What The Global Economic Crunch May Mean To You Or Your Neighbour

It’s amazing just how much the entire world can change in the space of just 6 months. From a high of $147 in August 2008, oil prices have plummeted to as low as below $40. This, as we now know, was caused by terrible, inadequate regulation of the financial services sector in the United States and other “developed” nations, which, when unravelled, affected many countries, which is not surprising, considering that we now live in a globalized, interconnected world.

Over here in Naija, it is clear that the effects of the global economic meltdown are very much here with us. From a high of nearly $59Billion, our foreign reserves are barely $50Billion. Oil, our major revenue earner, isn’t bringing in as much as we’d like, owing to a combination of the much lower oil prices, and the activities of militants in the restive Niger Delta, who have succeeded in reducing Nigeria’s oil and gas production volumes by at least 25%.

Foreign Banks have cut the huge credit lines they accorded our banks, while overseas investors, both those that invested in the stock market and the ones planning to open plants and factories, have either moved their funds out of the country or put their plans on hold.

These are the large-scale implications of the recession the world has found itself in and how they affect Nigeria. On the lower, man-on the street level, let me tell you what I believe has started to happen and will continue to a greater extent in Nigeria within the next 12 or so months:

Many Companies Will Cut Down On Staff Numbers
I have already been informed that some banks have already indirectly linked the payment of certain elements of their employees’ otherwise whole salaries to their ability to generate deposits. Of course, there’s no way all employees will be able to bring in their =N=500Million target deposits within the course of the year, so they’ll therefore lose part of their income. As the year progresses, these “non-performers” are bound to be shown the way out by their banks. Similarly, the manufacturing sector will experience further shocks as demands for their products will wane, and capacity utilization will further shrink. Reducing overheads (read headcount) will have to be one of the few tactics they’ll have o adopt to stay afloat.

Marketing and Marketing Communications Expenditure Will Reduce
Ask any experienced marketing person who has worked at firms facing cashflow or profitability challenges will tell you, one of the first budgets that get cut when companies hit a rut is the marketing/marketing communications budget. Those rebranding plans will have to be put on hold, while the television commercials that were shot 5 years ago will be revived to prevent firms from having to shoot new ones.

Sales Promotions and Lotteries Will Increase In Use and Popularity
Sales Promotions will be used more frequently by firms, who will cash in on the increasing sense of desperation among many within the populace, and the increasing need by more people to try to get something for almost nothing. Expect more of the television and radio commercials you encounter to promote these kinds of activities.

Religion Will Become An Even Bigger Function In People’s Lives
In an attempt to seek supernatural assistance for the multifarious challenges they will be facing in 2009, more and more people will retrace their steps to their god. Expect church and mosque attendance figures to jump through the roof this year. The many industrial spaces in the major cities, which were being used by factories, are likely to be reclaimed by Churches, as the industrial sector retreats, and the religious gains ascendancy.

Expect Many “Unnecessary” Businesses To Face Huge Challenges
People will spend more time and money saving and keeping their expenses to the barest minimum. This will reduce the amount of money available for seemingly “unnecessary” expenses like cinema tickets, visits to Mr. Biggs, Sweet Sensation and The Palms.

Bukas and Beer Parlours Will Grow in Numbers and Patronage
As you will have more people with more free time on their hands, and with issues on their minds, you can expect a fair share of them to make a beeline for the many beer parlours that dot the Nigerian landscape. This may also be a good time for the cheaper alternatives to Nigerian Breweries and Guinness Products to get a fair share of the market, as some people may not have the resources to buy Star at =N=200 a bottle, when they can get 33 Beer at =N=120. You can also expect a great deal of the people who used to eat at Tasty Fried Chicken to also reduce their patronage and eat more frequently at Mama Basira’s joint, where you can easily get a good meal for less than =N=300.

More People Will Spend More Time Online, While DSTV and Co. May Lose Clientele
As a result of having more time on their hands, more people will go online in 2009. They will be looking for a variety of things like jobs, friends, the odd mugu or two etc. On the other hands, payTV operators like DSTV, HITV etc. are likely to experience a considerable reduction in the number of their subscribers, as fewer people will see the need to continue to pay for so-called “unecessaries”.

Fewer People Will Officially Get Married This Year, But More Babies Will Be Born
As a result of the global crunch and huge increase in the cost of living, accompanied by a reduction in real income owing to inflation and worsening fate of the Naira against the Dollar, you are likely to see fewer men opting to get married this year. Many will not even bother to “toast”, talk less of looking for how to get a wife. I however see more couple hooking up without incurring the cost and fanfare of going through a wedding, but either just co-habit or have a cheap court wedding. Similarly, the fact that more people will have less money to play with at clubs, eateries, joints and with girlfriends, and will thus spend more time at home, will mean that they are more likely to put their wives in the family way than they would if the economy were in better shape and they spent les time at home.

A Lot Of Bank Loans Will Go Bad
Banks, which six months ago, were ready and willing to fund anything from your great business idea to the reburying your long-dead great grandmother, will find many of the persons and businesses they lent money to in dire straits. Expect a lot of loan defaults this year. I pity the credit officers that approved many of these loans. Flowing from this, expect a lot of businesses, Nigerian-used second-hand cars and even houses to be put up for sale in the course of 2009, as banks make a serious effort to retrieve their money.

Some Nigerian Banks Will Go Bust In 2009
Some of the practices of Nigerian banks in the last two or so years will make Citigroup or Bear Stearns look like choir boys. There is no way a few Nigerian banks will not collapse this year. And they shouldn't look to the government for any bail-out packages - even the government itself needs bailing out at this time, what with all the other challenges it has to face, and frankly, the Nigerian Federal Government really doesn't have the money to bail them out with. If the global meltdown persists for as long as pundits say it will, it's likely our reserves will be spent before it is over.

Expect To See Much Fewer “Buy Now, Pay Later” Advertisements In The Newspapers
This flows naturally from the point made in the previous section. Nobody will fund your silly desire to replace your 2007 Honda with a 2009 model.

Expect More People To Turn To Alternative Medicine
With the NAFDAC woman promoted to Minister of Information, and the rising cost of receiving medical attention in Nigeria, added to the reduced revenue in the hands of the average person, expect the Alhajis, Traditional Doctors and other purveyors of the alternative medicine option to make a killing (figuratively and literally speaking) this year.