I do not intend to alarm you, but the world is heading toward a recession in 2023.
And to make matters worse, Nigeria’s already battered and mismanaged economy is facing a worse crisis from different fronts, like flooding (which is devastating farmlands and displacing households), terrorism, banditry, etc.
So predicting a harsh recession for Nigeria in the coming year, does not require a degree in economics.
I will share with you 7 ways to survive the coming recession in 2023 and even thrive and benefit from it to make more money.
This is a matter of urgency, so despite my schedule, I will make sure I share these powerful strategies with you. If you have been following me earlier this year, when I first warned about the risk of a currency devaluation, then you may have already protected most of your assets. But if not, then read this article to the end.
Step 1: Find another Job or Learn a Skill
The worst thing you can do in a recession is to remain stagnant.
Let’s assume you are a civil servant with a fixed monthly income. That means that you are still receiving the same salary for the past 12 to 24 months.
With inflation at an official rate of 20%, your cost of food, transportation, and household expenses has increased. If you don’t find a way to augment your income, soon you will fall below the poverty line, and you won’t be able to protect yourself and your family from hunger and deprivation.
Anyone that visits the market will know that the cost of basic commodities like Garri, rice, etc. has nearly doubled. As a result, a 20% inflation rate is a mirage.
Just 2 days ago, the dollar-to-naira rate was N754. Today (October 28th Oct 2022), the naira has depreciated further from N774 to $1. At this rate, your salary will soon be worth nothing.
So your first step in surviving the recession is to find another job (in addition to the one you have) or learn a skill that will provide additional income.
When I offer this advice, many people tell me that they don’t have the time or the money to look for alternatives. My answer is always the same, “Where there is a will, there is a way.”
If you are serious about improving your finances, you will find the will and the way.
There are lots of side hustles that anyone can engage in, despite their schedule.
After this 7-day episode, I will take some time to explore some of those side hustles with you, so make sure to stay tuned.
In the meantime, start thinking of another job you can take, or a skill you can learn, that will bring you extra income within the next 3 to 6 months.
Step 2: Start a Recession-proof Business
We talked about finding another job or learning a skill. So, let’s say you prefer to learn a new skill or start a side business.
What kind of business should you start?
In a recession, it is important to look out for recession-proof businesses. These are businesses that do well in any economy because they satisfy the basic needs of people.
According to Maslow’s hierarchy, the basic needs of human beings are the physiological needs, which are: Air, Water, Food, Clothing, Sleep, Clothing, and Reproduction.
The next basic needs are safety needs, which include: personal security, employment, resources, health, and property.
Consider starting a side hustle in one of these industries because, no matter how bad the economy is, people cannot survive without these basic needs being met.
A recession is not a time to focus on luxury or premium services, because people can survive without massaging their egos. But think about food for instance, people must eat, no matter the state of the economy.
So, generally speaking, businesses along the food value chain – from production to processing and consumption – will continue to thrive.
What about safety needs like employment, resources, and health? All these are things we can’t do without. Big businesses would like to cut down on their overhead expenses. If you can provide a service to them, as a virtual assistant, at a fraction of what it will cost them to hire a full-time staff member, then you’re in business.
Take a look at what is happening in the United States today. Companies are outsourcing lots of their jobs to virtual workers from India, the Philippines, and even Nigeria, for the simple reason that a virtual worker can charge 10 times less than a regular worker, and still provide the same result.
So, start looking at businesses that will boom in a recession. Think of essential services that people need for survival, and then think of a way of making them cheaper and more accessible.
Remember, when people have less disposable income, they automatically start looking for a bargain price, not a premium price.
In my current capacity as adviser to the government of Anambra state on agriculture, mechanization, and export, and also a technical working committee member for youth development and entrepreneurship, I have the privilege of working with several national and international agencies on agriculture, youth development, mechanization, export, and entrepreneurship, like IFAD Value Chain Development Program, FADAMA, World Bank, ATASP-1, SMEDAN, NASME, etc.
In the near future, I hope to share the wealth of knowledge I gathered from these agencies with you, especially how youths like you, can benefit from them. So stay tuned.
Step 3: Protect What You Have
Hello, Millionaires. Today, we are going to look at a very important step in safeguarding yourself from the effects of a recession.
This step is particularly essential to those of us living in less developed economies, but it applies just as well to those living in most developed economies.
Most recessions are accompanied by inflation, meaning that prices of every commodity begin to skyrocket, not because the value or quantity of the commodity is increasing, but because the currency is losing value.
For instance, the Nigerian Naira has been losing around 1% of its value every day for the past week!
On Monday, October 24th, $1 was N754. By Friday, the naira had fallen to N774 to the dollar. As I write this post today (30th Oct), the Naira has plummeted further to N787 to the dollar.
From the chart I shared with you a few days ago, we already know where this is going.
You may think that this has nothing to do with you, but that would be a great mistake.
Nigeria is a consumer nation, and we import nearly everything we use. This means that as the Naira falls, the cost of everything will increase rapidly.
So how do you protect your savings so they don’t get eroded? Simple. If you cannot buy assets, save in a stable currency.
Do you know that governments all over the world try to protect themselves by storing most of their national wealth in diverse currencies? This includes Nigeria, China, Russia, the UAE, Saudi Arabia, etc. They all have currency reserves in dollars, euros, and yen. Even the USA stores most of its national reserve in gold.
And yet, every government wants to limit you to using the national currency.
Don’t be so stupid as to store all your wealth in one currency!
Let’s assume you took my advice two years ago and saved N1 million in dollars. Two years ago, the naira was around N450, so your N1 million would have bought you $2,222.2
If you do not touch the money, today it will be worth $2,222.2 X N787 = N1,748,871.
So you just made an extra N748,871 in two years doing nothing! And this is not all. There are many dollar-saving plans that offer anywhere from 5% to 8% annual compound interest.
But even if you are not technically savvy, you can simply buy physical dollars and hold them.
For business people that travel out, you can open a dollar account outside the country, and use it to help your family and friends in diaspora to repatriate funds while you pay them in Naira. This is even a business on its own, but that is a topic for another day.
By the way, the Ghana cedi lost 45% of its value to the US dollar this year (2022). In fact, it is the worst-performing currency this year.
Even the British pound, lost 3.5% of its value to the dollar in the past month, which led to the resignation of their six-week-old prime minister, Liz Truss.
So this is not limited to the Nigerian Naira, and you should start protecting yourself today by moving your cash to more stable currencies.
Step 4: Cut Down on Your Expenses, and Start Budgeting
By now, it is no longer news that the naira is depreciating on a daily basis.
Today, it has already fallen to N800 per dollar. What most people still don’t understand is the devastating impact this rapid inflation will have on the economy in 2023.
So as we keep driving fast toward the looming recession, you need to “travel light”.
Just like any journey, the more weight you carry, the more difficult it will be for you along the way.
Every family man or woman will need to take a careful inventory of all expenses, especially fixed expenses, and start taking radical action to reduce the financial load they will carry moving into 2023.
By fixed expenses, I mean the important financial commitments around your life and family, for example, your house rent, your children’s school fees, food and energy bills, transportation, etc.
These are expenses that you make on a consistent basis, either daily, monthly, or annually.
Start with the big ones and work your way down.
Many people today are suffering from self-inflicted injuries.
I know a young lady who was earning less than N50,000 monthly, yet she had a son in a school that was charging more than N100,000 per term. I caught her crying in the office one day, and upon interrogation, found out that she was struggling to borrow money for her son’s school fees. As a result, she got involved in the misappropriation of office funds, which nearly cost her her job.
While I understand the importance of education, I think putting your child in a school that you can barely afford is nothing short of stupidity.
I agree that schools matter, but if you don’t have the time to train your kids, don’t expect any private school to do that for you.
I am a proud product of a community primary school and a missionary secondary school (DMGS).
My parents were civil servants, and they did not have to struggle to pay my school fees. I am completely happy with who I am today.
If you can afford millions of naira easily, then, by all means, put your kids in any school of your choosing. In fact, you can even send them abroad if you like.
But if you cannot afford expensive schools, please look for a decent government or missionary school for your kids. Pay close attention to what they learn and the friends they make.
Another major fixed expense is your house rent.
Do not work for your landlord for half of the year! This is exactly what most people do.
Say you earn N50,000 monthly, but you live in a flat that costs you N300,000 per annum.
This means that all the money you make from January to June is for your landlord!
Essentially, you are working for your landlord.
As a rule of thumb, your house rent should not exceed your 2 to 3 months’ salary.
So if you’re earning N50,000, your house rent shouldn’t exceed N150,000.
You may have to look for a one-bedroom apartment instead of a three-bedroom flat, or you may opt to share a flat with a friend. Whatever you do, if you don’t cut down drastically on your house rent, you may never become financially free.
These are just two major fixed expenses that most people face. There are several others, like transport, etc., some of which are unique to your circumstances.
Take some time to identify all these fixed expenses and find a way to completely eliminate some of them, or at least drastically reduce them.
This will free up a lot of cash and help you survive a recession.
One technique that you should start applying, is the habit of making a family budget.
Work together with your spouse, and come up with a fixed budget, that will allow both of you to manage your finances responsibly and still save for rainy days.
Isn’t it ironic, that every country in the world, and every professional company, makes a yearly and monthly budget, yet individuals with less money to manage, fail to make budgets and instead buy things on impulse?
Budgeting is a major principle of fiscal responsibility, and any financially literate entity must understand when, where, and on what to spend their money.
Don’t wait until an emergency before you start putting your finances in order.
How To Thrive In a Recession
For the next 3 series in this episode, we will now focus on how to thrive in a recession, not just how to survive.
Step 5: Grow Your Own Food
So we begin to get into areas that some of you may not agree with me, but I still have to put the idea forward and let you make your own decisions.
Since we started this 7-day episode, the naira has been crashing before our very eyes. On the first day, I shared a chart with you, showing you where I believe the trend is heading to.
Today, we are at N829 to the dollar
I am not surprised because we have not hit the first resistance as shown in our charts, which is at N999.9
Assuming nothing is done to halt this unprecedented inflation rate, then you don’t need a crystal ball to foresee the magnitude of hunger and extreme poverty facing the nation in the coming months.
I know we are already facing hardship as a nation, but that is nothing compared to what we are heading to.
Now, if you have a family to take care of, I think one of the most important things you’ll have to worry about is food.
On a daily basis, feeding takes the bulk of our expenditure, and the more mouths you have to feed, the more you have to spend. So, have you considered making some of your own food?
I know this is much harder in today’s city lifestyle. However, it can still be done.
In my state today, we are trying to bring back what we call “ugbo azu uno,” or backyard farming.
You see, when we were small, most of us grew up with a small garden in the back of our house.
This garden provides us with most of the fresh vegetables and fruit that we need. In fact, in my own case, my parents kept poultry that provided us with crates of eggs every day. They also farmed on a nearby parcel of land.
I remember that during harvest time, one of the rooms in our house would be filled with yams. We had excess maize (for pap) and cassava that lasts us for the entire year.
Up till today, whenever I visit my parents, I always get abundant foodstuffs, fruits, and vegetables.
So, depending on your circumstances, I will like you to consider farming on any scale. You can do backyard farming or small-scale farming.
As I mentioned in a previous post, food is one thing that people must buy, no matter how terrible the economy is.
During hyperinflation in Zimbabwe, people fight to buy bread with a full wheelbarrow of money!
Trust me, despite all our technological advancements, farming remains one of the primary generators of wealth.
Step 6: Accumulate High-quality Stocks on the current 50% discount
One major key to wealth is understanding market cycles.
Every market moves in cycles of ups and downs. When the market is up, we say that we are in a bull market. When the market goes down, we say we are in a bear market.
In reality, markets move in four phases. Mastering how each phase works and how to benefit can be the difference between massive wealth and poverty.
Let me quickly summarize these four market phases.
• Accumulation Phase:
In the accumulation phase, the market has bottomed (i.e, It has dropped to its lowest point), this is when there is great fear on the index and people think everything is going to completely crash. However, early adopters and contrarians see an opportunity at this point and begin to scoop up discounts.
• Mark-up Phase:
In the markup phase, the market seems to have leveled out, and the early majority are jumping back in, while the smart money is cashing out.
• Distribution Phase:
In the distribution phase, sentiment turns mixed to slightly bearish, prices are choppy, sellers prevail, and the end of the rally is near.
• Markdown Phase:
In the markdown or decline phase, laggards try to sell and salvage what they can, while early adopters look for signs of a bottom so they can get back in
Most of the billionaires in the world became so by understanding and taking advantage of these market phases.
Good examples are Warren Buffet and Ray Dalio. For a complete understanding of these phases, please find and study the book titled “Principles by Ray Dalio”
Ray Dalio is the founder of Blackrock, the world’s largest asset manager, with $10 trillion USD in assets under management, as of January 2022.
10 trillion dollars, that’s not a typo!
So billionaires like Ray Dalio build their incredible wealth by understanding market cycles.
A market cycle can last from a few months to a few years, but typically, a strong cycle can last from 2 to 8 years.
In 2020, the market entered a massive bull run that lasted till the late part of 2021.
Stocks like TESLA and NIO, jumped by more than 500%.
Currently, we are in a bear market, which is sure to continue into 2023.
This is the accumulation phase, and those that get into the market between now and 2023, will be the millionaires and billionaires of the next bull run.
The stock market is a pretty big space, and I plan to do a detailed workshop or maybe a full course on it soon.
In the meantime, find the principles by Ray Dalio, and study it, for a good grasp of market cycles.
Step 7: Export and Earn in Dollars
When the currency of a nation is weakening, like what is happening in Nigeria today, two things happen.
1. Importers suffer
2. Exporters prosper.
The majority of Nigerians are suffering today and will suffer more in the near future because Nigeria is a consumer nation, and therefore imports a lot of what it consumes.
Since the naira is falling rapidly, the cost of imported goods will also rapidly increase in price.
But for the few exporters, this is actually a huge blessing!
Just last week, if they earned $1,000 from exports, it would be worth N750,000. But this week, the same $1000 will be worth N850,000, an extra gain of N100,000 for the same income.
So it is a no-brainer that those who export tangible and intangible goods are smiling to the bank today.
Now, I know you may be disappointed because you probably think that exportation is not for you, but don’t count yourself out just yet.
With a little bit of thinking, you will begin to realize that there are quite a lot of things that most people can start exporting from Nigeria.
This cuts across tangible and intangible goods.
Examples of tangible goods include but are not limited to basic food items (e.g., local foods for Nigerians in diaspora) , cash crops (e.g. ginger, cocoa, etc), commodities, and so on.
Intangible goods include services, entertainment, content, skills, and talents.
When you begin to think along these lines, you will see that almost anyone has something to offer another person across the globe.
Like most of the topics we raised during this 7-episode series on “surviving and thriving in a recession,” I will make time to expand on each of them for better understanding and guidance in the coming days.
So make sure to pin this group on top of your Telegram feed, and invite your friends and family using our handle https://t.me/MillionairesAcademy.
A recession is usually a hard time for the majority of people, but with good preparation and great strategy, it will turn out to be a time of immense prosperity for you!