Tuesday, October 12, 2010

Economics



Shoe-Leather Cost of Inflation
The shoe-leather cost of inflation is the time and effort used in counter-acting inflation, especially in the situation of a hyperinflation.
When there is inflation, especially a hyperinflation, there is usually an increase in nominal interest rate, that is, the actual interest rate and the expected rate of inflation. The rise in interest rate leads to holding of less cash. People tend to invest their money. The additional cost of having to go to and from the bank or building societies where they keep their money is the shoe-leather cost .i.e. the wear and tear on their shoe leather, the cost of transport and other inconveniences.
Although the internet has reduced the wear and tear on the shoe, it is more convenient these days. Therefore, the shoe-leather cost of inflation is the opportunity cost of time and energy used in beating inflation.

Economics


HORSES AND COURSES: ECONOMICS ON A BROAD VIEW

Inflation


Inflation is the rise in price of goods and services. The hike in price definitely affects the economy in a subtle manner. Inflation is an erosion of the value of money or anything that has a monetary value. It has its types, causes, effects, and control measures.

Inflation is a common economic phenomenon in every economy. Nigeria has her experience of inflation as it rises and the control measure offered by different administration with their reforms.

Types of Inflation

Wage Inflation: This is also known as Demand Pull inflation. This is a situation that arises when the demand for goods and services exceed the supply. This leads to competition that in turn causes a hike in the price of commodities and services.

Cost Push Inflation: This is the rise in price that is caused by increased cost incurred in the production process of goods and services.

Pricing Power Inflation: is a type of inflation that is caused by the deliberate act of the industries and entrepreneur to increase their profit margin. It is also known as the Oligopolistic Inflation

Sectoral Inflation: The hike in price is a result of price increase in certain sectors of the economy which will definitely have a ripple effect. For example, a rise in the price of fuel will lead to an increase in transport fair, prices of goods and services, and so on.

Fiscal Inflation:  Excessive government spending is the cause of this type of inflation.

Hyper-Inflation: This is an extreme case of inflation. It is also known as Galloping Inflation or Runaway Inflation. It is an unusual case and it affects the economy adversely. We have a hype-Inflation case during or immediately after a war.

Core Inflation:  This puts into consideration all the items in the basket without food and energy which are highly volatile.

Headline Inflation:  In this case as different from the core inflation, the headline inflation puts into consideration the highly volatile items i.e food and energy.

Measures of Inflation
Inflation is usually measured by estimating the inflation rate using the price index. The inflation rate is the percentage rate of change in indexes over a given period of time. The inflation price indexes are:

  • Producers price index
  • Commodity Price index
  • Core price index
  • GDP deflator
  • Regional Inflation
  • Historical Inflation
  • Asset Price Inflation

The Effects of Inflation
This could be positive or negative.

Negative


  • Hoarding
  • Shoe-Leather Cost
  • Menu Cost
  • Allocation efficiency
  • Hyperinflation
  • Sets off Business cycle

Positive
  • Labour market Adjustment
  • Debt relief
  • Tobin Effect
Room to Maneuver


   Government Bonds

   Government bonds are risk free debt instrument backed by the credit and taxing power of a country. It is an instrument for controlling the supply of money in an economy. It is also a form of long term investment for investors. It aids long term economic plans and so on.

Definition of Bond Related Terms
  • Broker - Any person engaged in the business of effecting transactions in securities market for the account of his customer for a commission.
  • Broker/Dealer - Any entity, other than a bank, engaged in the business of buying or selling Securities on its own behalf or for others.
  • Competitive Auction – An auction in which securities are sold to the highest bids. Successful bidders are awarded securities at the prices that they bid.
  • Customer - Customers are all Non-Primary Dealer institutions or individuals that purchase or sell Government Securities or engage in Repurchase Agreements in Government Securities with a Primary Dealer.
  • Dealer - An entity that stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). Individual or firm acting as a principal in a securities transaction.
  • Dutch Auction – An auction in which the lowest price necessary to sell the entire offering becomes the price at which all securities offered are sold.
  • Government Securities - Securities whose principal or interest is guaranteed by the government or its agents.
  • Government Securities Dealer - A dealer in government securities.
  • Inter-dealer brokers - An intermediary between dealers in securities who matches ‘best’ bids with the ‘best’ offers to arrive at the right price.
  • Primary Dealers - Dealers appointed under the Primary Dealership system.
  • Primary Dealer System - A system whereby some institutions are given exclusive rights to purchase/underwrite all securities issued for resale.
  • Primary Markets - The market in which new securities are issued by corporations in order to raise capital.
  • Regulatory Authorities - Regulators of different operators in the capital market i.e. Central Bank of Nigeria (CBN) for banks, Securities Exchange Commission (SEC) for capital market operators and Nigerian Stock Exchange (NSE) for members registered to trade on the floor of the exchange.
  • Repurchase Agreements - A short-term loan agreement by which one party sells a security to another party but promises to buy back the security on a specified date at a specified price.
  • Secondary Markets - The market in which previously issued securities are traded among investors.
  • Securities - Instruments that evidence the holder’s claim against a firm or government.
  • Securities Exchange - An organized market for purchase and sale of securities such as a Stock
  • Exchange.

Monday, October 11, 2010

Skirts in the Boardroom

Skirts in the Boardroom

Gender equality and the empowerment of women in the society has been a goal that has existed for decades considering religious and social standards, a woman is said to be weaker than a man. Other common expressions in use are: “weaklings”, “must be submissive”, “helper ”, “home make/keeper ”,“sex machine“, “baby makers ”, “skirts in the boardroom’.

Also, in the professional world, when some professions are mentioned, the gender that comes to mind is the female gender. Some of these professions are: secretary, hostess, sales representative, caterer, teacher, among others. All these aforementioned can be said to exist at a time. Better said, exist at its minimum in recent times. Even the language of adverts is better these days. Some of us can still remember the UBA jingle. (Wise men bank with UBA…) that was later modified to (wise men bank with UBA, wise women too with UBA…). Gender equality and women empowerment, (MDGs Goal Three) where are we in Nigeria?

This piece will discuss three generation of women, their activities, experiences, passions, and future. For easy reference, the first generation, I call the grand-mothers, the second generation will take the position of the mothers, while the third generation I call the daughters. The first generation is the successor of women of ancient times. They had few opportunities and made good use of what they had. These are the generation that spoke in their time and said a capital “NO” to female suppression. In fact, they laid the foundation for the feminist movement that some women modified as “womanism”. These generations cleared the path for what we have today as the sexist language where women are  put into consideration in daily conversation. Part of the joy of existence is communication; these group of women said no to suppression in a society where the voice of a woman is unheard, where the double standard exist, where women were sex objects, where women were the property of a man, where a woman dare not talk when a man talks, where a woman dare to say no, a world of no recognition for the identity of a woman. To mention but a few of these women were Olufunmilayo Ransome-Kuti and Eniola Soyinka (wild Christian).
These women damned the consequences, refused to be kept mute for life ,liberated the posterity and allowed history to absolve them.
Suppression continued ever after the generation of the grandmothers but they had already set the pace of speaking up, they set the pace of expressing the identity of a woman and the struggle against female oppression was actively championed in their time.

The mothers, that is, the second generation of women saw the great value in education, went for it, in a world where education was considered only for the male gender. They strived to be at their best. These brought out their voices that have been silenced for a long time. I salute their courage.
These women are found in all professions as lawyers, doctors, professors, engineers, linguists, and accountants and are active in their profession. Now, we have ladies in the boardroom, also as head of various units in organizations, vice-chancellors in universities, presidents of professional bodies and even pastors in churches. It is an awesome shift, isn’t it?

These women, because of the knowledge they have acquired could carry–on with the struggle on female suppression. To mention but a few, we have, Professor M.E.M. Kolawole, Prof. Alele-Williams (First Nigerian Female Mathematician and Vice-Chancellor), Prof. Dora Akunyili, Dr. Obi Ezekwesili, Dr. Ngozi Okonji-Iweala, Chimanda Adichie, Prof. Adedoyin (who composed the national pledge), Erelu Olusola Obada, Kofoworola Bucknor, Abike Dabiri-Erewa, amongst others. They are part of the feminist movement. Women can now do what a man can do even much better based on the performance of these women that brought about their recognition as women of substance. They have complemented the beauty of an African woman with the knowledge pursuit. When some women took the feminism movement from the radical point of view, which turned them into anti-male, some other women that have a good sense of the balanced and fulfilled woman came up with the movement called “womanism”. “Womanism” says no to female suppression and believes in gender equality. Womanism is not anti-man, they are not haters of men, but believe that both sexes should work together to have a better world to exist in. Both the man and the woman take care of the home (family relationship), they put heads together to have the best in the work environment, in the various religions, men and women have their roles to play, even in the politics of the nation, we have   female ministers, and female deputy governors, for example,  Erelu Olusola Obada in Ogun State and   Mrs. Sarah Sosan in Lagos State.

More so, the third generation that is, the daughters are the up-coming young feminine minds that see the sky as the starting point. They see themselves as beautiful within and without, their shoulders are tall and heads are high. They can only see the best coming their way. They are carrying on the battle of identity consciousness. Now, we have better expressions describing a woman. For example, “what a woman cannot do, only God can do it”, “a woman of substance”, “epitome of beauty”, “quintessence of excellence”, “rare gem”, and so on.  Also, the rate of teenage pregnancy has steeply reduced , teenage marriage barely exist, we now have NGOs championed by men and women of understanding e.g. Society for Family Health (SFH), Association for Reproductive and Family Health (ARFH), e.t.c. minding the good growth and development of both male and female children and educating adults on how to lead a better life. In fact, from a recent survey of a senior secondary school in Lagos: Aguda Grammar School. The data we have below is that of boys and girls in the school through the three levels of senior secondary education in four years.





2005/2006 Session


Boys
Girls
S.S.1
214
330
S.S.2
224
227
S.S.3
170
167
Total
608
724


2006/2007 Session


Boys
Girls
S.S.1
244
355
S.S.2
300
270
S.S.3
190
195
Total
734
820



2008/2009 Session


Boys
Girls
S.S.1
383
309
S.S.2
339
317
S.S.3
221
196
Total
943
822


2009/2010 Session


Boys
Girls
S.S.1
340
404
S.S.2
350
354
S.S.3
250
304
Total
940
1162


From the data above, the level of female education is encouraging, it tells us how far, we have come in achieving the MDGs goal three (3), i.e. “promote gender equality and empower women” in Nigeria. This gives us the hope that more would be achieved in the nearest future. Then we can talk not only of the skirts in the boardrooms but also stilettos at the core of business.