Your money, blood, sweat, and tears do not matter.

'And if everything still goes to hell, well at least we tried.'

Hi guys,

Hope you are well. I'm doing okay, Alhamdulillah.

I was fortunate to spend some time on Friday evening with my mentor, who I had not seen for about three months. Naturally, I have been in a good mood for most of the weekend. The rest of my life is pretty good as well.

At work, I’m slowly moving from ‘Oh my God I know nothing here and am so useless at this’ to ‘Kai I still have so much to learn but I'm now only like 75% useless’. I think I am also taking more regular breaks and becoming more patient with myself.

Of course, there are still many things to complain about (as those of you who I’m permanently ranting to are well aware), but I have many many reasons to be grateful.

Anyhoo, while reading my egbon’s newsletter this morning, I remembered that I did not set any goals for this year. Since 2016/2017, I have typically created a vision board for the things I wanted to achieve every single year. And as the year winds down, I review and update to see how far I have come.

But this year, I didn’t bother. I thought many components of my vision board from 2020 were still valid, and that the rest of my plans for the year seemed fairly regimented.

Also, I was struggling with my own problems back in January and just wanted to focus on that as much as possible instead of spending time thinking about what would or would not happen for the rest of the year.

Looking back, I wish I did it anyway.

Not because my year has deviated too much from the plan, as it has not. But because whatever problems we are facing at a given moment are temporary, and we should not make long-term decisions based on short-term circumstances.

—————

Last year, I took a course on Managerial Accounting. It was a very interesting class, and something I would definitely recommend for anybody who is so inclined.

But unlike Financial Accounting, in which you learn about the traditional rules of Accounting/Finance and methods like discounted cash flows, Managerial Accounting is more about using how to make decisions for a business based on financial data. It was here that I really got an appreciation of sunk cost.

Simply put, sunk cost refers to money that has already been spent and cannot be recovered. And in this class, I learnt time and time again that sunk cost was irrelevant in decision making.

For example, let's say ExxonMobil made a $500 million dollar investment in a petrochemicals plant in Warri 3 years ago.

They estimated that the project would take 5 years to complete, cost $700m in total, and give them returns of $750 million - a sweet profit of $50m. Now, they were about to invest the final tranch of $200m to accelerate efforts for the final two years of construction when they were presented with a new proposal.

There is an opportunity to invest in another petrochemical plant in Algeria. This plant is much smaller than the Nigerian one and will cost only about $200m. However, it is likely to bring about $270m of revenue - a sweet $70m profit.

Image from Texas A&M University

Assuming you were the Director of Business Development for ExxonMobil in Africa, you need to make a decision. Let us also assume that for some reason, you can only choose one of these projects.

Many of us might be tempted to complete the Nigerian project. After all, we have publicly announced our commitment and completed 3 years of construction already. But this would be the wrong decision.

You see, the $500m spent and 3 years of work done is sunk cost. It doesn't count. What we should actually be comparing is $200m investment for $50m profit in Nigeria vs $200m investment for $70m profit in Algeria. And the Algerian project wins easily.

** beginning of side note **

There are many things that determine how this decision is made. For example, if there is a company-wide target to accelerate the size of investments in local communities, the Nigerian investment is ‘bigger’ and will be seen as more attractive.

There are so many other factors like country tax policy, the incentive system for managers, potential repercussions of backing out of previously signed contracts, access to local talent and technical partners, geopolitical (in)stability, ease of repatriating forex to HQ, etc that go into making such decisions.

As you may know, this example is an oversimplification and it is more likely that the Nigerian project will receive additional investment.

** end of side note **

I struggled for a while to fully appreciate this concept. That no matter how much money, blood, sweat, and tears you have invested in a business, all of that is irrelevant when it is time to take decisions.

One key takeaway for me is that we really should evaluate the role sunk cost plays in our personal lives. Many times, we make statements like…

'Sis we have dated for 2 years. No matter how bad it gets, I can't leave him. 2 whole years?! No o, he will get better and we will marry next year in sha Allah.’

'Yeah bro I think I'll just do my MSc in Computer Science. I know I told you before I was tired of it and really wanted to apply for programs in Sustainable Development, but I've already done BSc and worked 3 years in this Computer space. It will be easier to get opportunities here so let me just continue.’

You know what I'm about to say.

It does not matter how many years you've spent in an industry, how much you've invested already on your farm, or how many of your friends and family members know your boyfriend.

Sad as it sounds, it's all sunk cost. We only get a few chances to make consequential life decisions. When the time comes, do not allow the mistakes of yesterday to influence the decisions of tomorrow.

Tamam.

** Jara content:

Today's Jara content is quite different.

I am privileged to regularly receive emails from a number of you and try my very best to reply to them (I can be better 😅). Halfway into replying to an email this morning, I thought it might be interesting to share with the larger community. And no, my responses are very rarely this lengthy. 😂

….

Hi Hameed,

Been a while :) 

Trust you are doing great. 

A happy new month to you. 

I'm curious, what's your relationship with Nigeria? 

I for a person, I'm very indifferent. No hate - no love. Its as though I'm just passing through the funnel called Nigeria.

I've spoken with a few who exhibit what I call patriotism, you? 

…

Hi Xxxxxx,

Hope you're good :)

Haha, this is an interesting question. I have a very ambivalent attitude to Nigeria. 

Sometimes, I love it so much. I can't imagine the meals in any other country ever replacing ewa agayin's status in my heart. I look at the grit and dedication Nigerians put into everything including yahoo yahoo (which I don't condone of course) and truly believe we are a blessed people. I laugh so hard at the banter on Nigerian Twitter or jokes on WhatsApp status that when oyinbo friends ask me what is so funny, I look at them and smile, 'you won't understand'. 😅

Many times, I hate it so much. The people are super corrupt, including you and I. There is a lot of insecurity these days, sometimes I don't even have ifokanbale while driving in Lagos - my own city! There is so much poverty in the land and people die every day for the silliest of reasons (a friend from uni died in the collapsed building in Ikoyi just last week). And many times, the government does not even seem to care. 

But so what now? 

I don't know. 

What I do know is that not all of us can leave. And if we do get the opportunity to leave, we will always have people we care about still in Nigeria. While we do the Nigerian thing (which is to hope and pray God will save us from everything), there are small steps you and I can take in the meantime to not make an already bad country worse. 

Don't litter. Stop peeing by the side of the road. 

Stop selling used phones and repackaging them as new. 

Stop tapping electricity from somebody else's generator. 

Stop fuelling hate unnecessarily with Sahara reporter's headlines (yes I said it).

Stop using interns for slave labour and paying them in 'experience'.

Stop collecting down payment telling customers you will deliver the abaya in 48 hours when you know it will take at least a week. 

Pay your tax (I know your business is still small, Nigeria does not help you at all, and somebody somewhere may steal the money, but pay it anyway).   

You see, we are all guilty. Nigeria is made up of Nigerians, and if all Nigerians started to act better, then maybe, just maybe, we would begin to move in the right direction. 

And if everything still goes to hell, well at least we tried. 

Lmaoo all of the above does not mean you should not japa if you get the chance, ma so mi lenu. 😂

…

Have a great week. 💫