Nigeria Content Online

Olu Jacob

Kadaria Ahmed

Victor Ehikhamenor

Ikhide Ikheloa

With the range of investment options
available for the individual investor, it can be difficult to determine
which investment is right for you. With stock markets up one day and
down the next, many investors face the dilemma of whether to invest
directly in stocks or to use mutual funds as their investment tool. In
order to decide which approach best meets your needs, it is important
to consider some of the pros and cons of each of them.
Clearly, the answer will vary from
person to person, depending on such factors as: How much risk you are
comfortable with, how much money you have to invest, how knowledgeable
you are about financial matters, and how much time and effort you are
willing and able to devote to this task. Each approach to investing has
advantages and disadvantages. Here are some questions you should ask
yourself to help you make the assessment.

Do you have the knowledge, time or inclination to build your portfolio and monitor your investments yourself?

Mutual funds are managed by experienced
professionals who are well acquainted with the dangers and
opportunities that come with investing. They will make the day-to-day
buy and sell decisions about which stocks, bonds, or other securities
to invest in, thus relieving the investor of that responsibility. As
with all investments, mutual funds will not perform to expectations all
the time. To have the best chance of success, it is important to select
a fund manager with a quality management team and a good track record,
but even then, only a few funds will consistently outperform the market.
If you decide to buy stocks on your
own, you will have more control over what you are investing. But as you
will also have to devote more time and attention to your investments,
it is important to make a realistic assessment of your ability to
handle that responsibility.

It will take time and effort to
familiarise yourself with the basics of stock investing. You should
have a sense of how to analyse a company to be able to arrive at your
own independent judgment of its value and how that compares to its
current market price. You should certainly be prepared to spend time
reviewing your portfolio periodically and if you are a new investor or
not disposed to put in that amount of time, and even more during
periods of volatility, then you are better off in funds, which are very
convenient and generally require less attention. The alternative is to
manage your own portfolio of individual stocks and bonds. If you do not
have the knowledge, experience or inclination, then this may not be a
good idea.
It is very tempting to listen to all
the rumours and noise out there and appear to be selecting stocks. If
you are going to buy based on a friend’s hunch about which are the
“best” stocks and which are the ones to avoid, and substitute their
judgment for yours, then you are probably better off sticking to mutual
funds.

Do you have enough money to be able to create a diversified portfolio?

How much do you have to invest? Mutual
funds offer a clear opportunity for smaller investors who do not have a
lot of money to invest. In Nigeria, there are several funds that offer
low initial investments of N10, 000. If you want to build a reasonably
diversified portfolio of individual stocks on the other hand, you will
usually require a much larger sum.
Mutual funds can reach a wider
diversification than can be reached by individual stocks. Dividing up
your funds among a few stocks is not usually enough to cushion you
against a severe market downturn. By pooling several stocks as an
equity fund does, the risk of loss in investing is reduced. If one
company or sector performs badly, it tends to be balanced by other
companies that may be performing better. By owning a wide variety of
stocks across various sectors, you reduce your risk of loss.

There are
different types of mutual funds to choose from including money market
funds, bond funds and equity funds to suit different objectives. It is
important to note however, that individual stocks tend to have a
greater upside potential than most mutual funds; as with all investing,
you trade some risk for greater potential reward.
Mutual funds are considered to be among
the most liquid investments. As shares in a mutual fund can be bought
and sold any business day, it is easy for investors to have access to
their money, as the fund is always available to buy its own shares.
When you invest in individual stocks, you have to wait for a broker to
find a buyer for your shares; this could take several days or longer
particularly if the stock is not widely traded.

Mutual funds and stocks?

For those who would rather let
professionals handle things on their behalf, mutual funds are the
natural choice. At the other end of the spectrum are those who may want
a greater level of participation with their investing. For this group,
stocks will be the more attractive alternative. You do not have to
narrow down your choice to one or the other; indeed investing in a mix
of both mutual funds and individual stocks appears to be a good
compromise for the majority of investors. The over arching
consideration must be to adopt a long-term investment strategy and to
ensure that a diversified portfolio is built with clear financial goals
and objectives in mind.

Write to personalfinance@234next.com with your questions and comments. We would love to hear from you. All letters will be considered for publication, and if selected, may be edited.

If there is any
debate that Nigerians should be glad to have, it’s about the economy.
With the crippling poverty and scarcity that average Nigerians daily
face, it is in fact a wonder that this issue is not being examined more
widely.

The economy was
certainly a subject of the campaign of former vice president, Atiku
Abubakar, before he decided to make zoning the premise of his
candidacy. But while he maintained his focus on the economy, informed
Nigerians had cause to pay attention – and apparently, so did the
Nigerian government, as its minister for finance, Olusegun Aganga,
engaged in a sustained war of words with the Atiku team.

Mr. Abubakar
criticised this government’s handling of the economy, questioning the
non-implementation of budgets, the disappearance of excess crude
account monies (even at a time when oil prices were far above the
benchmark), the foreign reserves being depleted so badly that our
status with rating agencies began to drop and the wisdom government
that premised its calculations on making debt a benchmark.

Faced with a
minister of finance with impressive educational and professional
experience as Mr. Aganga these were not easy questions for many
Nigerians to ask. But Mr. Abubakar effectively made it clear that as
far as he could tell there was no viable strategy on the economy being
implemented.

While it is
possible to chalk up all of that hot air to the usual back-and-forth of
politicians focused only on winning elections, Mr. Abubakar’s campaign
for his party’s presidential nomination is over, he lost, but the same
questions are still being asked by the likes of Adamu Ciroma, himself a
former Minister of Finance and Chukwuma Soludo erstwhile governor of
the Central Bank.

In an open letter
to Mr. Aganga challenging the minister to a debate on the economy –
Soludo raised a long line of issues. He criticized the government for
its inability to evolve a “sensible debt strategy” flaying the
administration’s debt-to-DGP ratio as well as the constant debt
accumulation. Pointing out what he referred to as “ignorance” in the
ministry’s aping of the models of countries like the United States, the
United Kingdom and others in Europe while Nigeria is not in a
recession, he recalled that Mr. Aganga assumed office with an oil price
benchmark of about $75 per barrel and external reserves of about
$42billion, but has so far lost about $10billion in foreign reserves at
a time of unprecedented export boom, even with oil prices now over $90
per barrel.

Mr. Soludo also
questioned the Eurobond issued by Nigeria, noting that the joy over
oversubscription is misplaced considering the attractive returns
foreigners were offered, while referring to a London Financial Times
report on Nigeria in January that questioned the economic management
skill of this administration.

Unfortunately, the
minister for finance had no response beyond pointing to the amount of
money lost by investors in the capital market while Mr. Soludo was in
office and the millions now being used to bail banks out under the
Asset Management Corporation of Nigeria as well as accusing Mr. Soludo
of misrepresentation.

Unfortunately,
while we can take a safe bet that none of Mr. Soludo’s latest
statements are altruistic (especially considering the rot his successor
met, as well as the many questions he himself left unanswered in his
time), the minister’s response will not suffice. The questions asked
demand satisfactory answers.

For what it is
worth, Messrs Abubakar, Soludo and others have found an easy target in
the Jonathan administration’s economic competence. Whatever the
intentions of the accusers, when ordinary Nigerians take a look at the
handling of the nation’s debt profile, reserves, those telling ratings,
the free fall with the banks and the stock exchange and above all, that
most telling indicator: the fact that, over the past year, nothing has
really changed in the conditions of living, then it becomes apparent
that someone somewhere has failed. Why, and what exactly is going on?

Aggrieved
opposition politicians might not deserve an answer to those questions,
but the generality of the Nigerian public does. And we are still
waiting.

“Look at him!” the
emcee at celebrations to mark 25 years in power for Ugandan President
Yoweri Museveni shouts into a mic. “Look at him! He is very fit!” The
former rebel decked out in his usual – and fairly unique – floppy hat
and suit combo ambles down a grass slope and waves cheerily to his
supporters.

“Look!” she shouts
again. “You can even see from the way he is walking!” Moments later, a
pick-up truck draws alongside the 66-year-old and he slowly clambers up
onto the back to continue saluting the crowds.

“Oh…” she pauses for a moment before quickly gathering herself.

“He is in a car
now!” she booms. “That is the modern way! He needs that vantage point
to see you. He is a kind-hearted man who wants to see you!” A nice bit
of quick-thinking there from one of the party faithful all too aware
the Ugandan opposition wants to portray the famously shrewd operator as
past it.

That shrewd
operating was plain to see, as “Sevo” was careful not to make the bash
about himself – rather it was about Uganda and its progress.

Reading out a list
of 551 war heroes and parroting statistics about growth and exports
didn’t exactly make for a great party but it got the message across: I
care about the people. I rely on heroic Ugandans. I have made things
better.

Few Ugandans would
deny that. The country Museveni took hold of in 1986 decked out in his
fatigues had become something of a sorry husk after years of civil war.
He quickly made it stable, got it growing convincingly and became an
example for other African leaders – the oft mentioned 90s “new breed”.

But, for many in the country and outside, something’s gone wrong.

And it hinges on one of his most famous quotes.

“The problem of
Africa in general and Uganda in particular is not the people but
leaders who want to overstay in power,” he said when he took the helm A
quarter of a century later, he’s still there.

As he spoke about a new road at his celebration, a Ugandan leaned to me:

“120kms of road is what he’s boasting about after 25 years! Big deal,” he said.

That opinion was
reflected to some extent on radio phone-in shows and on social
networking site, Twitter, as the country tried to make sense of his
tenure.

A man identifying
himself as Jeff called into a radio show and said: “The liberators have
grown fat. And the people they liberated have grown skinny.” That
perception, right or wrong, that Museveni and the ruling National
Resistance Movement have been feeding at the trough, is particularly
damaging and anger is growing, an anger that was reflected on the
radio, on the TV and in Kampala’s bars.

On Twitter some
were equally scathing, especially after I tweeted from the party that
Museveni had said, “We have recovered. We are now going to take off.”
“Huh!” journalist Evelyn Lirri replied. “It’s taken 25 years to
recover. We might need another 20 to take off.” Alan Kasujja, a radio
host, tweeted that there was good and bad to the legacy.

There were others,
though, who had nothing but praise for Museveni and were unconvinced
that any of the opposition leaders could do better – an opinion
seemingly shared by the U.S. as revealed in a cable obtained by
WikiLeaks.

The opposition is
“fractured and politically immature,” the dispatch said. “It is by no
means clear (they) would improve governance in Uganda in any way.” For
some, despite the marathon stint in power, Museveni is still the
country’s best bet.

So what do you think? Is he still fit for power? Or is it time he took a rest?

REUTERS

The philosopher
Aristotle once opined that youth is a form of ‘permanent intoxication’.
Youth knows everything and is capable of everything.

In the early
seventies I sauntered into Mada Hills, a missionary boarding school in
the pleasant meadows of the ancient savannah that makes up the
heartland of our country. The civil war had ended. Learning came very
easily to us. We took on the best of our rivals in sports and
inter-schools debates. Love letters were sometimes dipped in talcum
powder – most of it silly and innocent. The white missionary teachers
gave us the best education any child could ever ask.

University was
another three years of fun. Bongos Ikwue, Christie Essien and Kris
Okotie were the reigning musical idols. When the annual milk round
arrived in our final year, a friend and I went off to play tennis. The
civil service, we believed, was for those who did not have what it took
to become scholars. Banking was for the lower orders. Ayodele Awojobi
in engineering, Ojetunji Aboyade in economics, Jibril Aminu in
medicine, Iya Abubakar in mathematics, Wole Soyinka in literature and
B. J. Dudley in political science were, for us, the ideals of the New
Man. We had unwavering faith in our own abilities and in Nigeria’s
manifest destiny as a great nation.

We were the
generation that came after what Soyinka has termed the Penkelemes Years
— the fruits of the Holy Spirit. Every graduate worth his or her salt
was literally guaranteed a job. Outside our country, nobody ever
questioned the quality of a Nigerian degree certificate.

And then the
barbarians arrived at the gates. It started with Shehu Shagari. By
August 1985, Nigeria’s death knell had been sealed.

A nation’s hope
lies in its youths. The current seismic tremor blazing through the
Middle East has its origins and indeed its inspiration, in the youth.
Yesterday it was Tunisia; today it is Egypt. Tahrir Square in the heart
of Cairo has become the symbol and battleground of youth resistance
against the Last Pharaoh. We also hear of rumblings in Yemen, Algeria
and Jordan.

Statistics released
by the ILO in January paint a bleak picture for the Middle East and
North Africa (the MENA countries), where the youths make up 60 percent
of the population. Over 40 percent of working adults live on less than
US$2 per day, with 24 percent of youths without gainful employment. In
Jordan and Algeria the figures stand at 30 and 40 percent respectively.

The story of
Muhammad Bouazizi (March 29, 1984 – January 4, 2011), who has become
the symbol of the Jasmine Revolution in Tunisia, is not untypical.

Born in Sidi
Bouzid, a suburb of Tunis, he grew up in a humble home and was bright
enough to study computer science at university. His father died and
left him with the responsibility of looking after his ailing mother and
five siblings.

Jobs were nowhere
to come by. He decided to set up a stall to sell fruits and vegetables.
A police woman accosted him for failing to produce a permit. He
mentioned his dead father and poor family. The police woman replied
with slaps across his face and insults to his dead father. The poor
young man could not take it. His complaint having fallen on deaf ears,
he set himself ablaze. The rest, as they say, is history.

Sooner or later,
what US Secretary of State Hillary Clinton describes as ‘the perfect
storm’ will come to our shores unless we do something drastic about the
abysmal situation of our youths. We have succeeded in creating in the
last two decades a truly monstrous anti-civilisation where the youths
have had no option but to turn to cultism, prostitution, drugs and
violent crime. With youth unemployment hovering at nearly 60 percent,
we are living on a time bomb.

These problems are
no doubt the results of decades of misguided policies purveyed by
cruel, backward tyrants. I have no illusions that they can be resolved
with a magic wand. But we have to start today.

We must overhaul
agencies such as NDE, NAPEP and SMEDAN so that they give real value for
money and address the needs of the youth for gainful and productive
employment.

The Greek
philosopher Diogenes wisely noted that “the foundation of every state
is the education of its youth”. We have to re-examine our education
system and the tragic semi-literates that the system is producing these
days. A situation where the humanities are the most popular courses can
only lead to disaster.

A recent global
survey put Nigeria at number 77 out of 80 countries in the ratio of
scientists/engineers to population. India today has more scientists and
engineers than the whole of the EU put together. The Chinese churn out
some 700,000 scientists and engineers per annum. We cannot offer our
youth a future unless we turn resolutely in the direction of science,
technology, skills and vocational training.

Linked to this is
the need for a concerted national industrialisation strategy that will
boost jobs and spur growth while ensuring long-term sustainable
development. It requires nothing less than the reinvention of Nigeria.