2015: Looking back, looking forward

By tomorrow, 2015 will become history. As we look forward to 2016 with hope and apprehension, it is important to look back and learn the lessons 2015 taught us, so that we become better positioned to weather the storms ahead. 2015 was a remarkable year in many respects.

Apart from the change in government, the impact of low oil prices finally hit home. It seemed as if we had made a full circle back to the 80s when the buzzword was ‘austerity measures’. It was different strokes for different folks. There are winners and losers. In the international scene, oil companies and oil-based economies are cutting back and laying off staff due to shrinking turnover (Venezuela had to go to China and Russia cap in hand asking for help) while international airlines are having their best year as low oil prices shoot up their profits.

Back here in Nigeria, lower oil earnings and falling naira exchange rates are negatively impacting the government, businesses, and the capital market while at the same time, companies that earn non-oil dollars are seeing an increase in their naira turnover compared to last year. This is the best time to earn dollars in Nigeria. You make more naira and are also exempted from restrictions on naira-denominated debit cards abroad, as you are spending your dollar earnings via your domiciliary account.

Prepare for famine in a time of plenty

Current events have shown that we did not manage our windfall well. We spent money in ways that left us vulnerable if circumstances change. In spending today, we need to always have a plan for tomorrow, because it will surely come. Our current reserve position is so precarious that the CBN and banks had to resort to desperate measures to defend it. Dollars have become an essential commodity. It reminds me of the Econet saga some years back when the owner of Econet could not fund his holding due to exchange rate restrictions in Zimbabwe. It sounded like Latin to me then. Now I know, as it is staring us in the face. You can have naira but are not free to spend it abroad as you would like.

There are two broad ways to embrace change – willingly or by force. You can foresee the danger and change in order to avoid it or change when the consequences hit home. The consequences are already here. It is not too late to learn the lessons and change course. For many, it may be late to prepare for famine as they have already lost their jobs or business. It is not too late to start over and do things differently. Every crisis or setback is an opportunity to learn and rise higher.

If you still have a job or business that is putting food on the table, does your current expenditure profile prepare you for times when your primary sources of income dwindle or die? Are you ready if your ‘oil prices crash? Can you fund your budget at low oil prices? That is one of the lessons from 2015.

The oil price crash did not come as a surprise. The US was ramping up its shale oil production and cutting down imports. With the US buying less oil and pumping more (reduced demand and increased supply), the price had only one direction to go – down. The marketplace is always changing and you need to study the trends so that you are not taken by surprise. If business is good, don’t go to sleep and assume the party will continue forever.

Diversify your sources of income

Another key lesson from 2015 is diversifying our income sources so that you are not held hostage by one source of income. This is the time to shift from the consumer mindset to the producer mindset. The era of buying and selling as the mainstay of our economy should come to an end, and each of us can make a difference in our own little corner. We can export most of the things we import. The CBN is rolling out funds to support businesses and startups at low-interest rates. This is a good time to stop giving excuses, put on our thinking cap and throw our hat into the ring.

Easy petrodollars seem to have discouraged us from creative thinking and ingenuity. The oil price crash can turn out to be one of the best things that happened to us in decades, depending on how we respond to the challenge before us. Some nations closed their borders to force their citizens to come up with homegrown solutions and become competitive globally (India being one good example). Our borders seem to be closing on us as the naira takes a fall due to the shrinking dollar supply. We can lament or put on our thinking caps and use our gifts and talents to create something that meets our needs at this hour. One word you will hear a lot in 2016 is import substitution – producing in-country raw materials we usually import.

One thing is very clear – it is not going to be business as usual. We have to rise to the occasion or sink. This crisis is a golden opportunity for us to change and become better, self-sufficient, and richer. A lot of people are doing fantastic things despite the constraints we all face – lack of power, finance, infrastructure, etc. We need to step out of our comfort zone, stop giving excuses, mind our business and achieve greater things. The year 2016 is challenging us to rise higher. The decision to rise to that challenge is ours to make.

Compliments of the season and a prosperous new year 2016 whereby you will soar above the storms like an eagle.