Managing wealth in a sustainable manner

By Kassey Garba, Department of Economics, University of Ibadan.

Aderemi Babalola,
Minister of State for Finance

What is wealth? Wealth can be defined as an abundance of items of economic value, or a state of having and controlling such items. These items often encompass money, real estate, and personal property.

Wealth, in many countries, is often measured by things such as existence of good health care, social and economic infrastructures and possession of life stock and crops. One is wealthy in such a society if he or she has accumulated substantial wealth in relation to other members of the same society.

Other views and concept of wealth
• In economics, wealth refers to the value of assets an individual (or group or nation) owns less the value of the liabilities the person or group or nation) owes at a given time. While wealth is the accumulation of resources, richness refers to an abundance of such resources. Therefore, a wealthy or rich person (or group or nation), in a given society, has more resources than a poor person (or group or nation). This makes wealth a relative concept that varies across countries and even between different groups in a society.

Non-financial wealth
Some have made a case for true wealth being a combination of financial and non-financial wealth. Non- financial wealth include mental, emotional, physical and spiritual well-being. While these are gaining ground, they are still overshadowed by financial measures of wealth.

Wealth and income
While wealth is a total accumulation over time that can be seen in a snapshot. Income is a flow or rate of change as represented in a cash flow statement. It is the increase in wealth, while expense is decrease in wealth.

Working definition of management
The appeal of this definition is in its capacity to turn very many possible questions into three black boxes that can then be analysed within particular context. Management is the act of acquiring inputs, processing the inputs into outputs with a view to meeting organisational goals and objectives. Specific schools of thought that have defined it include the management process school, the empirical school, the human behaviour school and the social system school among others.

Thoughts on wealth creation
Natural resources can be harvested and sold to those in need of them. Through proper processing and use of knowledge, skill, labour and equipment, material inputs can be transformed into more valuable things that are exchanged for financial gain. Improved technology helps to also create additional wealth by enabling faster creation of wealth. Note that creation of wealth does have limits with respect to the environment, which must always be considered in exploring new processes for wealth creation.

Other non capitalist views on wealth distribution
Some societies wealth is kept relatively evenly distributed. Wealth acquisition and use of moderated traditions like the potlatch in the Cascadia eco-region, wealth is kept evenly distributed. The potlatch require their leaders to continuously buy status and respect with giveaways of their wealth to the poorer members of their society. It is seen as a mark of honour.

Effectiveness and efficiency in wealth distribution
Wealth (re)distribution is never 100 per cent effective and efficient, given that the act itself has costs associated with it. For example, individuals who are engaged to do the distribution may create unnecessary bottlenecks or may be corrupt. Some see wealth redistribution as an unnecessary waste while others see it as a natural and inevitable fact of life.

Issues on wealth distribution
Capitalism asserts that wealth is earned, not distributed, that it can only be distributed after it has been forcefully taken away from the earners through taxes and then distributed.

In modern societies, philanthropy exists through donations, which transfer wealth from the rich to the poor. Government policies and programmes distribute and re-distribute wealth. This may be done through disaster relief, social security systems, funding of rural infrastructures, public education, and so on.

What is sustainable wealth?
It defines the ability of an individual, society or nation to meet his/her (their) personal, social and environmental needs without compromising the ability of future generations to meet their own needs. (Elizabeth M. Parker).

Wealth is what sustains a person when he/she is not working. It is a person’s net worth that is important (not income) when he/she retires or is unable to work for any reason.

The fundamental question is, how long will wealth last? This, of course, depends on the withdrawal rate, and whether or not wealth in increasing. Growth in wealth greater than the withdrawal rate from the accumulated assets would extend the time asset may last, all things being equal. This means that a lower withdrawal rate is more conservative and therefore desirable for wealth sustainability.

Managing wealth in a sustainable manner
The act of managing wealth demand the responsibility of government among other stakeholders.

Government responsibility in ensuring wealth sustainability
Having national vision and working towards achieving it (strategic in outlook), credibility of government policies (stable and consistent policies), having effective and efficient institutions (rules and regulation and organisations) and the national, state and local levels.

Working definition of strategic management
It may be conceptualised as a way of running an entity (organisation, group or nation) that recognises the complex variables surrounding that entity.

“It is a process by which the manager can transform environmental factors, along with various internal, personal, and political considerations, in to decisions that result in strategies (goals and plans of action for reaching them) to help guide the organisation into the future.” (Comerford/Callaghan, 1985).

Strategic wealth management issues
•There must be some guiding vision and priorities and fundamental values that guides wealth creation, distribution and use.
• Environmental variables surrounding the creation, distribution and use of wealth must be understood.
• Choices and actions must focus on the vision, established priorities and core values that would ensure wealth sustainability.
• There should be periodic update of goals and identification of new capabilities needed to ensure sustainable wealth for the future.

Based on this understanding, goals should be set for wealth creation, distribution and use. To achieve wealth sustainability, the goals must factor in the interests of future generation. There must be deliberate effort at seeking out the most appropriate strategies for achieving the desired goals in light of the environmental analysts.

Whatever changes that need to be made should be done strategically. Management should plan and implement any painful change in a more humane manner. Performance Indicators (PI) should be developed even before implementation of the plans.

Other important issues in strategic wealth management
• Managing Risk
• Leadership for Strategic Wealth Management

Leadership for strategic wealth management
• Drastic change often comes with strategic moves that must be taken but may be resisted
• Managing such change calls for dynamic leadership that must beware of the single, seemingly simple and right answer to questions posed.
• The views and contributions of others, including those of the opposition, must be respected and considered.
• Beware the temptation to feel indispensable.

Managing risks
• Likely political instability
• Reduced government support for the process
• Union labour unrest
• Natural disasters, and so on

Leadership for strategic wealth management
• The leadership must think through options within the context of organisational vision, mission, objectives and core values.
• Leadership must be cautious of its own power, as leadership comes with responsibility. People are watching what the leadership says and does.

Need to make NIPOST technology-driven

membership of trade organisations such as Chambers of Commerce should be strengthened by raising the current level of funding by at least 80 per cent to help ease the process of sales and effectively support and grow the business.
Strategic business units
The creation of few Strategic Business Units (SBUS) has shown the inherent advantages of giving each product of the organisation its own identity, focus strategy and resources to effectively manage and market it to deliver promised value that meets customers tastes and needs. This measure has enabled the Managers of EMS and Bulkpost, for instance, to rapidly respond to market trend in their target segment where their products compete and enjoy large market share and growth.
The multi-national business giant, General Electric, has at least 49 (forty-nine) SBUs.The following new SBUs are therefore recommended:
•Airpost express (a six hour -delivery service, same day)
•Mail services postal facilities (Post Office Box and PMBs)
•Letter post;
•Parcels and logistics;
•Philately;
•Financial Services;
•Agency and Partnership Alliance;
•Counter and Mobile Services (that will include vehicle Mobile Post Offices on wheel)
•Passenger Service (medium-term business proposal, to take advantage of the resuscitation and revamping of the Nigerian railway system)
Fast-tracking infrastructural development, ICT, automation, location and vehicles
The process of rehabilitating Post Office buildings and the development of the counter networks, which is under way, needs to be fast-tracked in order to make them modem and attractive business channels to the customer and thus inspire confidence in them about the quality of products and services they offer.
The present effort of the management, through public private partnership initiative, is too challenging and slow due to the obvious fact that the present state of the entire asset base and investment of the organisation is not easily attractive to the investing business community, both local and foreign.
ICT
Without a robust Information and Communication Technology (ICT) infrastructure, NIPOST’s offerings are not only limited, they are turning obsolete, such as the postal order money transfer and slogan die advert, and are therefore increasingly becoming a near impossible products to market, despite the employment of diverse means and techniques to communicate the existing products and services to the target markets through the above and below the line communication campaigns and personal selling efforts using the limited and scarce available resource allocation.
Automation
With the envisaged development of an integrated ICT infrastructure that will enable NIPOST develop and offer numerous and sought- after products through its numerous and wide-spread counter network, the facility (ICT) will enable it (NIPOST) automate the outlets and increase its capacity to attract consumers and businesses, with little efforts from the marketing programmes of the marketing department and units at the corporate and Strategic Business Unit (SBU) levels respectively.
Location
With the envisaged modernisation and computerisation of the counter network with internet connectivity, henceforth, the location of postal outlets should be strategic, after market research and survey, to provide easy access to and reduce total cost of obtaining the offerings from the channels by customers.
Vehicles
To effectively back up the other infrastructures and services of the organization, particularly its envisaged enhanced Mail processing, the envisaged logistic services operations and passenger transportation service, as well as an envisaged e-commerce, the provision of an appropriate and adequate vehicles need to be addressed.
This can be achieved through the present management strategy of out­sourcing and forming partnership and through government capital financial support. This is the case with the South African Post Office and the Swiss Post, to mention a few.
Parcel and logistics
This business proposal needs to be singled out here for immediate attention and benchmark. Hitherto Parcel and Express Services were often included under the USO (Universal Service Obligation) by Postal Administrations worldwide, including Nigeria with its characteristics of low level service delivery standard, uneconomic price and underfunding.
Today, many posts, particularly in developed and transition economies, and few in the developing world, excluding Nigeria, have had to review and expand this status, and changed these services into commercial and lucrative business, after the required high investment.
Passenger service
Closely related to logistics, but to be separated from it, is the passenger transport service. This is a medium-term business proposal to take advantage of the opportunities to be offered by the resuscitation and revamping of the rail system in Nigeria. Today, the Swiss Post operates a forbidable passenger bus service along with its logistics services. Three relative photos are visual illustration attached.
Implementing Postage Stamp Duty Act
The Postage Stamp Duty Act CAP 411: Volume xxii,LFN 1990, provides that for any business transaction of Nl,OOO.OO (One thousand Naira) and above to be considered legal, the relative receipt or document of the business transaction must carry a N50.00 (Fifty Naira) Postage Stamp affixed on it.
Accounting based cost (ABC) and pricing
Hitherto, NIPOST, like other postal administrations worldwide in the past, ran its business without regard for cost and price implications for an efficient and effective postal service delivery that meets customer satisfaction and changing marketplace, needless of contemplating profit.
Training and employee motivation
This is the most important strategy and asset for the achievement of the Organisation’s vision and mission to become a viable commercial and communication infrastructure that is reliable and can be felt and seen to contribute and facilitate the economic and social development of Nigeria and her citizens and businesses.
Every plan and strategy implementation requires the touch of the human element as an important stakeholder in the value - creation and delivery chain, to succeed.
Reserach and development
One fundamental key to the health and success of an organisation is the willingness and ability of the organisation and its employees to scan, monitor and examine the changing environment and to adopt appropriate new goals and behaviours, through flexible strategic planning, to maintain a viable fit with the evolving environment.
Proper funding of NIPOST activities
While reform programmes can be defined, there is need for the political and institutional will to drive and support regulatory and enterprise changes which are necessary precondition for creating a viable and sustainable Postal Services and a vibrant Postal Sector.
Benchmarks of funding
UPU member Postal Administrations whose countries have responded to the kind of prayers sought for NIPOST, particularly in the areas of ICT infrastructure, modernization of the counter networks, transportation and management autonomy, cut across regions and levels of economies.
For example, Kenya Post, a developing country, member of the Universal Postal Union (UPU) and the Pan African Postal Union (P APU) has had all its eight hundred(800) Post Offices connected with VSAT by the government of its country.