians are being
essential commodities and services respondents stated more careful in their saving and investing decisions than
Nigerians are spending on. Our findings are in line with late2016.Thisishingedonthestagnantmonthlyincome.
Should I buy luxury or essential commodities? The
decision depends on something which I do not know,
namely whether my monthly earning can support it or not,
andimproveintheincome.
Should I save during this harsh economic period? This
depends on whether I will need my money often to buy
goods and pay for some essential services. Without saving
and investing, how can I solve unexpected high financial
needsiftherecessionpersists?
Should I invest during this tough economic period? This
investment opportunity looks feasible, but perhaps I will
still find a better one for the higher returns and little
investment capital. When should I stop the search for
anotheropportunity?
Nigerians are choosing the action with the highest value in respect to with their relative

3. Food
Housing
Clothes
Transport
PersonalCare
Food inIbadanis21%cheaperthaninLagos
Food inLagosis27%moreexpensivethaninIbadan
Food inAbujais2%cheaperthaninLagos
Food inLagosis2%moreexpensivethaninAbuja
Food inPortHarcourtis8%cheaperthaninLagos
Food inLagosis9%moreexpensivethaninPortHarcourt
Food inKano is49%cheaperthaninLagos
Food inLagosis95%moreexpensivethaninKano
Housing inIbadanis40%cheaperthaninLagos
Housing inLagosis65%moreexpensivethaninIbadan
Housing inPortHarcourtis40%cheaperthaninLagos
Housing inLagosis66%moreexpensivethaninPortHarcourt
Housing inKano is42%cheaperthaninLagos
ClothesinLagosis41%moreexpensivethaninIbadan
ClothesinPortHarcourtis25%moreexpensivethaninLagos
ClothesinAbujais38%moreexpensivethaninLagos
TransportationinPortHarcourtis2%cheaperthaninLagos
TransportationinKanois65%cheaperthaninLagos
TransportationinAbujais49%cheaperthaninLagos
PersonalCareinPortHarcourtis48%moreexpensivethaninLagos
PersonalCareinKanois27%cheaperthaninLagos
PersonalCareinAbujais16%cheaperthaninLagos
Source: Numbeo. 2017
Between choice under uncertainty and
Inter-temporalchoice
return, associated risk, convenience and seamless
withdrawalofthesavings.
The monthly income of many Nigerians is either
Nigerians are still in the known unknown situation (see stays the same or improves. This signifies a chance but no
Sidebar). They are making choice under the frightening equal chance towards spending, saving and investing. Our
situation and on the premise, the outcomes of their findings show that effect of the recession is being moderate
financial decisions would be determined. They are being on Nigerians earning between N50, 000 and N150, 000,
sceptical about spending, saving and investing. If they have when saving is considered. Whereas it is severe on the
improved income they don't know whether to spend on people earning between N151, 000 and N200, 000, when
luxury materials, save with banks or cooperative society spending is measured. The same effect is being
and invest in business, giving them immediate pleasure or experienced under the investing indicator. Overall, the
delayedbenefits. recession has changed the ways Nigerians spend, save and
As stated earlier, Nigerians are buying less invest before its occurrence to the extent that majority don't
expensive brands. In addition, they are borrowing from know when they could recover if the recession ends.
friends and family to cushion the effects of the recession on “Income reduces during a recession and so, one reduces
their spending rather than saving and investing. For those partying. You hardly save because there's even no leftover
who have the financial strength towards saving indicator, income. Even investment decisions are thought upon thrice
they are making the decision because of retirement, health in recession,” Abdulateef Olona, an economist with the
expenditure, precautionary and travel. When saving BankofIndustrysaid.
decision is made, majority are considering the possible
March, 2917 Enterprations Weekly Strategy3

4. Interactionofdecisionmakers
Makingthebest choice
spending, saving and investing for Nigerians earning
N150,000 showed that half of it is being spent on essentialDifferent people and entities are influencing Nigerians
commodities and services, N45,000 for saving andsaving and investing decisions. From our study, we
N30,000 for investing. Forty-five thousand earmarked fordiscovered individualism, collectivism, and business-
saving with bank would result to N27, 000 interest whereasentity. By individualism, we found that Nigerians are
investing in life savings insurance with 7.75% interestmaking choice among the three indicators by internalizing
earned and savings would lead to N387, 900 in a year. Forthe outcomes.Whereas, when the effects of choosing any of
those having N250, 000 monthly, as income, N125, 000 isthe indicators will affect more than one person (for instance
being expended on necessary goods and services, N75, 000a whole household) Nigerians are being influenced by
and N50, 000 for saving and investing respectively. Withcouple, relative, children, and friend. Business-entity
saving with bank, N45, 000 would earn as interest for a yearevolves on the basis that profit-making establishments are
while investing in life savings insurance with 5.75%seeking Nigerian's attention through investment
interestearnedrateandsavingswouldresulttoN634, 500.opportunities information dissemination and the real
Analysis for the strategic choice two indicates thatreasons to save and invest during this period. Thus,
those who earn N150, 000 monthly are spending N75, 000Nigerians and businesses are engaging in strategic game. In
on important consumables and non-consumables whilespecific terms, both Nigerians and businesses are weighing
they are expected to have N45,000 and N15, 000 forbenefits of engaging in saving and investing activities. As
investment and saving decisions. When they save N15, 000Nigerians are engaging in this game, they are becoming
with bank monthly, the total interest they would earn is N9,more sensitive to receiving real value for their money and
000 and N543, 037 from life savings insurance, havinggetting a fair deal when investing. Steve Pavlina, a personal
invested N45, 000 with 6.75% interest earned rate and totalgrowth consultant, has warned that people should not buy
savings. For those who earn N250, 000 per month, N75, 000into lame money-making programmes, join and promote
is expected to be invested in life savings insurance with theuseless MLM schemes that would expose them to
return of N904, 312 (interest earned and total savings) in ascammers. Instead, they should look for businesses and
yearbasedon5.75%interestrate.individuals who created
In line with their monthly income, our study has shown that
Nigerians are making a discrete choice among the three
indicators spending, saving and investing. As the findings
revealed, Nigerians are spending, saving and investing
instead of spending, investing and saving has proponents of
choice modelling want us to understand. In other words,
Nigerians are using their money mostly for purchasing
decision rather than investing and saving decisions. We
categorized spending, saving and investing as strategic
choice one while we developed strategic choice two, using
spending, investing and saving as the basis. With the
strategic choice one, Nigerians are expending 50% of their
income on spending activities, 30% and 20% on saving and
investing activities respectively. Based on the choice
modelling approach towards the decisions making during
uncertainty situation such as economic slump, we
formulated spending, investing and saving, as strategic
choice two. Within this choice, Nigerians are expected to
disburse 50% of their income on spending activities, 30%
and20%oninvestingandsavingaccordingly.
These two choices were further analysed using
saving with bank and investing in insurance towards
medium or long term recovery from the recession effects.
Saving account as one of the financial services peculiar to
all the commercial banks in the country was used while
AXAMansard's life savings, which gives an opportunity to
earn a better interest on medium/long term savings than the
ordinary savings account was from the investment
standpoint. Five percent was adopted as the flat rate of
return on any amount saved with bank monthly. AXA
Mansard's life savings interest earned percentage is based
on the category of the plan chosen by the clients. For the
strategic choice one, analysis of the percentage allotted to
and ready to deliver sustainable
values.
Choice 1
Note: Spending-N=Spending-Nigerians, Investing-N=Investing-Nigerians, Saving-
N=Saving-Nigerians
Choice 2
Note: Spending-E=Spending-Enterprations, Investing-E=Investing-Enterprations,
Saving-E=Saving-Enterprations
March, 2017 Enterprations Weekly Strategy4

5. Choice 1 Returns Choice 2 Returns
Stakeholders' Perspective companies to curb unfair charges on imports and exports
made possible by the several monopoly structures in the
maritimesectorhasalsobeenproffered.
What takes Nigerians out Spending on employees and infrastructure. Government
at all levels must prioritize spending on people and core
infrastructure having the tendency of enhancing jobsofeconomicrecession?
creations and business advancement. Regular payment ofSince the country entry into the recession, economist,
salary has suggested by the stakeholders would go in a longpublic analysts and other stakeholders have been giving
way of reducing the recession's effects on household. If thepossible factors capable of digging the country out of it.
workers are empowered economically, they would be ableThese factors have largely been proffered and discussed
to spend more and this will trickle down to the commonbasedonmacroandmicroeconomicindicators.
man on the street,” Segun Oshinowo, Director General ofProductive sectors funding. Effective funding of
Nigeria Employers Consultative Association (NECA),manufacturing and agriculture sectors remains one of the
hinted recently. On his part, Emmanuel Nkolo, a publickey solutions towards industrialisation sustainability and
affair analyst notes that as much as spending is necessary,saving the sectors from the current economic tsunami.
investment in infrastructural development and buildingStakeholders also want government to vigorously pursue
should be embarked by the government to enhancepolicies capable of making up for the deficit in international
business environment and growth. “Investment intrade by encouraging export of finished products while
Research and Development in IT, energy, education andexporters should be encouraged to repatriate accrued funds
health care. It is time government invest in renewablehome. ToAbdulateef Olona, an economist with the Bank of
energy to solve the most challenging problem facingIndustry, importation should be reduced to the equipment
business inNigeria-poweroutage,”heemphasized.andrawmaterialsthatarenotavailableinthecountry.
Local food production and consumption. ResponsibleSector interdependency For the effective functioning of
food production and consumption should be encouraged bythe economy, all sectors are expected to work
governments and other stakeholders. Nigeria needs tointerdependently while integrated nature should be
produce what it consumes and stop salivating over foreigndeveloped within the economy. Sectors such as ICT,
goods thatkeepdepletingthenation'sforeignreserves.telecoms, real estate, transportation, aviation, maritime,
Right economic policies. Currency devaluation,tourism, hospitality, entertainment, agriculture,
borrowing to offset or finance main expenditures anddistributive trade, health services, education services,
diversification model have been suggested as the rightbroadcasting, print media, solid minerals, engineering, and
policies that would take the country out. By devaluing theconstructionshouldbework hand-in-hand.
naira, stakeholders believe that imported goods willFiscal policy. Import tariffs, taxation, and other incentives
become more expensive and Nigerians will be forced toare better suited to address sectoral imbalances than
buy goods made in Nigeria. Obtaining loans frommonetary policy. However, monetary policy could be
organisations like IMF, World Bank, and others will help inuseful when transparency and discipline exist among the
the rapid completion of basic infrastructures for businessplayers. “What is key for monetary authorities is to ensure
andcitizens'advancement.that financial markets are efficient and transparent; and to
ensure that there is discipline among players,” Abdulateef
Olonastressed.
Our research has revealed that Nigerians are engaging inTrade policy review. Review of current trade policy has
spending decision more than investing and savingalso been suggested, to reduce the pressure of cost on
decisions. With their spending decision, they expend mostinvestors and citizens. Government needs to moderate the
on food, public transport, house rent, clothes and shoes, andinflationary pressures and ease poverty conditions by
consumable services. They prefer having (in terms ofreviewing import duty regimes and the various trade
investment) their money with the bank, real estate, andfacilitation issues at the nation's ports. More effective
insurance businesses. As Peter J. Williamson and Mingoversight over the terminal operators and shipping
StrategicInsights and implicationsforbusinesses
March, 2017 Enterprations Weekly Strategy5

6. 6 March 2017 Enterprations Weekly Strategy
About Enterprations
We provide a platform for working class professionals and aspiring entrepreneurs to own their business. Our focus
include;
Providing start-up strategy for different SMEs in Nigeria and Africa.
Tactical measuring and evaluation of business at initial, maturity and decline stage.
Reviewing of business's personnel, marketing and training components for greater output and profitability at
different stages.
Helping aspiring entrepreneurs with feasible business ideas and a workable business plan in the areas of
comprehensive business training programmes, networking activities and technology commercialization.
F15, Lagos City Mall, Onikan, Lagos State
www.enterprations.com
info@enterprations.com
+2348141374490
Contact
Zeng on Harvard Business Review article titled Value-for- entrepreneurs'. Smart companies need to work more on
Money Strategies for Recessionary Times said instead of developing value-for-money strategies.According to Peter
refining cost-cutting techniques, companies should J. Williamson and Ming Zeng, in developing countries,
develop cost-innovation capabilities. They must learn to consumersaretraditionallyvalueconscious.
re-engineer their cost structures in novel ways so they can
offer customers dramatically more for less. This becomes
imperative because everyone is working harder and harder
for scraps. Nigerians' behaviour towards the three
indicators spending, saving and investing have also created
opportunities for 'smart companies' and 'smart aspiring
...In developing countries, consumers are
traditionally value conscious.
About the Research
The main thrust is to understand how Nigerians are making a strategic choice among spending, saving and investing (SSI).
The end-product is to reveal whether choosing one, two or all the indicators would help Nigeria in leaving the recession as
soon as possible. Nigerians across the six-geopolitical zones were sampled through offline and online survey approach
from January 1st February 28th, 2017. A total of 68 Nigerians participated in the study willingly. In-depth Interview and
News Media Interview ThematicAnalysis were also adopted. These methods were appropriate towards understanding the
indicator likely to help Nigeria in escaping the recession from the economists, public analysts and stakeholders'
perspectives.