Recession: Where did the money go? Find out

Anytime there is a recession, it is believed that there is less money in circulation. Business is slowing down and customers are not buying as much as they used to. This is the reality of many businesses. The disposable income of most individuals has gone down. Instead of spending more to stimulate growth, most businesses are cutting costs.

Many companies are laying off workers to keep costs down. This results in less demand for goods and services, which means fewer turnovers for businesses, which can trigger another round of layoffs. It is a vicious cycle. Individuals are also spending less in areas that will generate growth. Beyond what should be the right response to dwindling income, one question to ask is: ‘Where did the money go?’

We can understand what happened to the dollar supply due to the crash in oil prices since 2014. There is more naira chasing fewer dollars. What happened to the naira supply? Has 50 per cent of the naira in circulation left our borders also? Why is the naira not circulating around us as before? Why are sales down? Why does our wallet get to hold less naira?

The reality is that we feel there is no money because we are seeing less of it. The press is awash with tales of woe; companies are reinforcing the message by cutting costs and laying off workers. Individuals are also cutting back, scaling down and in some instances, doing without. There is a general sense of doom. There are very few voices of hope. The inspirational leadership required at times like this seems to be lacking while the stimulus package seems to be slow in coming through.

Getting out of recession

The first line of attack in getting out of recession is to have a positive outlook of the future, to have hope. Your mood influences your actions. If you feel gloomy, you tend to be pessimistic and lethargic; you pull back and in the process miss opportunities. When you have hope, you are fired up to take positive action. You are inspired to come up with new solutions. Franklin Delano Roosevelt is credited with ‘talking America out of the great depression’. Words are very powerful.

This is a season of unprecedented opportunities. You cannot see them if you are pessimistic. The unprecedented volume of naira that circulated during the 2015 election season has not left our borders. It is somewhere. Some may have been retrieved or seized by Economic and Financial Crimes Commission, but it is technically still in circulation as the banking system is virtually cashless.

How much money you have is now expressed as figures and digits in your account balance, and not necessarily the volume of cash in your bank’s branch. It is when you need hard cash that they move it with a bullion van. The economy is saturated with cash, but little is showing up in your account balance. That is the issue. With the right frame of mind, you can get to work and turn things around in time.

In addition to a mind-set shift, you need to upgrade your skills to be able to grow and attract more money. Your current skill set has brought you as far as you can go. To go further, you need to upgrade. One of the key skills you need is how to use other people’s money and other people’s time to make more money. Most of us lack business skills. We are afraid of entrepreneurship, and when we gather enough courage to step out, we jump in head first without doing proper due diligence. We lose our money and other people’s money in the process.

Moving from an employee to an entrepreneurial mind-set takes a lot of internal work, as both are essentially opposite. While the employee seeks security, the entrepreneur seeks freedom. While the employee looks out for himself (keeping his job) the entrepreneur seeks to grow his business and employ more people.

Entrepreneurship is more than putting aside some money and going into business. A stint in a business school helps but most of the training is on the street. If having an MBA was a prerequisite for succeeding in business, man

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