COVID-19 AND MY MONEY

Hello everyone, I hope we are all doing great and keeping safe?

I need not be a Soothsayer to tell of the scourge of COVID-19 on the world economy and coming home to the Nigerian economy, we are not just facing the Virus we are also facing low oil prices which is as a result of the faceoff between Russia and Saudi Arabia (Talks on going to resolve)

As at 20th April 2020.  the price of Crude Oil was $13.5 the lowest since 1999. So, the implications of all this is that we have in our hands an impending Recession, if not already in Recession.

The truth is these affects the world all over, most countries are heading towards Recession, if not already in one.

Let me quickly explain how they intertwine.

The faceoff between Russia and Saudi Arabia started before Corona Virus became a Pandemic, so in other words the USD crisis we are having now is not just as a result of the Pandemic.

That is, In layman terms and in summary we have more supply of Crude in the Oil market and simple economics law of demand and supply kicks in thereby crashing the price worldwide and you and I know that Nigeria is largely a mono economy depending on Oil revenues with our National Budget set at $57/Barrel. But this was reduced to $30/ Barrel.  But even at that we can still meet up as it was sold at $13.50, 20th April 2020. Not only that we have less demand as most factories are shutdown worldwide due to COVID-19, meaning a further reduction in price.

In March 2020 the CBN devalued the Naira to N380.5/$1 and as at today the black market is selling at N416/$1. What is the meaning of this, someone who had 360m before the devaluation you had $1m but now that as reduced significantly. And experts are still looking at a further devaluation soon. What this in turn mean for you and I is that we have our income reduced and our disposable income with it, so we will be experiencing inflation

Because of the high risk of person to person transmission of the COVID-19, the Federal Government lockdown Lagos (Financial Capital) Ogun (Industrial Capital) and Abuja (Federal Capital). And thereby causing Businesses to either a full or partial shutdown, I spoke with some of my Entrepreneur friends and the said they are doing half salaries this month for their staffs and if the lockdown persists they will do no salaries and the sad truth is some businesses may not recover from it.

So, what would I have done before the devaluation (This is for next time):

·       Take a more stable currency position (USD/GBP etc)

·       If you had a foreign currency loan (Business Owners) you should hedge (NDF, SWAP is not visible here in Nigeria).

What should be done now:

·       Review your expenses and reduces frivolities’ as much as you can.

·       Verify investments well and be smart as fraudsters will increase, the last time we had rescission was 2016 and that was when MMM grew more even though it started late 2015.

·       Be financially disciplined.

·       Make and work with a Personal Finance Budget.

Lesson from the whole episodes:

·       Increase your savings culture, so many people are ‘broke’ because of the lockdown.

·       Review your business model/ life model to include contingency plans for situations like this.

·       Always buy things in bulk (Majorly food stuffs etc)

In all this the most affected industries are Tourism, Aviation, Sports, Cinemas, Entertainment, Fashion Hotels etc are all counting losses in revenue.

While some industries are hit hard some are having surge in revenue, Telecommunications, Video Streaming websites (Netflix, YouTube, etc) ,Social Media (Twitter, Tiktok, Instagram etc), Pharmaceutical, Food, Supermarkets etc.

Above all, I am an optimist and I believe we are more than able to come out of this strong and better as a person, as ‘Though Time Never Last but Tough People Do- Robert Schuller’

Let us remember to Keep Safe, Stay Home, Wash your Hands, Maintain Social Distance and remember it is only the living that spends money.

I remain your friend and Personal Finance Coach Babatunde Ayorinde, follow me on twitter @pistis03, on Instagram @personalfinancebabat

And if you like to engage us to speak in your program or for adverts send us a mail at babat09@gmail.com.

Thanks for reading, invite you Family, Friends, and Foes to read the blog, as we move ahead to our financial freedom.