How to Sustain Financial Prosperity after the Entertaining Career

Many a time we have witnessed our youth in the entertainment industry: in music, in performing arts, films, sports, etc go broke just few years following their glorious fames, or what my friend will call “on their after-shelf life”. But before then, you will hear record breaking contracts and deals worth millions of Shillings, with either a recording studio or company, or a TV stations, a Corporate Sponsor, or a football sports team, the list so goes. These are kind of stories that haunt our artists and sportsmen, the same story haunts many artists and players in many other places where a large percentage of these former stars in the entertainment industry go into bankrupt within short periods into retirement/resignation.
Now, it may be easy to think, ooh this is a scenario of “a fool with money soon partying ways” or like it is said in the biblical book of Proverbs: “…one who chases fantasies will have his life fill of poverty”, but the reality is that sometimes there can be a very thin line between maintaining that prosperity (after your performing and sports days are gone), and sliding into poverty. This is a real threat, that somebody was as (s)he was yesterday, but today live in a poor houses, a poor neighborhood, without any form of financial security, and meals which seemingly difficult to be assured. But then what could be done?
There are many ways to stay afloat, even when you have retired or have resigned from your active entertainment activities, I will mention a few:
First: it is always proper to seek and get advice from financial or investment experts. Now, as obvious as this may seem, but many a time we rarely practice it. And going back to the book of Proverbs: “make plans by seeking advice, … obtain guidance”. There are many studies that shows that people do not take time to consult financial and investment experts at any point in their personal financial management and investment life. For instance, let me share my personal experience to contextualize this argument — in my professional career I have worked with two commercial banks, I have worked with two out the “Big Four” firms — both in corporate finance and transactions advisory services, I then worked as a stockbroker and investment adviser before landing into stock exchange, but in this career path spanning about 15-years I have never come across a person from the entertainment world seeking a financial or investment advice. I have also been writing these articles on weekly basis, without a miss for the past 6-years now – but still no one from that space has taken interest in following up with a question or seeking guidance, having read one of these articles. It then says that a large chunk of us in the arts and sports, etc depend either on our own knowledge and instincts or probably those of our family/friends, when making decisions on financial matters. And, this is not wise.
To propel this argument a bit further, many youths that I interacted with, especially in these recent years seem to consider betting as a good income source and are therefore utilizing their income from entertaining, using their mobile money for betting. This being said, we definitely need a change, we need to pursue and get all the good advice and instructions or guidance that we can get for our better tomorrow. I will come to this again.
Second: learn to embrace other asset classes (shares/stocks, bonds, mutual funds/unit trusts, etc) beside real estate. Many of us are sometimes obsessed with this land thing, and so I have heard youth and individuals from the films, music and football sports industry express whatever little or many they have in terms of the land and/or property they own. But do you recall the expression: “don’t put all your eggs in one basket”, generally this means do not risk losing everything by pinning all your hopes or future goals on one and only one option. The danger of keeping your eggs together should be obvious, once the basket falls off the wagon or experiences some other unfortunate fate you are done. Let me take you once again to the biblical wisdom, from the book of Ecclesiastes 11:1-2 which says: “Send your grain across the seas, and in time, profits will flow back to you. But divide your investments among many places, for you do not know what risks might lie ahead.”
Now, again this is not only applicable to our environment or circumstances or to individuals in the entertainment industry, it is globally applicable only that the extent and perspectives differs. For instance, according to Global Wealth Report of 2018 published by Credit Suisse, financial assets account for the biggest percentage (53 per cent) of global wealth compared to non-financial assets. The report further says following the 2007-08 global financial crisis financial assets accounted for the biggest rise in global wealth compared to real estates. In this regard, we need a complete change of mind set. The fact that we have only about half a million self-directed individuals with investment accounts at the DSE (out of more than 55 million people), it says something.
Third and last: Let me go back to the betting thing, I know it is a big topic for financial and fiscal policy makers as well as by political operatives in our society today. But let me extend it a bit – my youth friends – particularly those in entertainment, let us get off with habit of chasing after these high promising returns bogus Ponzi schemes or on-line forex trading or sports betting. You may call them “investments” but to my knowledge and experience these are just like what King Solomon called: “chasing after the wind”. In most cases, such schemes leave the individual in a worse financial situation than they were before. It is better actually to spend that money attending a financial and investment management seminar or pay for internet to access YouTube videos that teach better and wise ways to save and invest and not go broke “in the after a shelf life”.

Making Finance a Tool for our Development

A week ago, I was in Lagos Nigeria, being part of the World Federation of Exchanges (WFE)’ Inspection Team which was in the mission to inspect a securities exchange in Nigeria that has applied for full membership on this global/international body for stock exchanges. While in there I learnt a great deal about recent changes in the Nigerian financial market structures. The changes respond to the challenges around lack of transparency and inadequate price discovery mechanisms in their financial market, which raised concern on the effectiveness and efficiency of liquidity creation/enhancement, the efficiency around prices discovery, as well as the volatility and certainty in the economy’s fixed income (bonds), money market, foreign exchange and derivative markets. Prior to these notable changes, just like in our current situation, financial products traded in the “Over-the-Counter” (OTC) market.
By the way, an OTC market is where investors and dealers buy and sell securities (such as bonds, medium term notes and bills), foreign currencies, or other financial products directly between two parties in bilateral forms, without a meaningful supervision, or transparency, except for reporting purposes.
An OTC market is contrasted with open and transparent exchange market in that the open exchange has the benefit of facilitating liquidity, mitigates credit risks concerning the default of one party in the transaction, provides transparency, and maintaining better market price discovery mechanisms.
And so, financial market regulators – the Central Bank of Nigeria and the Securities Exchange Commission of Nigeria with financial markets actors (particularly banks and securities dealers) collaborated in introducing a market infrastructure that meant to address the issues around market transparency, price discovery and certainty, volatility and liquidity. This new market structure and infrastructure seem to have so far being working well – liquidity on foreign exchange, fixed income and money market has increased several-fold compared to prior situation. This has benefited; regulators, banks, dealers, investors, traders and importers, the government, and the society at large. With more transparency and liquidity bonds’ interest rates have declined and are relatively stable, resulting into lower borrowing costs across all key players, from the government which issues Treasury bonds and Treasury bills to private entities which issue corporate bonds and medium-term notes. Lower cost of borrowing means more demand and access to credit and finance to public sector, to businesses and to private individuals.
With enhanced transparency in the foreign exchange transactions and its embedded derivative market – which enables importers to lock-in medium to long term foreign exchange prices by buying futures and forward contracts which trades in the Exchange, means there has been relatively currency stability, reduced speculative tendency and low level of central bank involvement in ensuring price stability — benefiting not only the Government but also traders who import goods to the economy, and so the list goes.
The above, is but a tip of the iceberg of what consciousness and coordination around finance and financial markets can do the economy and the society – albeit on the sophisticated side of the financial markets. But still, it is doable for us as well for our collective good.
On the other end — as it were, access to finance is a determining factor of individual financial freedom and in extension economic prosperity, the good news is that this freedom and prosperity can be exercised only with minimum knowledge. It only requires that every citizen of this country to be able to understand what it means to save, lend, and invest and what/how these activities contribute to his/her well-being and the well-being of the economy at large. As a country, we must build a community that can understand and make use of different financing tools, products and services. To achieve this, basic knowledge is fundamental, and that’s why the noteworthy step in the direction of creating the legal infrastructure and institutional framework for financial education and financial consumer protection, which will be responsible for informing the public and analyzing products provided to them is worth the pursuing for all of us, no matter our stations in the sphere of finance and how it relates to our development.
I was privileged to be part of the Familiarization team which was recently in South Africa to educate ourselves on how best we can create the national financial consumer protection framework – South Africa itself having made significant stride in this space. In my opinion, this is a significant move by our government and other key stakeholders into right direction towards the role of finance as it relates to our development, with more availability and accessibility to financial products and services, consumer education to improve their awareness of financial matters and credit becomes of great necessity. Investors and consumers of financial products and services needs to be more and better informed. With a more informed society on these matters – we will be able to mobilize more finances to finance our development and unlock the potential sources of finances currently under mattress, and in the case of my tribe in the form of livestock, somehow unproductive.
Matters of finance cannot be left to bankers, we all need to understand them, argue them, use them and benefit from them. Imagine what would be possible if we could finally mobilize our intelligence and energy with the perspective in mind about the issues of finance and what they could do to our development. Now, this requires a change in mind-set, a different way of thinking about finance and how we can all be smarter about changing behaviors on how we access finance, how we keep our finances, how we use our finances, how we can mobilize our finances and how better we can make use our finances to unlock some aspects of our own growth and development. The good news is that this mobilization has already started and it’s taking the shape of a silent revolution, especially following the introduction of financial technology and digital platforms in the financing space. Let us work on it.