Economics and profits

Yesterday I was explaining to my oldest daughter a few economics principles. I had one of those moments where you consciously stop yourself and say, "Remember this point, and ensure to apply it!" Maybe it is just me that experiences these moments?

We were discussing how the lowering oil prices are great for the general consumer. Lowering prices means that we are able to save more money on our daily activities, leaving more funds available to be spent on things more important to us than fuel that we burn up. However, life and economics is a balancing act that is always moving, needing a constant eye on it and the response to various policies to keep the balance.

The problem with lowering oil prices is that companies that invest into that industry and sector are holding back their investments due to the lower returns based on the present oil price and perceived lower pricing for the near future, can't blame them on this. This has meant the laying off of hundreds of thousands of oil industry employees and contractors. As we personally benefit from the lower oil prices, impacting many parts of our lives with lower transportation costs, which impacts every industry, there are many peoples personal stories that have been far more adversely effected by the lower oil prices.

I am not advocating for $100/ barrel oil pricing just to keep people in jobs. I am advocating that for every action there is an opposite reaction. Every time you save money on an item you purchased at a store, you are in reality taking that money out of that persons or companies bottom line. Don't feel too guilty, they agreed to it and most likely they had overpriced the product, hence why no one had purchased the product until the new price.

I do though advocate for longer term views on investment and deployment of growth. I advocate that with the long term in mind, perhaps being low on cash flow initially but having a cash cow in the long term, businesses and investors should look further out than 6 months. Not all investments are sound and should have the business or investor walk away, however did they contemplate the longer term and bigger picture?

Curruption and Africa

It has been very pleasing to see some of the latest developments out of the new heads of states and presidents of African countries. Seeing presidents cracking down on over spending and lavish lifestyles in exchange for allocation of funds to human rights, is very moving!

John Magufuli, the newly elected president of Tanzania. Has recently been followed up by the president of Malawi, Mr. Peter Muthurika. Both of these presidents have decided to lower the governments expenses and utilize the tax funding for services to the people. To the normal rational person, this sounds like a logical thing to do, however these two presidents have really stepped out from the fray.

The peer pressure from African leaders in the past has been to take the opportunity and redeem what is deserved, deserved in their opinion. As South Africa emerged from Apartheid, Nelson Mandela lead with a conviction from prison, to have a country free of oppression. However as time has rolled on, South Africa has now been nominated as the most corrupt country in Africa!

It is so refreshing to see how the now Nigerian president, Mohammadu Bahari, has created a new standard and peer pressure in Africa. The standard that says that you as a president were elected by the people for the people! Elected to operate and represent the country and people not only to the world, but to the people of their own country.

Being a president or in a position of power, influence, is a position of privilege, the privilege of serving others and helping them to achieve more every new day! As business leaders,, what are you doing today to leave those around you in a better position for tomorrow, in a better position to be more efficient or productive for your business?