Financial Literacy
Millennials’ silence towards pension is a great concern
Millennials’ silence towards pension is a great concern
A careful look at the recently released Summary of Pension Assets by the National Pension commission reveals a troubling trend. Not that this trend is new or peculiar to the recently released reports, it has been there, but it was hoped that this would improve or change with the introduction of the multi fund strategy.
However, one year after that introduction, the trend remains and that is what makes it even more troubling. The trend I am talking about is the seeming lack of interest in or silence towards retirement savings by Nigerian youths, the Millennials.
Who are the Millennials?
The millennials or Generation Y (Gen Y) or otherwise called the Net Generation, are those born in the late 1980s and early 1990s. Demographers have come up with some demographic groupings or characteristics of generational cohorts and have come to classify people as belonging to one of the Silent Generations (those born 1928-1945) or the Boomers (those born 1946-1964), or the Generation X (those born 1965-1980), or the Millennials. In Nigeria, some have chosen to call the Millennials, the “Indomie Generation”. For the purpose of this article, Millennials refer to those born in the 1990s.
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A disturbing Trend
According to an analysis of the Summary of Pension Assets in Nigeria, less than 10% of those participating in any form of pension savings account are in the Millennial age grade. In a country where a great majority of the population belong to this age grade, a 10% pension fund participation is depressing. As if that is not depressing enough, a look at the total pension assets in Nigeria shows that Fund 1, which is set up especially for the Millennials, accounts for less than 1% of the total pension assets, indeed, it is a sorry 0.17%.
Reasons for the perceived lack of Interest
There may be many reasons for this seeming lack of interest or disdain towards saving for retirement early. One of the reasons may be the high level of unemployment. There is no doubt that the rate of unemployment is high in Nigeria, the crime rate is a pointer to that high unemployment rate. Even those that are employed are under employed, in that they are employed in areas that offer them less than they can accomplish. With such high rate of un-or under-employment, it stands to reason that that pension participation rate will be low.
Another reason that may be contributing to the apathy towards pension participation among the Millennials is what I may call the “burden of life”. The Millennials are burdened with such things as the need to build a house in the village and/or in the city. While that is a noble idea, the Nigerian culture seems to subject people to building huge houses because according to one of my cousins who is building such mansions, “that is what the society demands.” Since you are not erecting the building for society, you should build it in such a way as to have a beautiful place to call home without sacrificing your retirement savings. Another impediment in the wheel of retirement savings participation among the millennials is the need to get married and start a family.
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This is so much so among the men. With bride prices and other incidentals that go with it, who knows how long it takes to save for marriage expenses. Then comes the thought for cars, and other luxuries that eat into the ability to save for retirement. Nigerians are fond of owning multiple cars or fleet, as soon as the opportunity presents itself. How many cars will you drive at the same time? For those clamoring for large mansions, how many rooms will you sleep in, in one night? If all you need is one car, why buy two or many? Why not just buy the one car you need and save the rest of the money for those years when your ability to generate income is almost zero?
Poor wage rate also accounts for the unwillingness, on the part of young workers, to save for retirement because there is that thinking that since the wage is low or poor, any savings towards retirement will reduce the available resources required to take care of immediate financial needs.
Time is money
As noted in one of my earlier articles, a whole lot is lost by not starting to save early. So Nigerian Millennials, do yourselves a favour, open a retirement savings account today and start saving for the eventuality of old age and retirement.
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Financial Literacy
How to grow rich with the power of profitable relationships (Part 2)
The idea that you can build rich relationships with zero value is best left at Disney land.
Hello friends, to catch up on this topic, you can read up on the first part by clicking here. Now let’s continue…
The two rewards for solving high-income problems
There are two rewards you can get for being a high-income problem solver. The first is the value reward and the second is the cash reward.
The value reward is earned when you enter into relationships solely to extract value. This means that someone has what you need to succeed and you have what they need to succeed. And both of you are willing to enter into a value for value exchange relationship.
For example, if you need a job and you meet someone that can help you get a job. And if this person needs contacts or a certain service that you can provide. Both of you can enter into a value for value exchange relationship and solve your problems. The important thing for this kind of relationship to work is that both of you must come to the table with value. And the value must be comparable and worthy of the exchange.
The idea that you can build rich relationships with zero value is best left at Disney land. Frankly, it never truly works this way. In the corridors of wealth and power, it is value for value. This is why the rich keep getting richer. They are always exchanging value that creates more wealth. If you want to be rich or build profitable relationships you must approach relationship building this way. You must bring value to get value. And you must constantly strive to increase your personal value every day. The value for value exchange is common in the relationship among peers, friends, and business partners. It is also common in the relationship between the older and younger generation.
Right now, there are certain relationships that you need in your life. But those relationships will not just fall on your laps for nothing. You need to have what these relationships need to attract them to you. And you must become a person of value to attract them. Success in the value for value exchange relationship thus begins with first becoming a person of value.
Sometimes a financial reward is what you get in return for solving high-income problems. This is common where there is a customer involved. And where a problem can be solved using products or services. When you engage in a customer-type relationship you must offer products and services, that can solve customers’ problems in exchange for cash. And there are two ways to achieve this.
The first way is to sell your own products and services to customers. This is a slow and laborious way especially if you are a working professional. The second way is to find products and services that are already selling. And are owned by companies or organizations that you care about. And then sell them in exchange for income. This is the faster way. All you need to do here is connect people who need a solution to the companies that can offer those solutions. This is what I call Relationship Brokering and it simply means connecting two people who need each other and getting paid for your connection. To succeed as a relationship broker, you must become a value connector and this brings us to the second point.
2. Become a value connector
Becoming a value connector means connecting people with a similar problem that you have solved or are solving with the organizations that have helped you solve the problem or are helping you solve the problem in exchange for cash. It is connecting people that need help with those that can help them. And it means that you must first solve a personal problem for yourself, then partner with the company that helped you. And then find people with similar problems who are ready to solve them.
Successful value connectors thus build three kinds of relationships. They build-relationship with business owners. They build relationships with customers and they build relationships with other value connectors. The key to succeeding as a value connector or broker is to focus on solving high-income problems for yourself. And to choose companies that you have used, tested, and trusted.
You must also ensure that the company you choose has a good reward system that can help you earn a high income or at least is willing to negotiate one with you. If you do this successfully you will not only transform your life, you will transform the lives of other people and enlarge your income in the process.
The beautiful thing about being a value connector or broker is that you don’t work alone. You work in partnership with reputable organizations and people that can increase your value and credibility. All you need to do is be the one that connects people who need help with the companies that can help them.
Perhaps you are thinking to yourself where do I find these companies, how do I know which problems are high income-producing problems, how do I negotiate a reward for myself and how do I do all of these with my busy work schedule etc. The solution is to join a problem-solving platform.
3. Join a problem-solving platform.
A problem-solving platform is a platform that exposes you to a diverse range of problem-solving opportunities that produce high income, help you build rich relationships, and develop high-income skills. This means that you don’t need to set anything up all by yourself. All you need to do is join a platform that has already set it up for you. So if you want a one-stop-shop for solving high-income problems, entering into value for value exchange relationships, or developing high-income skills our platform is the answer.
Our Relationship Brokering platform is focused on helping people solve financial, investing, retirement, wealth, business, and relationship or networking problems. So, if you want to solve any of these problems for yourself. And want to help other people solve this kind of problem in exchange for cash. You can join our platform. However, you must qualify to be considered. To learn more, send an email to [email protected].
About the author
Grace Agada is the most sought-after Financial Planning expert in the country and is quoted frequently in leading Newspapers, magazines, and blogs. Grace is a Renowned Keynote Speaker, Author, and Column Contributor in Punch Newspaper, This Day Newspaper, Vanguard newspaper, Business Day Newspaper, Leadership Newspaper, The Tribune Newspaper, and Online Platforms like Nairametrics, Proshare, and Bellanaija. Grace is the Founder of “The University of Wealth” The author of “The Financial Freedom MBA Program”, “The Better Life in Retirement Planning Blueprint” and “The Wealthy Business Blueprint”. Grace is on a mission to shrink the middle class and populate the upper class. She has been featured on BBC Africa. Business Day TV. Inspiration FM. and inside Naijatv. And she consults for Numerous Top Organizations, Company Directors, CEOs, Senior Executives, and High-Income Professionals.
Financial Literacy
How to pre-qualify for your banks’ Retail/SME loans
The cash flow of borrowers taken in context with the nature of their businesses is crucial in determining their loan eligibility status.
The CBN’s directive of July 3rd 2019 compelling Nigerian Banks to maintain a Loan to Deposit Ratio (LDR) of 60%, wherein SMEs, retail, mortgage and consumer lending would be assigned a 150% weight in the computation of this LDR, has definitely been a game-changer in the industry as more commercial Banks focus on retail and SMEs to meet their lending quota in order to avoid stiff CBN sanctions that accompany noncompliance.
Indeed, the mass market has become the battleground for Nigeria’s financial institutions with institutional giants previously considered huge corporate giants jostling with Fintechs and MFBs for retail and SME customers, each outdoing themselves with mouthwatering rates and relatively easy to fulfil covenants for loans that are “a click away.” Naturally, this should be good news for the market as getting a loan has reportedly never been easier, but it is not. Most retail customers simply do not qualify for the type of loans they need.
READ: Nigerians will soon use their gold as collateral for loans – Minister
No matter the pressure from CBN, banks are still profit-making institutions that are duty-bound to protect the interest of their stakeholders, hence their need to comply with best credit practices even when disbursing the smallest of amounts as loans. Their loans are thus, only given to those who meet their requirements, whose records show favourable odds.
Here are a few ways of increasing your odds at being pre-approved for your Bank’s retail/SME loan:
READ: Interest rates of some loan apps in Nigeria
Consolidate your banking activities
If you are reading this, then I can safely guess you have an account in a Nigerian bank. If yes, then you probably have accounts with more than one bank; and you probably wear your resources thin trying to service these accounts because “they serve different purposes.” While this may be good for financial planning, it definitely works to your detriment in showing your true cash flow from your turnover.
Most retail loan applications require just one bank statement, and in the case where you may be allowed to present statements of more than one bank account for your loan application, a reviewer may suspect duplicity of transactions. Save yourself the hassles and consolidate your banking activities to one account for the purpose of your loan request; to show your capacity.
READ: 4 Nigerian banks that offer easy-to-get car loans
Ascertain your credit status
Do you have any outstanding debts owed to any financial institution? Perhaps you guaranteed a loan with your bank details or one of your abandoned accounts has a negative balance? Clear it before putting in your loan request.
Credit is mostly about character. Any financial institution willing to lend you money will make sure that you are in the habit of settling your debts, hence their need for a credit check. There are no forgotten loans in the system; whilst they may have been written off, they are not forgotten. Know your credit status today.
Build turnover and average balance
Turnover is the total amount that passes through an account within a period while the daily overnight balance on the account summed up and divided by the number of days under review is the average (daily) balance.
There is much emphasis on turnover amongst customers who seek loans; however, any credit officer worth his pay usually uses turnover in tandem with your average balance to make decisions on a loan request because the turnover addresses capacity while the average daily balance addresses available capital. Turnover may be easy to manipulate but your average daily balance is not. Build both.
READ: FG grants N22.3 billion tax credit to Dangote Cement
“Show your workings”
As simple as it sounds, this could be the most common reason why some account statements are rejected as fraudulent and the loan requests of their owners denied – because they do not show any underlying transaction or pattern. They are haphazard at best.
It has become commonplace for SME owners to use their company’s account for personal expenses; withdrawing cash with their ATM cards and hardly describing their transactions in details such that a reviewer is unable to decipher who their suppliers or customers are from their bank statement. Not even salary payments appear to be recurring on these statements, as most transactions are in cash.
Account statements like this show early signs of impropriety that will have any credit officer doubting the management competence of the loan applicant.
Bottomline
All of these points, well-observed, may get you pre-approved but no loan is disbursed without a verifiable source of repayment. Collateral will definitely help to assure the lender but the cash flow of the borrower taken in context with the nature of the business is key.
While personal loans may be approved based on account analysis, valid Know Your Customer (KYC) documentation and credit checks (depending on the amount); contracting financial experts for proper bookkeeping and development of business plans could go a long way in getting your SME loan request approved.
