After I published my article of last week, not a few had called to interrogate me, whether I had only submitted an incomplete paper, complaining that they could hardly grasp the import of the message I am sending. My response to each and every enquiry was very simple, which is that running a business is far less easier than running a government, that entails making incredible sacrifices and concessions, like the one made by the government of United States of America, refusing to pass a pro women legislation, out of the need to protect the very small entrepreneur, as the necessary backbone of general economic activity in a nation.
Indeed, organization of a national economy is much more than the management of a company, as such, it entails more than making a huge profit or returning a large turnover, in fact, it requires more than the substitution of subsidy expenditure, with that of the infrastructure provisions in the budget, which denotes that, a better infrastructure automatically stimulating business confidence, though it could be so but certainly not at the expense of general consumer confidence.
Because, were it such a reality, every business enterprise in mainland Europe and United States of America, would have been a crowning success, after all, they have the best physical and social infrastructure in the world, yet other factors more than infrastructure had made many a business venture to fail. Indeed, had the availability of infrastructure being the sole factor in the beginning of any business venture, the Nigerian oil industry would never have took up in the Niger-Delta, because, today, even after many years of operation in that region, the sector has not been able to transform the area, into a place where social infrastructure would attract anyone to go there.
Upon assumption of office, the President Muhammadu Buhari administration, which had came into office with one of the key mandates of the improvement of the economy and creation of job, decided that the easiest and fastest way to success is through the resuscitation and supporting of manufacturing industries and business ventures.
Fortunately, within the context of Nigerian economic entrepreneurship, it is the not the big companies and large corporations that provide the most employment, rather, it is the small business firm, employing less than twenty people, which provide the bulk of business and create more jobs. Besides, luckily for the new government, while the big industries needs are many, the requirements for small business is not much, as big industry requires availability of social infrastructures, huge credit, low and stable foreign exchange rate and many more friendlier government policies.
In the case of small business, all it needs is the availability of power, cheap energy source and necessary consumers to patronize the business, because, within the context Nigerian business environment, such small ventures hardly start business with bank credit or even get it, while sustaining the operation of the business, thus, they hardly rely on what they may not get, even if they want it, issues like infrastructure, price of foreign exchange and others are not key to the management of small business in Nigeria.
One of the first thing, the present administration did after coming into office, was to ensure that petroleum products are not sold above the official price, thereby allowing consumers to buy the product at N87 naira per litre, also, during the period, a great effort was made to ensure a stable power supply, thus complementing the small entrepreneurs needs for energy to power their business, either through consistent electric power or improvised generator power. The mere fact of the availability of cheap and stable energy enhances such key business to operate maximally, thus sustaining general business confidence in the Nigerian economy.
However, Buhari was still very much concerned about consumer confidence, thus, he also directed the Central Bank of Nigeria, to create a financial avenue or facility that allows the state governments to pay the backlog of salaries, they owed their workers, that action, apart from helping the state governments to fulfill their mandates, was one of the best approach to stimulate consumer confidence, because, most of the owed workers, upon receiving their working dues, go to the market to make purchases and, they also engage such small firms to conduct business.
The next challenge for the new administration, was how to measure the effect or lack of it against the newly introduced policy option and most gladly, the release of the World Economics headline Sales Managers Index (SMI) came into the rescue, which was an aggregated survey on the individuals and personalities, whom Nigerian companies rely on, to push their products into the market and their verdict was superlative, because, they returned rosy business confidence figures on the Nigerian environment, mind you, a happier industrial sector, that is able to sell its products, translates into more industrial expansion and ultimately, more workers to be engaged and more jobs to be created in the economy.
The reader should note that the Sales Managers Index (SMI), Business Confidence Index for August rose by 9.34%, which is the best performance figures since December 2014, correspondingly, it was the same period between July ending and August, which was the time when electricity became much more stable, with most homes and business establishments getting up to 16hours of electricity in a day, it is also the time when the policy effect of selling Petroleum at N87 naira per litre, started to bear fruit and the petroleum product started becoming available at the official price in most filling stations in the country.
The idea behind the policy is a very simple logic and could be verified by anyone willing to spend some time doing some deep introspection, just calculate how much did you spend before now on generating power, when electricity availability is less than two hours a day, what is the difference. I can bet that the amount is quite a small fortune, but what do you do with the sum gained, you either save but most Nigerian hardly save, thus, usually, you go to the market to buy goods and patronize small businesses, as such galvanizing consumer confidence, it noteworthy also, that cheaper fuel means a more empowered consumer-citizenry.
In fact, if you are an owner of small business, what hampers operation is power, thus, having more and stable power enriches the pocket of the entrepreneur, thus further making the enterprise more stable and I can also bet, the entrepreneur also goes to the market, further stimulating business confidence, a stable economy and a more satisfied citizenry. In that case, if anyone ask you, on what is the achievement of the President Muhammadu Buhari administration in the last one hundred days in office, ask him to interrogate his pocket.
And this two other things:
BETWEEN NBS AND SMI REPORTS
Last week, immediately I published my opinion editorial blueprint, detailing rosy pictures about the Nigerian economy from Sales Managers Index (SMI) reports, the Nigerian Bureau of Statistics came out with contrary figures, elaborating how the economy has slowed down, stating that the Gross Domestic Product (GDP) for the second quarter ending (Q2) is now 2.35% percent, from the Gross Domestic Product (GDP) of 3.86% percent, in the first quarter ending (Q1) 2015.
The first question that comes to mind was whether I painted a false picture to promote the present administration, knowing that the Nigerian economy is clearly in trouble, though, in my defence, I still stand by my assertion of last week. Now, to understand things from my view, you have to understand the data from the National Bureau of Statistics, which released its second quarter report on the Nigerian economy a weekend before last week.
Generally, such reports are divided into four quarterly periods, starting from January to March, though the first quarter report comes out on April, the second quarter report is between April to June, while the report comes out in July, as the third quarter report is between July to September, when its quarterly report comes out on October, while the fourth quarter is between October to December, as its report comes by the January of the incoming year.
But, what am I inferring here, it is very simple, the National Bureau of Statistics (NBS) report, detailing the second quarter economic performance of the Nigerian state is based on figures from April to June 2015, which clearly has only the last month, in the period of quarterly duration economically superintended by the administration of President Muhammadu Buhari. Also, it is most noteworthy that the World Economics headline Sales Managers Index covered the period of July and August, which when added to June, goes three months into the duration of the new government.
Surely, the figures much closer to the truth, should be the one closest to today, but, as a financial analyst, which data would you prefer, the one that stops in June ending or the one which extends to the period of August ending.
BETWEEN PMI AND SMI REPORTS
In the beginning of this week, the FBN Capital headline Purchasing Managers Index (PMI), came out with its August data, which was in sharp contrast with World Economic headline Sales Managers Index (SMI), as while the former was negative, the latter was hailed as positive. However, if the two statistical surveys are about Nigeria’s general consumer and business confidence, the legitimate question to ask is why the difference and the answer is very simple, the Purchasing Managers Index merely projected into the downtown in global consumer confidence index, because, apart from Germany, every European Union member nation and the United States of America reported negative numbers for the month of August.
Also, the Purchasing Managers Index (PMI) relied on the National Bureau of Statistics (NBS) second quarter (Q2) figures, which reported that the manufacturing sector had contracted by 3.8% percent during the period, but the NBS data only covered the months of April to June, supposedly for a survey only limited to consumer activities in the later month of August and finally, the report keyed into the significant loss of government revenue, due to low price of crude oil, as if apart from the payment of salaries, general government contractual spending have a tremendous impact on consumer purchasing power, the report is just a litany of wrong suppositions.
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