Nigeria

One of my good friends and colleagues at work is a brilliant engineer from Nigeria. He used to be a mechanical engineer, then had a career change and joined the software realm....
Anyway, I hang alot with him, and we talk alot about technology (and women when we are not geeking) and I also got to meet a number of his friends a co-patriots. There is a large number of Nigerian ex-pats here in London. In fact, the UK has the largest Nigerian community in the world, with an estimated 3 million immigrants.

One advice to the bankers: invest in Nigeria.

Nigeria is projected to become the third most populous nation on the planet by 2050, and it has some very interesting demographics. It is also very similar to the United States in many ways. It is a federal state, with 36 states in addition to the federal capital territory of Abuja, with Lagos, the former capital, being the most populated , with 11.5 million. They have 389 different ethnic groups, with many different languages and dialects. It is also a huge country, 1 million Square kilometers , and was projected by Goldman Sachs as on of the Next-11 economies of the world. It's also one of the biggest exporters to the United States, and an oil and natural resources rich country......

But this is all.....marginal.

If Adam Smith was still alive, he'd tell you that the real wealth of a nation, is its people, and the ability of the people to create wealth.

A bit of recap first, as I like to use an example put forward by Howard Baetjer Jr. in his book, Software As Capital . In the old days, a country's gross national product, relied on its labour force, and it's ability to produce. For example, in the mid 1800s, almost 45% of the United States worked in agriculture, in order to feed the nation. Today, with all the technology and advancement in science, it only takes 3% of the people to work in agriculture to feed the nation. So where did the other 42% go? They surely didn't move t Hawaii, but they had to seek employment in other places. Well, they simply "moved up a notch", and that technology, that is making the life of a farmer so easy became the biggest employer, and we had the industrial revolution. Cars , trucks, pipes, TVs, factories, big buildings, picked up the 42% and empoyed them. As we move towards a more "knowledge based economy" , manual labour is needed less, and mental ability is needed more. But, likewise, these sectors became over-teched, and fewer people were needed to operate the factories, and again, the United Kingdom, which was the first country to fully industrialize, is leading the way in "de-industrialization". It seems people have moved to banking, but well.... we all know how that is going.

Moving on, the point is, that all this poduction, needs consumption. Someone needs to buy the TVs and the cars and the hamburgers. So far, the Yankees are leading the way in mass consumerism, and well, that is why they have the biggest economy in the world? Why? Simple, because well, they are their biggest clients. The biggest client to all those US multinationals, are the Americans themselves, and it is a positive loop- the US firms don't need to worry about what is going on in the rest of the world, as long as there biggest market is in-house. (I work in a multinational, US-based company, and our biggest market is in the US of A).

And here is the biggest similarity for Nigeria.

I have observed closely, and so far from what I have seen, Nigerians enjoy life. (Why shouldn't they?!) . They like nice cars, nice things, and are even better than the yanks when it comes to knowing there taste in food. Ok I am biased because my friend is Nigerian, but, well, think of it this way, one Nigerian will be a bigger consumer than 2 indians, and 3 Chinese. Today, the wealth of a nation, is it's people, and Nigerians are up and coming.

Bigger, better, stronger, and, they are not short of brains either. One of them sits 3 feet away from me.

Invest now, coz sooner than later, they'll be up there. I am banking on it.

The English Budget

Now don't you just love the English? They have their peculiarities - the two faucets, driving on the right side etc- but, in my personal opinion, I think those peculiarities, fundamentally, come from a very old culture, a culture of a country that doesn't have an independence day, and has never been occupied for over a thousand years. Tradition, or the way the English go about their business, is deeply rooted in the culture, even if most of the people are unaware of these qualities. Some people refer to the Englishman's "indiferrence" to life, I'd rather think of it as "deep understanding of life." I particularly admire the English's ability of self ridicule, and who better than the Greatest Englishman to put it best, than Mr. Winston Churchill.

"If Hitler invaded hell I would make at least a favorable reference to the devil in the House of Commons. "

Those peculiarities, in my opinion, are a sublime way of outlining the importance of certain things, and I discovered today, that Alistair Darling, our notorious Chancellor of the Exchequer, who, now is the man calling the shots in the banking sector after nationalizing a number of banks, like the Royal Bank of Scotland, once the 5th largest bank in the world in assets, today is 60% nationalized. Based on the UK bailout of £500Bn , and with the British government leading by example, with the EU and the US structuring similar bailouts, it seems Mr. Darling is the leading figure to be the savior of the world economy, even if this will only be proven by history.

Anyway, the economy, should be the focal point of any government, and back to those "peculiarities", that's how the English show how truly they believe that. Get this:
The Chancellor, delivering his Budget, is the only person allowed to drink alcohol in the Chamber.

Now, personally, I think this is a recognition of the importance of the man's job, and how important it. is. Although the funny thing about this year's budget, is that the only man allowed to drink in the chamber, has imposed higher taxes on alcohol.


Deliciously English sarcasm.


Anyway, the British are the ones who invented Value Added Tax (VAT) , which, in simple terms, instead of taxing every entity and middle man between producer and consumer- just tax the end product- i.e. impose the tax on the goods being sold, and let the consumer pay the tax. This may sound a little counter intuitive, but actually this will cause companies and producers to cut their prices. Why, because, well, the government, to encourage businesses and help them flourish, will lower their tax the more business and production they make. But the money has to come from somewhere, so, just tax the consumer. The consumer anyway is the one using most of the government service, and well, what difference does it make as long as the price stays the same? i.e. By moving the tax from producer to consumer, the government helped the economy grow, but by keeping (or increasing slightly) the money it gets from tax. That's also a similar strategy to the never ending debate that rich people seem to pay less taxes on average, and that if people have more money and liquidity, they will tend to invest more, and the money will be re-invested in the economy.

They don't do that. They move to sunny countries. So, My darling Alistair, creates more stealth taxes for me to pay at the pub.