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Surviving COVID-19: Cost containment must guide everyone henceforth

It has been a long year for us Nigerians, even when the year has hardly started. The year 2020 is one of a kind. I heard some people are sending humble appeals to God to take by this 2020 and give us another year. Many around the world, not just Nigerians, actually are wishing there was an opportunity for such a deal with God, to rescind a bad year and replace it with a good one. This year 2020 has actually seen more disasters in three months than so many did in twelve months. It brought with it a complex chain of events that presented differently to different people – to some a good lesson and opportunity to change; to others bad news.

 

As a year subsequent to one in which some elections were held, 2020 bore the brunt of some of the dirtiest things that are Nigerian politics and jurisprudence. Many, who lost elections the year before, suddenly woke up occupying the exalted offices they could not win at the ballot, by some yet to be resolved judicial/legislative abracadabra. This year also brought to a sudden end, the ambition of some Nigerian individuals to enter the Guinness Book of Records, as those with the largest number of names, aliases and name combinations – a feat our efficient election umpires and those that ought to prevent such ridicule failed to perform.

 

But that was the small part of the big events that have lined up. A deficit budget was made and while efforts were on to borrow and fill the hole; hell was let loose in the world oil market. Saudi Arabia and Russia began a production fight and prices began to tank towards a hitherto unimaginable $20 mark. Under the earth tremor that followed, even the president did not need a counsellor to chill his $28 million controversial loan ambition. From that point on, Nigerians went into a tunnel of confusion as they waited for the budget to be reviewed to realistically reflect developments in the oil market. Then nature came and reviewed it for us.

Then suddenly came Coronavirus, COVID 19, the new killer virus now rampaging the whole wide world. While this was going on the price of the county’s major foreign exchange earner, oil continued to go south, dropping to as low as below $27 per barrel.

 

In the midst of the confusion, the monetary authorities are taking a number of panic measures meant to achieve some unknown objective – the currency was “adjusted”, not devalued, to N370 per dollar. Many are still reading some tough books in Economics to fish out the fine differences between the two words. Many governments have asked workers to stay off work as COVID 19 rules the waves – in the poverty headquarters of the world. You must be in for some news.

 

The truth is that nobody is making any money today. In a few days, hunger, which was hanging around the corner, will take its proper place among the very same unfortunate members of the world’s poorest human enclave. I know that many of us have gone spiritual; and who wouldn’t, when giants and invincible like Bill Gates have long turned to prayer and fast. Sadly, COVID 19 does not even allow for a fellowship of the brethren. At times like these, when men can no longer trust in their skills, contacts and connections, the divine takes pre-eminence. At such times, it is usually no longer a matter of faith but a question of what works, and the spiritual part of us comes alive. I really and truly join my faith to those of all Nigerians who have since the crisis become more spiritual. I continue to hope and pray that your doubts and fears will disappear soon enough so you may return to your sinful way. God forbid.

 

As this crisis unfolds, certain things must happen if we are to go through the definitely trying times ahead with minimum damage. Those of us with the entrepreneurial mind set in Nigeria must be busy right now plotting the way forward for a softer landing. So we must do some hard thinking. When a country is described as an oil rich country many tend to think it means that the country has oil and therefore is rich. That confusion has to be cleared. An oil rich country is rich in oil but not necessarily rich in the sense of being wealthy. As things stand today, Nigeria is rich only in oil. We may be an oil rich country, but only in the sense that we are endowed with a lot of oil. If oil remains the black gold then it is fine but if its price continues to fall as it is currently doing then the term “oil rich” becomes of no significance. Nigeria has lost much of her foreign exchange income to the fall in oil prices. We are now without any doubt a low income country.

 

Unfortunately, certain costs in our national and individual expenditure are sticky downwards as economists would say. They do not immediately accept the reality of a downward change. They are like wages, which once increased are hard to reduce. Such costs continue to be high even as incomes drop. This category of expenditure are like the fixed costs of a production facility that do not easily respond to falling sales. One of the realities and imperatives of 2016 is that we must find ways to deal with those costs and bring them into alignment with our earnings. Cost containment is therefore one of the key management solutions every family must implement in the coming months. Frivolous spending has come to an end; lavish birthday parties should be reserved for the rich as it is one of the stupid things rich people do, all over the world.

 

We are about to enter into a phase of our national life when we must feel the full impact of the changes that have recently occurred in the world economy and by extension the Nigeria economy. National revenue has taken a sharp and deep fall and so must national expenditure remains unmet. With COVID 19 adding its own lashes, it means that we are entering into a period of economic contraction and if care is not taken we may experience a global recession. Public policy must therefore rise beyond the routine of income and expenditure dynamics to activate anti-depressive economic policies to counter the expected decline in consumer spending.

 

As we battle COVID 19, families and the small business community in Nigeria are enjoined to brace up for more frequent times of cashlessness. There will be need for learning many new things that help us fit into the new nature of our smaller national and individual economies. When one cannot make fresh income, the wisest thing to do is to effectively manage the little one has. Cost containment is a form of revenue generation.

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