The Socio-Political Impact of SMEs in Lagos State

A PhD. Thesis on


November, 2018






Governments around the globe encourage entrepreneurial development as the major route to economic growth. In Nigeria, the words “beyond oil” have been used by political leaders, policymakers and scholars to emphasize the need for a diversified and more competitive economy. On this premise, the impact of Small and Medium-scale Enterprises (SMEs) on Nigeria’s socio-political structures is evident in milestones achieved by the Lagos State government through huge investments on infrastructure, industrialization and human capital development. A sample population of 150 respondents was selected from traders, artisans, factory workers and SME operators in the nation’s business hub. Using descriptive statistics, normality test of hypotheses and multiple regression models, this study examines the current situation and performance of SMEs in Lagos, Nigeria. Research method is quantitative in nature and collated data (primary and secondary) is evaluated using a mix of percentages, pie charts, tables and mean scores.  Findings show that Nigerian SMEs face managerial incompetency, inadequate infrastructure and poor financing as the major challenges. Other results highlight the relationship between SME development and entrepreneurs’ age, marital status, gender, education, access to finance, political participation and standard of living. The study, however, concludes that revitalizing the SME sector through an integrated approach will boost Nigeria’s economic recovery and diversification strategies.



Nigeria is among the major Oil Producing and Export Countries (OPEC). It’s a shame, however, that Africa’s most populous country is still one of the world’s poorest countries with less-productive activities in the SME sector even though SMEs, where maximally utilized, have been recognized as a reliable tool for economic development because they infuse innovation, dynamism, productivity, sustainability and relevance in world economies (Olufowobi., 2018). Governmental support for entrepreneurs in small and medium-scale businesses generates employment, creates equitable wealth, strengthens industrial linkages through production of primary goods, inspires loyalty to the government, increases citizens’ participation in governance, and broadens people’s understanding of global business trends. In Nigeria, SMEs offer nearly 70% of industrial employment and, according to Enelamah (2018), provides employment to about 80% of Nigeria’s total workforce.

Shailesh et al (2013) described entrepreneurship as a “dynamic process” through which businesspersons create, sustain and continuously improve earnings. Considering the agriculture-friendly, capital-saving and labour-intensive nature of SMEs, the Federal Government of Nigeria (FG) considers SMEs as a key to economic growth despite the sector’s unimpressive overall performance in recent years (Acha., 2009). To improve lives in line with President Muhammadu Buhari’s Vision2020 agenda, the Lagos State government has encouraged advocacy on the importance of SMEs and shown commitment by formulating policies projected for quality delivery in the industrial and manufacturing sub-sectors. These strategic measures have attracted foreign investors and enhanced capacity utilization needed for industrialization (Cook & Nixson., 2000).

This study therefore delves into the socio-political performance and potentials of SMEs in Lagos State, with focus on proffering effective solutions to the identified problems.


Established in 2003, the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) aimed at restructuring the Micro, Small and Medium Enterprises (MSMEs) sector for sustainable growth. Purposes for its formation include the attainment of national economic development objectives (Ayyagari et al., 2003) in line with previous economic transformation policies such as the Structural Adjustment Programme (SAP) of 1985. Nigeria has since jiggled between capital-intensive projects that support large-scale industrialization and others such as SMEs, which are labour-intensive but more responsive in identifying and harnessing domestic linkages for quick, sustainable growth, self-reliant growth, and progression of non-oil exports (Lalkaka., 1997).

Figure 1: Economic Development Policies in Nigeria


Source: SMEDAN (2010)

In its monetary policy statement released in 1998, the Central Bank of Nigeria (CBN) described SMEs in general commerce as businesses with less than 300 employees, including total assets below ₦500,000 and/or annual revenue not above ₦100 million (Oyelaran-Oyeyinka., 2006). Business activities in the sector include: poultry farming, trading, food production and supplies, laundry services, food beverage production, fashion designing, restaurant services, creche/kindergarten education, including professional services such as law, accountancy etc (Fabayo., 1989). Developmental efforts from the World Bank and three tiers of government (Federal, State and Local governments), National Economic Reconstruction Fund (NERFUND), Nigeria Export & Import Bank (NEXIM), Peoples Bank of Nigeria (PBN), Bank of Industry (BOI) and community/microfinance banks, through budgetary allocations to SME Loan Schemes, have provided financial assistance to business owners who previously depended on private funds or cash received from informal sources (Arriyo., 1999).

However, the failure of these formal credit schemes in addressing problems of SMEs in Nigeria indicates managerial incompetence, weak capital base and entrepreneurs’ low credit rating which makes the argument on poor performance a vicious circle (Ayyagari et al., 2003). Transforming the SME sector demands change and innovation strategies which aid policymakers in identifying internal and external factors in the economic, cultural and socio-political structures that either stimulate or impede growth. Secondly, entrepreneurs need governmental support on personal development, financial empowerment and the provision of a conducive business environment.

This study therefore aims at identifying the underlying factors hampering growth of SMEs in Nigeria and how strategic business ideas can relaunch the sector as a catalyst for economic growth.


Dearth of accurate, verifiable information on the number of SMEs and employees working in the sector is responsible for an alleged distortion of facts on job creation, production of raw materials, export earnings, development indicators, and inherent potentials of SMEs. According to a 2010 survey conducted by the National Bureau of Statistics (NBS) and SMEDAN, there are about 32.5 million employees in nearly 17.3 million SMEs and significant improvements have been documented in the federal government’s efforts to stabilize the economy through effective macroeconomic policies, reduction of importation barriers, streamlining the taxation system and institutionalizing transparency in the nation’s customs system (Enelamah., 2018).

Nonetheless, lack of reliable data management systems are not the only challenges to SME growth in Nigeria. Oyelaran-Oyeyinka (2006) notes that SMEs in countries like Korea, Vietnam, India and Singapore, which are comparatively at the same level of development with Nigeria, have made better progress since the 1960s. This study therefore identified these as the major problems:

  • Lack of commitment from FG in institutionalizing a solid SME sector.
  • Poor infrastructure base.
  • Poor credit environment.
  • Inadequate technical/financial support.
  • Low-level investments from individuals, corporate bodies and foreign creditors due to Nigeria’s unstable economic and political environments.


This paper aims at evaluating the socio-political impact, problems and prospects of SMEs in Nigeria using Lagos State as a case study. The objectives are:

  1. To identify the problems militating against SMEs’ performance as a catalyst to Nigeria’s economic growth and sustainable development objectives.
  2. To thoroughly examine sources of the identified problems.
  3. To analyse the current situation of SMEs in Nigeria.
  4. To ascertain the socio-political impact and prospects of SMEs in Lagos State.
  5. To proffer solutions through change and innovative models.


Results of this analysis will be useful for the long-elusive transformation of the SME sector by:

  • Presenting the Lagos State government with a clear understanding of how SMEs can be maximized as a socio-political change agent.
  • Providing managers and policymakers with the most effective leadership and business management strategies needed to properly identify the strengths, weaknesses, opportunities and threats in the SME sector, for optimal development and functioning of human capital and material resources.
  • Providing entrepreneurs with easy access to working capital and investment funds.
  • Adding competitiveness to the sector and thereby attracting global investors.
  • Increasing local production of goods and services for exports, with less reliance on imported products.
  • Presenting an intellectual basis for further research on SMEs in Lagos State and 36 states of the federation.


SMEs have formidable potentials for exports, employment and economic growth, especially in Nigeria, where there are significant, unexploited opportunities spread across entertainment and leisure, agro-processing, fashion, biotechnology, telecom etc. Although the development of SMEs requires improved financial assistance, Benhabib and Spiegel (1994) noted that the problem is not in providing physical cash but in human capital investments. This is true, although domestic development of entrepreneurs with adequate technical know-how is costlier than what any country can spend to attract Foreign Direct Investment (FDI).

Based on these facts, the research question is: “How can innovative policies be recommended to the Lagos State government to solve SME challenges and maximize opportunities in local and global markets?”

Additionally, the sub-questions are as follows:

  1. How has Nigerian SMEs performed in recent years and what are the potentials?
  2. What are the socio-political impacts of SMEs in Lagos State?
  3. How can strategic policy change enhance the performance and potentials of entrepreneurs in Lagos State?


The research investigates SME challenges and prospects using valid, verifiable and unbiased contributions from a total of 120 SME owners carefully selected from all Local Government Areas in Lagos State. The respondents were chosen based on the fact that:

  1. They have a minimum of 5 years’ experience in the SME sector.
  2. They own or manage a registered small and medium-scale enterprise.


This study will focus on the overall performance of SMEs in Nigeria, including a comparative analysis with India, but narrowed down to Lagos State, where, through a mix of qualitative and quantitative methods, the researcher collates useful primary data from 150 survey participants who are resident in Lagos State. Other information collected from secondary sources include materials from public libraries, journals, academic books, print media and the Internet, which are expected to add relevance to the cache of knowledge required by the researcher to successfully complete this task.


H01: There is a relationship between SMEs and poverty reduction in Lagos State.

H02: There is a relationship between SMES and politics in Lagos State.

H03: There is a relationship between SMEs and the standard of living in Lagos.


Research processes are often challenged by human limitations such as ethics, moral, culture, tradition, language and socio-political barriers. Also, lack of reliable, comprehensive and easily assessible data records in Nigeria presents one of the major challenges to this study.


According to a 2017 survey conducted by the Economist Intelligence Unit (EUI), over 90% of businesses in Nigeria are categorized as SMEs which, with increased financial support and sustainable productivity, have the potentials for champion economic diversification strategies for industrialization and sectoral development. Unfortunately, an unstructured taxation system drains the nation of productive time. For example, approximately 956 hours are spent on filling tax returns in Lagos, compared to Africa’s overall average of 310. Findings from EIU also show that only 2% of adults had access to loans from MFIs. Further, 50% of Nigerians live without access to national grid electricity supplied by Enugu Electricity Distribution Company (EEDC). Although about 82% of residents access the internet through mobile phones on daily basis, mobile business transactions are slow and mostly impossible due to poor network coverages, especially in rural communities. These pitiable conditions are worsened by the incessant cases of terrorism in the North-East and militancy in the South-South (Green., 2017).

On this backdrop, SMEs in Nigeria experience low survival rate. Adeniji (2015) points out that most business outfits collapse within five years of existence whereas many others struggle to last between six and ten years. Only less than 10% of SMEs survive the highly-competitive market due to infrastructural inadequacies such as inaccessible roads and dysfunctional or inexistent water supply systems, including poor knowledge market trends, lack of differentiated products, ineffective business strategies and inexperience (Dӑnӑcicӑ., 2011).

For Nigerian SMEs to attain global competitiveness, there is need for collaborations, commitment and increased investments from the government, entrepreneurs, investors (local and foreign) and all stakeholders.

Jaguar Land Rover to lay off 5,000 workers in 2019


Jaguar Land Rover.jpg

In a bid to ward off the threat from Brexit, Britain’s biggest car maker Jaguar Land Rover is reportedly gearing to release its major turnaround plans in the new year.

According to reports, the car maker is expected to roll out its 2.5 billion pounds saving plan that could result in thousands of job cuts in the U.K.

Jaguar Land Rover, which currently employs 40,000 people in the U.K., has already laid off 1,000 temporary contract workers at its plant based in Solihull.

Following that, the company reportedly reduced working hours for some of its workers in the run-up to Christmas.

Now, reports claim that the company’s savings planis designed to help Jaguar Land Rover handle any potential Brexit threat, while also helping the company deal with dropping sales of diesel cars and overall sales decline in China.

In the three months to September, the company made a 90 million pounds loss – largely due to a decline in sales in China and Europe.

Then, in October, the carmaker announced its turnaround plan that would help the company save 2.5 billion pounds, including 1 billion pounds of cost cuts.

At the time, the company did not reveal the exact number of job cuts it was planning.

Recent reports, however, confirm that as part of the company’s plan, a large number of workers at the company’s i54 site at its Wolverhampton-based factory, where engines are manufactured, will be affected by the planned job cuts.

Jaguar Land Rover is expected to cut as many as 5,000 jobs.

Sources quoted in reports revealed that the company will release details of its cost-cutting plans in January 2019.

Commenting on reports over possible layoffs from its turnaround plan, Jaguar Land Rover released a statement saying, “Jaguar Land Rover notes media speculation about the potential impact of its ongoing charge and accelerate transformation programmes. As announced when we published our second-quarter results, these programmes aim to deliver 2.5 billion of cost, cash and profit improvements over the next two years. Jaguar Land Rover does not comment on rumors concerning any part of these plans.”

Google unveils development projects in New York City


Google Plans To Expand NYC "Campus" With $2.4 Billion Real Estate Purchase

Google Hudson Square is coming to New York City, with an attaching price tag of more than a billion dollars.

Google’s parent company, Alphabet Inc., is following in the footsteps of Amazon in choosing NYC to build a new campus comprising 1.7 million square feet. The mega campus will include leased properties at Hudson Street and Washington Street, media reports confirm.

“Today were taking the next step in our commitment to our New York City presence by investing over $1 billion in capital improvements to establish a new campus, Google Hudson Square,” Ruth Porat, Senior Vice President and Chief Financial Officer of Alphabet and Google said in a company blog on Monday.

“We came to New York City almost two decades ago, it was our first office outside of California. Its now home to more than 7,000 employees, speaking 50 languages, working on a broad range of teams including Search, Ads, Maps, YouTube, Cloud, Technical Infrastructure, Sales, Partnerships and Research.”

She continued, “New York City continues to be a great source of diverse, world-class talent, that’s what brought Google to the city in 2000 and that’s what keeps us here.

“Earlier this year, we announced the $2.4 billion purchase of the Manhattan Chelsea Market and shared plans to lease additional space at Pier 57. We hope to start moving into the two Hudson Street buildings by 2020, followed by 550 Washington Street in 2022 once the building is complete. Google Hudson Square will be the primary location for our New York-based Global Business Organization,” Ruth added.

“We believe that as our company grows, we have a responsibility to support the communities we call home. That means supporting the infrastructure and services that make our neighborhoods unique places to work, live and play,” said the Google SVP and CFO.

“Since 2011, Google has contributed more than $150 million in grants and employee-matched giving to New York nonprofit institutions. We’ve been ardent supporters of iconic neighborhood public resources such as the High Line and Hudson River Park, and partnered with the New York City Public Library System to provide free Wi-Fi hotspots to public school students and families without home internet access. We recently donated $1.5 million to support the Stonewall National Monument Preservation Project and joined forces with 19 local businesses to establish the Westside Community Fund. And to help foster New York’s burgeoning tech ecosystem, we’ve funded programs like Mother Coders NYC, provided space to organizations like Black Girls Code and hosted Cornell Tech while its permanent campus on Roosevelt Island was under construction.”

Google has promised to deepen its commitments in STEM education, workforce development and access to technology.

With its most recent investments in Google Chelsea and Google Hudson Square, the company says it will have the capacity to more than double the number of Googlers in New York over the next 10 years.

“Our investment in New York is a huge part of our commitment to grow and invest in U.S. facilities, offices and jobs. In fact, were growing faster outside the Bay Area than within it, and this year opened new offices and data centers in locations like Detroit, Boulder, Los Angeles, Tennessee and Alabama. And as we continue to grow across the country, we look forward to calling New York City home for many years to come,” Porat said.

The U.S.-China trade war: No victor, no vanquished


Trade War truce.jpg

China is reportedly confused by the Trump administration’s version of what happened in Buenos Aires.

After the key meeting between President Donald Trump and Chinese President Xi Jinping, officials from Beijing are “puzzled and irritated” by the Trump administration’s behavior, The Washington Post reported Tuesday, citing a former U.S. government official who has been in contact with the Chinese officials.

“You don’t do this with the Chinese. You don’t triumphantly proclaim all their concessions in public. It’s just madness,” the former official, who asked for anonymity to describe confidential discussions, told the Post.

The two world leaders met over dinner during the G-20 summit in Argentina last week. The White House said the nations had agreed to a 90-day truce on trade. Following the meeting, Trump told reporters it was “an incredible deal” and that it “goes down, certainly, if it happens, it goes down as one of the largest deals ever made.”

But the Post reported that the Chinese have not acknowledged a 90-day deadline for the talks and have not said that they would “immediately” increase purchases of U.S. farm goods.

There are also “significant differences” between the two governments’ versions of what was agreed upon at the dinner, according to the Post, which cited a side-by-side comparison of their post-meeting statements by Bloomberg.

In a series of tweets Tuesday, the president said he’s looking to make a “fair deal” but stressed that he is “a Tariff Man” if talks do end up crumbling.

The White House has pushed for Beijing to make changes to reduce the U.S. trade deficit with China and to address “trade abuses” such as alleged Chinese theft of American intellectual property. Washington has already slapped duties on $250 billion of Chinese goods and promised to tax an additional $267 billion in imports from China if certain practices don’t change. China, meanwhile, has imposed duties on about $110 billion of U.S. products.

Wall Street cheered the decision to pause the trade war between the U.S. and China on Monday, but economists aren’t convinced any delay would ultimately lead to a concrete solution.

Trade war with America or any other country is ‘unwinnable’


China’s Vice Premier Liu He told an economic conference in Hamburg on Tuesday that protectionist and unilateral approaches to trade will only deepen economic uncertainty, and that no country can emerge as a winner in a trade war.

Liu He

Image: Liu He

“We believe that protectionist and unilateral approaches do not offer solutions to problems on trade. On the contrary, they will only bring about more economic uncertainty to the world,” Liu said.

“The history of economic development has proven time and again that raising tariffs will only lead to economic recession and no one ever emerged as a winner from a trade war. Our approach therefore is to seek a negotiated solution to the problems we have on the basis of equality and mutual respect,” he added.

Liu is on a three-day visit to Germany. He also attended the 8th Hamburg Summit, a leading economic conference on China-Europe affairs, and delivered a keynote address at the summit.

Officials, scholars and entrepreneurs from China and Germany are meeting to discuss economic cooperation against the backdrop of rising protectionism.

The China-proposed Belt and Road Initiative (BRI) also takes center stage at the two-day gathering which is themed, “Hamburg Summit: China meets Europe”.

In an opening speech on Monday, former German Chancellor Gerhard Schroeder said the opportunities created by the BRI will bring people and businesses in Asia and Europe closer together.

This summit was initiated by the Hamburg Chamber of Commerce in 2004, aiming to help China and Europe enhance their economic relations through dialogue.

This year marks the 14th consecutive year since the European Union (EU) became China’s largest trading partner and China the EU’s second largest export market and largest source of imports.

The bilateral trade volume between China and the EU rose by 13.4 percent to about 401 billion U.S. dollars from January through July this year.

The EU’s investment in China also surged to 8.5 billion U.S. dollars by the end of September. That was an increase of 22.3 percent year-on-year.

Amid a complex and volatile international landscape, both China and Europe seek to counter isolationism with more exchange and cooperation.

Man started his company in a closet, sold it to IBM at $34 billion


In 1993, Bob Young was unemployed and working out of his wife’s sewing closet on a new company he co-founded. Late in October, that company sold to IBM for $34 billion in the tech giant’s largest acquisition ever.

“It’s, no question, an out of body experience,” Young said.

Bob Young of Red Hat.jpg

Image: Bob Young

Young, the co-founder and former CEO of Red Hat, the open-source, enterprise software provider IBM is using to expand its cloud computing business, is now 64. He stepped down as Red Hat CEO after the company went public in 1999. He also left the company’s board in 2005 to launch, an online self-publishing company, where he is still the CEO.

But it was Young who first started the company that would become the multi-billion dollar Red Hat roughly 25 years ago. At the time, Young tells CNBC Make It, he had no job and was out of money after selling his previous business, a computer leasing company.

“I’m an entrepreneurial businessman, that’s just how my mind is wired. It’s not that I’m a smart guy or a risk-taker. I was actually a terrible student,” says Young, who majored in history at the University of Toronto. Because of his poor track record in school, Young assumed he would have more luck starting his own company instead of applying for jobs, he says. “So, in my case, starting a business was the low-risk activity to do in my career.”

In fact, Young started a string of businesses after graduating from college in 1976. He first rented out typewriters from an office outside of Toronto that happened to be next-door to a factory farm raising fishing worms. Meanwhile, his college friends were beginning careers as accountants and lawyers at large firms.

“My friends were not overly impressed with my career choices back then,” he says.

He transitioned to leasing computers by launching Vernon Computer Rentals in 1984. After struggling financially during the 1989 recession, Young sold the company to Greyvest Capital for roughly $20 million, from which he got a cut of about $4 million as the CEO, he says. But, the deal called for Young to work at Greyvest and use his share of the proceeds to take a stake in the acquirer. Unfortunately, only months after the deal closed, Greyvest found itself in “serious financial distress” and the company’s stock declined dramatically, leaving Young with a stake in the company that was practically worthless, he says.

Greyvest eventually laid Young off.

“Now, I’m unemployed with three kids, a big mortgage and a net worth of something below what it had been when I graduated from college 15 years earlier,” Young says of that period in 1993. “But for that disaster, though, I wouldn’t have stumbled into the open-source opportunity and founded Red Hat, and the rest is history.”

Fortunately, Young’s experience in the computer business allowed him to spot a hole in the software sales market for a product that let tech businesses modify and customize software to fit their needs.

“The benefit that having the source code, and a license to modify the source code, gives you as an engineer, is it gives you control over the technology that you are using,” Young says.

In the early 1990s, Young says, Red Hat was the only company offering open-source software, as larger competitors like Oracle, Microsoft, and even IBM, were reluctant to relinquish the valuable source code to clients.

“I’m an old typewriter sales guy,” Young says. “I like selling things my customers can’t get anywhere else.”

In 1993, Young started a business out of his home selling software on the open-source Linux and Unix operating systems. Young joined forces with North Carolina-based software engineer Marc Ewing (who gave the company the name Red Hat, a reference to a red baseball cap Ewing wore in college). Young merged his fledgling company with Ewing’s own open-source Linux software distributor and moved to Durham, North Carolina (Red Hat is currently headquartered in Raleigh).

Young served as CEO, using his sales background to focus on the company’s operations, while Ewing handled the software engineering.

Because of his lack of money, Young had to get creative when it came to funding this bootstrapped venture. So, he took steps that, in hindsight, might seem ill-advised: he and Ewing racked up credit card debt.

“The banks used to spam the world with credit card applications, and I would fill them out and send them in and they would send me another $5,000 credit card,” Young tells CNBC Make It. “And, I would use the $5,000 to pay off the previous credit card I had signed up for. I got these credit cards up to $50,000, which in 1994 was a lot of money.”

Young’s credit card debt eventually reached about $50,000, spread across at least eight different cards. “I thought of it as creative finance,” Young says. His wife thought he should “go to jail,” he jokes. In fact, it was Young’s wife, Nancy, who made the credit card ploy work, thanks to the fact that she had a better credit rating than Young.

Young now calls his wife “probably the single-most important contributor” to the initial success of Red Hat. “Without my wife Nancy’s sterling credit rating, I wouldn’t been able to raise the money that got us to profitability,” he says.

Young and Ewing were able to fund the company with their mounting credit card debt through the fall of 1995, when the company released a new version of its open-source software that first started turning a profit, which allowed them to finally pay off the cards.

By 1998, Red Hat was generating sales of more than $5 million per year, and that number doubled to more than $10 million by the following year. Young remained CEO through Red Hat’s 1999 IPO, which gave the company a multi-billion dollar valuation.

Young stepped down as CEO after the IPO, handing the reins to Matthew Szulik, who had helped take the company public as Red Hat’s president. (Szulik led Red Hat until 2007, when former Delta Airlines COO Jim Whitehurst took over).

Despite his success, Young has no problem expressing humility and a sense of humor about his career (his LinkedIn profile lists his title at as “Coffee Mug Washer”), and he is quick to give the credit for Red Hat’s massive exit to his partners and successors, including Ewing, Szulik and current CEO Whitehurst.

“The $34 billion success has nothing to do with me. I will take some credit for spotting the initial opportunity. The actual execution of that opportunity, the credit goes to much smarter guys than me.”

Young also left Red Hat’s board of directors for good in 2005, explaining at the time that he was better suited to the life of a serial entrepreneur than a corporate director with a less hands-on role.

For that reason, Young founded in 2002 and he continues to serve as the company’s CEO. The following year, he bought his hometown Canadian Football League team, the Hamilton Tiger-Cats. And, he’s also spent his time investing in projects like drone technology company PrecisionHawk (where he served as CEO from 2015 to 2017) and his wife’s craft supplies company,

Young sold all of his shares in Red Hat after leaving the company, he says, so he cashed out at a time when the company was worth a fraction of what IBM is paying. Young, who still walked away from Red Hat with a net worth of several hundred million dollars, says he does not regret selling his Red Hat shares years before the company’s big sale to IBM. He used that money to do “a huge number of fun things,” he says, from founding to supporting his local CFL team.

“Had I hung on to my Red Hat stake, I might have done better than I did by selling when I did,” he says. “But I do not regret for five minutes my decision, because my last 15 year have [gone] very differently than if I had just been a manager of a big Red Hat investment.”

What triggered the recent rise in US stocks?


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U.S. stocks mostly rose Monday as financial and health care companies finished higher, while Apple and other technology companies continued to fall, the Associated Press reports.

Asian indexes fell following weak economic data in China and a lack of progress in trade negotiations between the U.S. and China.

Warren Buffett’s Berkshire Hathaway, which owns Geico and other insurance businesses, led the rally in financial stocks after it reported strong results over the weekend. Drugmakers including Eli Lilly also climbed. Apple took another sharp loss, which knocked the tech giant’s market value below the $1 trillion mark.

Real estate companies, utilities, and other high-dividend stocks finished with solid gains as high-growth stocks like tech and internet companies slipped. Smaller and more U.S.-focused companies also lagged.

Big technology companies and small companies were both hit hard during the market’s slump in October. Tech companies fell as investors worried about the trade dispute and about an increase in interest rates, which could erode their future profits. Smaller companies are vulnerable to higher interest rates because they tend to carry more debt.

Earnings for S&P 500 companies are on track to grow about 20 percent this year, and analysts expect company profits to grow another 10 percent next year, according to FactSet. But Jim Paulsen, chief investment strategist for the Leuthold Group, said that might be too optimistic because costs and interest rates are rising and global economic growth could slip.

“It’s a double whammy of slowing sales at the same time we may be starting to (see pressure on) profit margins,” he said, adding that corporate earnings could fall next year, and smaller companies might have a hard time dealing with that.

Paulsen continued, “Large companies tend to operate with bigger profit margins, and they have more room as a result of that to allow them to cut and to deal with a slowdown.”

U.S. stock rise.jpg

The S&P 500 index added 15.25 points, or 0.6 percent, to 2,738.31. The Dow Jones Industrial Average rose 190.87 points, or 0.8 percent, to 25,461.70. The Nasdaq composite sank 28.14 points, or 0.4 percent, to 7,328.85. The Russell 2000 index of smaller-company stocks slipped 0.47 point to 1,547.51. Stocks plunged in October, but last week was the market’s best week since March. One reason for that recovery was increased optimism about trade talks, as Chinese officials and President Donald Trump said a phone conversation between Trump and China’s President Xi Jinping had gone well.

On Monday, Xi promised to reduce costs for importers and raise consumer spending power, but he did not address the technology policy dispute between the U.S. and China, a critical part of the trade impasse.

Berkshire Hathaway said its profit quadrupled in the third quarter as the value of its investments climbed. It also reported better results from its insurance and railroad divisions. Berkshire bought back almost $1 billion in stock during the quarter, the most in years. Its Class B stock climbed 4.7 percent to $216.24. Other insurers and banks also rose.

Apple lost another 2.8 percent to $201.59. The stock tumbled Friday following a weak fourth-quarter forecast. Apple also said it will stop announcing how many iPhones it sold each quarter.

Daniel Ives of Wedbush said that while Apple’s announcement felt “flippant,” it’s actually part of a strategy intended to get investors to see the company as a services provider and not just a device seller.

In early August Apple became the first publicly traded company valued at $1 trillion, but Monday’s decline brought its value down to $958.6 billion. After big gains late last week, Japan’s Nikkei 225 index fell 1.5 percent and South Korea’s Kospi dropped 0.9 percent. Hong Kong’s Hang Seng index fell 2.1 percent.

Benchmark U.S. crude slipped 0.1 percent to $63.10 a barrel in New York. Brent crude, used to price international oils, added 0.5 percent to $73.17 per barrel in London. Natural gas soared 8.6 percent to $3.57 per 1,000 cubic feet following forecasts for cold weather in the next few days. According to the Energy Department, nearly half of all U.S. households use natural gas as the primary source for heating. Its price often surges when investors expect a cold snap. Heating oil also rose 1.1 percent to $2.20 a gallon.

Wholesale gasoline lost 1 percent to $1.69 a gallon. Britain’s FTSE 100 rose 0.1 percent while Germany’s DAZ fell 0.2 percent. The CAC 40 in France was little changed. The British pound rose even though the office of British Prime Minister Theresa May dismissed reports the country is close to reaching a divorce agreement with the European Union. Officials have said negotiators are on the brink of a deal, which could be reached this month.

The pound rose to $1.3053 from $1.2963. Bond prices rose. The yield on the 10-year Treasury note fell to 3.20 percent from 3.21 percent late Friday. Gold fell 0.1 percent to $1,232.30 an ounce. Silver lost 0.7 percent to $14.65 an ounce. Copper shed 1.8 percent to $2.76 a pound.

The dollar slipped to 113.21 yen from 113.28 yen. The euro rose to $1.1418 from $1.1398.

Elon Musk reveals why Apple products are no longer appealing to consumers


Elon Musk, the controversial celebrity entrepreneur and CEO of Tesla CEO, had a time-out with Recode’s Kara Swisher but did nothing strange like smoking weed or passing out in his car after bingeing—he revealed a top secret about Apple Inc.

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Image shows Walt Mossberg, Kara Swisher and Elon Musk

Musk had really good reasons to take some time out of his busy schedule. He had been boosting Tesla Model 3 production and running SpaceX.

In the hour-long interview with Swisher, Musk figuratively attacked Tesla’s Silicon Valley neighbor, Apple, saying his company’s closest rival is worlds apart in terms of financial strength.

Talking about productivity, value creation, customer satisfaction and sustainability, Musk remarked that there are no longer many appealing products in global markets.

‘There are not many things you can buy with maximum satisfaction guaranteed. Apple did that a long time ago. Agreed. But I do think, and it’s obvious to see, that Apple Inc makes great phones,’ he said.

Comparing quality, attractiveness and consumer satisfaction, Musk noted that has a strategic plan to produce cars that can appeal and make people really happy.

‘Till date, I still use an iPhone and other products from Apple, but the company could have done more. They used to have gadgets that blew people’s minds, you know?’

He continued, ‘I admit the still make “great products”, but there’s less of that.’

Musk then predicted that Apple’s next iPhone, which he called the “iPhone 11,” might not draw as much consumer attention – at least compared with Tesla’s famous 450,000-long Model 3 waiting list.

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Image: Elon Musk

‘I don’t think people are necessarily running to the store for the iPhone 11. But I think with Tesla, we really want to make products that people just love, that are heart-stopping,’ Musk said.

Musk has sniped at Apple in the past, calling it the “Tesla graveyard,” suggesting that employees that couldn’t hack it at his company went to work at Apple. But employees go back and forth between the companies all the time. In August, Doug Field, a former Tesla engineering executive who oversaw Model 3 production, ended up back at Apple.

Musk may be tapping into a growing view on Apple products. This year, when the iPhone XS and iPhone XS Max went on sale, the lines outside Apple stores were not as long as they used to be. When the less expensive iPhone XR – the “Model 3” to the iPhone XR’s “Model S” – was released a month later, there weren’t lines at all.

Still, Apple would probably argue that “running to the store” doesn’t accurately capture consumer interest for the iPhone, instead pointing to smaller surveys that say customer satisfaction for the iPhone is 98%.

But that criticism may sting a little bit more coming from a Silicon Valley legend who makes cars that Apple’s own employees love.

Investors fear uncertainties surrounding Nigeria’s 2019 elections


Nigerian elections

Nigeria’s economy faces continuous decline in investment inflows ahead of 2019 elections, some analysts who spoke to Business Day have said.

Projections from the analysts are a result of the recent decline in capital importation numbers from Q2 2018, and especially as cloud of uncertainties surrounding the 2019 elections increase averseness to investing in the rebounding economy.

Data released by the National Bureau of Statistics (NBS) for the second quarter of 2018 show the first slide in total value of capital importation into Nigeria, since the economy returned to growth after a difficult recession.

Capital importation dropped by 12.53 percent from $6.3 billion in the first quarter of the year to $5.5 billion in the second quarter of 2018.

Foreign Portfolio Investment (FPI), a very important component of the country investments, while maintaining its position as the largest contributor to capital importation fell by 9.76 percent and according to data tracked by the news outlet, has continued to dwindle month-on-month beginning with N318.3 billion in May 2018 to N133.84 recorded in August of the same year.

As the nation approaches major political change with the upcoming 2019 general elections, analysts and financial insiders say that further drop in capital importation is to be expected.

Johnson Chukwu, Managing Director, Cowry Assets Limited, echoed the same sentiments, stating that although capital importation fluctuates, the peculiar situation of the elections is bound to have a negative impact on it.

“Capital Importation doesn’t follow a particular pattern. However as we move into the election year, we should expect it to diminish as those bringing in capital either for investment or remittance purposes might hold back, because investors are always skeptical about investment into countries experiencing political change.”

Chukwu mentioned that in the face of this fall, home remittances might still hold strong.

“Home remittances might be neutral in the sense that since it’s reliant on the economy of other countries where they come from like the UK and US which have remained buoyant, it would stay strong even as people send money to support their families” he said.

Chukwu, however, is hopeful that the planned $2.4 billion Eurobond issuance to help fund part of the 2018 budget might be a one off flow capable of distorting capital importation decline, “although investors would require yields that would compensate the risk that comes with the high 9 percent interest rate.”

Following the release of the 2019 Doing Business Index released by the World Bank which saw Nigeria fall to 146 out of a ranking of 190 countries despite an ease of doing business score of 52.89, there are even more fears that this new development would likely deter foreign investors.

Chukwu, however, foresees that investment inflows could rebound after the elections- but then, dependent on whether the process will be properly managed and fair.

“I expect the decline to slow down and eventually reverse after the elections, if it is handled carefully. Confidence will be returned to investors if turmoil doesn’t follow after the elections and losers accept defeat, the elections have to be free and fair”, he said.

With statistics showing a decline in the contribution of the Oil and Gas sector to GDP between the first and second quarters, Tope Fasua, a financial analysts and CEO, Global Analytics Consulting Limited fear that apart from the direct impact of the uncertainties surrounding the upcoming elections, the continued drag on the passage of the Petroleum
Industry Governance Bill (PIGB) is another major threat to Foreign Direct Investments (FDI) into the economy.

“Most FDIs go into oil and gas and with the PIGB still hanging, there’s cause for worry because it doesn’t show that we are ready for business, especially in this period of record increase in crude oil price which stands at almost $80 per barrel.”

In October 2018, the Central Bank of Nigeria (CBN) recorded the steepest $2 billion drop in foreign reserves since February 2015, settling at $42.06 billion. According to Fasua, this can be described as a repercussion of the drop in capital importation.

“The fall in capital importation is going to put pressure on the Naira as CBN reserves have fallen over time in their bid to defend and stabilize the Naira at different times this year”, he said.

On actions that could be taken to pull the economy out of its current situation, analysts have called on the government to avoid intervening as factors are set to play out in the long run.

“I’m very pragmatic about these things and there are times when all you can do is hunker-down and see how everything plays out, there might be no need to influence the system”. Fasua said.

ExxonMobil sued for cheating investors



New York Attorney General Barbara Underwood sued ExxonMobil on Wednesday, accusing the oil company of misleading investors about the risk climate change regulations posed to the business.

A complaint filed New York’s Supreme Court said ExxonMobil for years told investors it was preparing for the probability of increasingly stringent regulations on its effects on greenhouse gas emissions.

Underwood’s office accused the company of telling investors it was “rigorously and consistently applying an escalating cost of those emissions to its business planning, investment decisions, calculations of the amount and value of company reserves and resources, calculations of the amount and value of company reserves and resources, impairment assessments, and projections of future demand for oil and gas.”

The complaint said ExxonMobil did less than it promised but marketed itself as a secure long-term investment.

“Investors put their money and their trust in Exxon — which assured them of the long-term value of their shares, as the company claimed to be factoring the risk of increasing climate change regulation into its business decisions. Yet as our investigation found, Exxon often did no such thing,” Underwood said.

“Instead, Exxon built a facade to deceive investors into believing that the company was managing the risks of climate change regulation to its business when, in fact, it was intentionally and systematically underestimating or ignoring them, contrary to its public representations.”

The complaint said the fraud reached the highest levels in ExxonMobil, including former CEO Rex Tillerson, who left the company to become secretary of state.

Tillerson allegedly knew the company was using a lower proxy cost than what the company told its investors it was using. A proxy cost corrects for the possibility of growing carbon costs based on the likely effects of things like climate change.

By failing to apply the publicly represented proxy cost, ExxonMobil undercounted 14 of its oil sands projects by more than $25 billion, undercounted projected greenhouse gas-related costs by up to $11 billion and overestimated the projected economic life of its reserves at Cold Lake by 28 years, the complaint said.

New York, not London, is the world’s ideal financial center


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With Brexit posing as the biggest challenge to the City of London’s finance industry and Britain’s divorce from the European Union prompting banks to shift jobs out of the city – London’s position globally has taken a beating.

According to a new survey, London has lost the position as the world’s most attractive financial center to its biggest competitor – New York.

The Z/Yen global financial centers index, which ranks 100 financial centers on factors such as infrastructure and access to quality staff has ranked New York as the world’s most attractive financial center.

The survey’s authors pointed out that London’s ranking fell by eight points from six months ago – which was said to be the biggest decline among the top contenders.

Further, the surveyors noted that the drop reflected the uncertainty around Brexit.

Britain’s decision to leave the European Union has prompted banks to shift jobs out of the city to preserve access to Europe’s single market.

Further, experts have pointed out that Brexit has become London’s biggest challenge since the 2007-2009 financial crisis as it threatens banks and insurers who have established presence in the city — and would now lose access to the world’s biggest trading bloc, the EU.

Due to this, some of the world’s most powerful finance companies in London have begun moving staff to the EU to preserve the existing cross-border flow of trading after 2019.

A study published by Reuters in March said that around 5,000 roles are expected to be shifted or created in the EU from London by March next year – the date of Britain’s EU exit.

Mark Yeandle, the co-creator of the index pointed out, “We are getting closer and closer to exit day and we still don’t know whether London will be able to trade with all the other European financial centers.

“The fear of losing business to other centers is driving the slight decline and people are concerned about London’s competitiveness.”

Meanwhile, in the Z/Yen global financial centers index, New York took first place, followed by London, Hong Kong and Singapore.

GM to recall over a million SUVs and pickup trucks


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General Motors Company has announced plans to recall over a million pickup trucks and sport utility vehicles in the United States.

The National Highway Traffic Safety Administration said that the recall has been issued because the power-assisted steering can briefly shut down.

According to a document filed with the auto safety regulator, GM has highlighted that the problem may cause difficulty steering the vehicle, especially at low speeds, which it said increases the risk of a crash.

However, in the documents filed, the automaker has not mentioned any crashes that have occurred due to the problem related to the pickup trucks with the defect.

The automakers’ recall covers big pickup trucks and SUVs – including certain 2015 Chevrolet Silverado and GMC Sierra 1500 pickups as well as Chevy Tahoe and Suburban SUVs.

The recall also affects 2015 Cadillac Escalade and GMC Yukon SUVs.

GM said that the power steering can fail momentarily during a voltage drop and suddenly return, mainly during low-speed turns.

It pointed out that a failure would increase the risk of a crash.

The company has stated that GM dealers will now update the power steering module software, free of charge for owners of the affected vehicles.

While GM has said that the software is already available, for now, no date has been set for the recall.

‘Make your products in the US instead of China,’ Trump tells Apple


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Apple Chief Executive Tim Cook speaks to President Trump at an American Technology Council roundtable at the White House in 2017. Photo source: Alex Brandon / Associated Press

Trump’s increasing aggression toward China and his strong desires for increases in tariffs have many companies worried.

In a public letter to the government, Apple highlighted how the latest $200 billion worth of tariffs would “ultimately show up as a tax on U.S. consumers, [and] they will increase the cost of Apple products that our customers have come to rely on in their daily lives.”

As you can see in Trump’s tweet above, his solution to that is for Apple to finally move production to the US, something Trump has been campaigning for since before he was elected.

So, will they? To begin with, it’s hard to be sure the tariffs will even eventuate; despite Trump saying on Friday that they would “take place very soon,” the White House says they are still receiving feedback from the community and no decision has been reached yet.

Secondly, the tariffs would not drastically affect Apple’s trillion dollar bottom line, the largest product lines they would affect appear to be Apple Watches, AirPods and HomePods. Substantial, yes; cataclysmic, no.

“Apple prices may increase because of the massive Tariffs we may be imposing on China – but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting!” – Donald Trump

It’s also very unclear exactly what Trump means when he says, “zero tax.” Obviously, Apple would have to pay zero import tax if their products were manufactured here, but Trump hasn’t specified what other kinds of tax Apple could be exempt from. It could be a lot, or a little. Plus, a tweet isn’t exactly a signed document and it wouldn’t be the first time Trump has backed away from promises he’s made on Twitter.

It’s also unknown if any tax reductions would actually make manufacturing in the US worth it. It’s alleged that “making iPhones in the US means the cost will more than double.” Apple asked its manufacturing partners Foxconn and Pegatron to investigate the cost of production facilities in the US. Pegatron didn’t, saying it simply wasn’t viable, and though Foxconn did, they weren’t optimistic.

It’s hard to foresee if Apple will begin manufacturing in America, but even if they do, it could take years before production kicks off.

How to write a Perfect Elevator Speech


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An elevator speech is, in other words, a brief and vital information about your business, products or services. It is often presented as face-to-face networking which lasts about 30 seconds in business settings.

The perfect “elevator speech” therefore presents a summary of who you are, what you do, and why you deserve a chance to prove yourself in that dream job.

From cocktail parties to job interviews, there are no restrictions on where you are allowed to reel off your elevator speech so far you are well-prepared. A warm smile and confident presentation could offer you a once-in-a-lifetime chance to being the right candidate. So, why worry about convincing a stranger—in 30 seconds—about what decades of experience and piles of certificates you have?

The truth is: preparing a perfect elevator speech does appear an uphill task, like a camel walking through the eye of a needle, but it is certainly achievable when you follow these simple steps:

  1. Know your job target. Unless you want to “beat about the bush” and miss a rare chance as Yogi Berra rightly said, ‘We must be careful…If you don’t know where you’re going, there’s no way you’re going to get there.’ Unless you’re able to explain exactly what position you want, no one can help you find it.
  2. Write it down. Your skills, work experiences, accomplishments and everything you would want a potential employer to know should be streamlined. Recheck the points and erase anything that’s not critical. A stitch in time saves nine.
  3. You must format the points according to these three questions: Who are you? What do you do? What position are you interested in?
  4. It is important that you desist from using industry jargon. Assume that your elevator speech has been prepared for a lay man, and make it easy for anyone to understand. Use of acronyms, urban terminologies and tech-speak are a no-no.
  5. Read out the elevator speech to someone who is capable is identifying the highs and lows, cross you t’s and dot your i’s, and practise until you achieve an all-positive result. According to Deborah Grayson Riegel, ‘Jobseeker’s major problem with elevator speech is how to fix it.’

The point is: writing is more formal than speaking, but finding the right balance will make yours stand out. Write, edit, rehearse, record yourself on video and hear yourself speak.

Here’s a sample elevator speech prepared by on request:

I am a professional civil engineer with 7 years’ experience as a site engineer and project manager. I run a private engineering firm which has effectively handled several project portfolios that I can forward upon request.

I currently study full stack web development at George Washington University Coding Bootcamp, Washington D.C. So, I am seeking career shift from civil engineering to web development.

I am a dynamic, self-motivated and goal-oriented team player looking for an opportunity to harness my skills for growth.

I have acquired knowledge in basic computer programming languages such as JavaScript, C+ and other tools, with high expectations of becoming a professional web developer.

I’d love to schedule an appointment with you so we can discuss further on a prospective business partnership.

Burberry to end burning of unsold items


After sparking widespread fury in July, when it announced that it had destroyed unsold goods worth millions of pounds in a bid to protect its brand – the British fashion label Burberry has now announced that it would end such practices.

Burberry Festive Campaign

While announcing its earnings report in July this year, Burberry managed to enrage customers, activists and environmentalists after it revealed that it had to destroy unsold clothes, accessories and perfume worth 28.6 million pounds in 2017.

Amid growing anger, Burberry argued that it had to resort to the practice in a bid to protect its brand from misuse.

However, now, as it tries to calm tensions, the luxury goods maker has announced that it would stop the practice of burning unsold goods with immediate effect.

The company also announced that it would end the use of real fur in its products, adding that the existing fur items would be phased out.

Making the announcement on Thursday, Burberry CEO Marco Gobbetti said in a statement, “Modern luxury means being socially and environmentally responsible. This belief is core to us at Burberry and key to our long-term success.

“We are committed to applying the same creativity to all parts of Burberry as we do to our products.”