12 truths about recession

Recession seems to be the word on everyone’s lips these days and rightly so. Everywhere you go you hear people whine and complain about the dwindling value of our local currency, double digit inflation, rising unemployment and negative GDP growth which all point to recession season. Even the market womanblames the dollar’s rise for the rising prices of her offerings.

Now recessions are hardly new but quite novel for many Nigerians. Recession is a state or condition caused by a series of factors, which we must understand in order to do our part and prevent a recurrence. This forms my motivation for penciling down these twelve truths about recession:

Nigeria has experienced recessions before

According to the World Bank this recession ranks as the worst Nigeria has experienced in the last 30 years since the Babangida regime, with the economy recordinga full year decline of 10.8 percent of GDP in 1987. After that there were recessions in 1991 and 1995 with GDP decline of less than 1 percent. I think it’s safe to say that recessions come and go and will continue to do so.

Many other oil producing countries are experiencing it at the moment

The following oil rich countries are also in a recession, according to Bloomberg and the IMF–Canada, Ecuador, Venezuela, Algeria, Brazil, Iraq, Russia, Libya, Azerbaijan and Kazakhstan. Recessions are not peculiar to Nigeria at all.

Othereconomies are also experiencing quarters of negative GDP growth

Greece, Russia, Finland, Switzerland, Taiwan, Argentina and Ukraine are some other countries that are currently experiencing recession season in their economies within the past year. It’s clearly an economic reality that can be experienced in any country in the world. After all during the Global Economic Crisis the United States of America was in a recession between 2007 and 2009.

Recession forces governments to look for opportunities to grow and diversify the economy

The current recession has caused the government to begin to search out opportunities to expand and diversify our economy. This would not have happened if we were not in this current situation. For example Nigeria currently cultivates a mere forty percent of its arable land! That’s a huge untapped opportunity which has taken us being in this situation to try to harness it.

Some people have actually made more money during a recession

While researching for this article I came across three Americans who made money during the last economic recession. Grant Cardone invested heavily in a declining property market at a fraction of their value knowing the market would rebound. Warren Buffett invested Billions of Dollars on several American stocks and made over Ten Billion in profits, while Jamie Dimon of JP Morgan acquired other failing financial firms at a fraction of their value and turned the investment banks fortunes around. Who says the same can’t happen in Nigeria?

This is a good time to purchase assets

There is no better time to purchase real estate, stocks and many other assets because with the shrinking economy people need  liquidity and are ready to offload quality assets at a fraction of their worth. Those with the resources are sure of substantial discounts and price reductions as owners are desperate.

Cash becomes one of the top selling products in the economy

People require cash in order to thrive and survive in a recession. Being liquid becomes the order of the day. Loans and associated offerings become key to many in order to be able to finance lifestyles and meet obligations. More people will require funding thus making it attractive for lenders in the financial system to increase their revenue and profitability.

Think Entrepreneurially

With the dwindling and downsizing of many jobs in a shrinking economy it is important that we all think like businesspeople when it comes to surviving in times like this. We must all be driven to explore ways where we can create value for as many people as possible in order to thrive. The concept of creating value, looking for opportunities, potential and growth drivers are entrepreneurial in nature.

Shift from Specialist to Generalist

Those who remain fortunate to retain their paid employment will be forced to increase and expand their repertoire of skills and qualifications in order to remain relevant. It will become common to see employees handling several roles for less pay and thus evolving from being highly specialized to taking up other functions just to keep body and soul together.

Seek out recession-proof business ideas

No matter the economic condition there are several industries that won’t be affected, the onus is on you and I to find them out and plug in. For instance comedy and entertainment, agriculture, food and drink, and even ladies fashion continues to thrive at this time of harsh economic uncertainty.

Lifestyle changes – conserving scarce resources becomes the order of the day

Some things have got to go in this period with there being major financial pressure. It is important to look at what you can do without and downsize accordingly especially now that the value of goods and services have risen. Only the essentials would suffice for now until things improve.

Complaining does not cut it

Complaining about the current state of the economy is not going to make things better, rather it will make them much worse. This is not the time for complaining especially if you want to thrive. Complainers rarely see opportunities as negative commentary causes a mental block and blinds you from seeing the good in the situation.

I was very happy to learn that every country in the world has been through some form of recession in the past and many are still going to do so in the future. Recession is a stage and as surely as there are times of economic downturn there are also going to be times of economic boom on the horizon soon.

So hold onto these truths and keep striving towards surviving and thriving and preparing yourself for the better roads ahead whether in or out of recession.

Kenneth Doghudje