Do you know that one of the ways that Nigerian big companies and high-net worth individuals, known as HNIs, make extra income is by giving banks their money to trade for them in lieu of an agreed percentage every month?
This is how it works.
Let’s say that Visage Media has 500 million in idle funds in the bank. Instead of leaving it idle, I will approach the branch manager of Zenith Bank with an offer to take the 500 million to trade and then give me 10% of the amount, which is 50 million naira, at the end of the month.
Since banks are desperate for such lucrative offer and always on the lookout for idle funds, the bank manager would quickly accept my offer because he knew that another bank could lure me with 15% interest to give them the idle 500 million.
At the end of the month, I will have my 500 million back plus an additional 50 million of the interest rate agreed with the bank.
I can choose to put back the 500 million for another month in order to earn another 50 million in free income from it.
With this, I have preserved the 500 million capital of Visage Media and have earned additional benefits and income from it without moving a needle.
For big companies, it is categorized as “non-core business income” or interest income in their financial report.
Last year, BUA Cement, owned by Nigeria’s second-richest man, Abdul Samad Rabiu generated 1.1 billion naira in interest income by giving their idle funds to Nigerian banks to trade with.
This is how important this is for Nigerian companies, as they earn extra money by fixing or giving their idle funds to banks in return for an income on those funds.
This is why I believe that as an entrepreneur, your first job is to grow the revenue of your business.
Once you grow the revenue and you have disposable cash. My brother, my sister—there are so many things you can do with that disposable cash.
One of them is fixing it and giving it to banks to trade; with this, you preserve the money but still make free income from it.
I belong to this school of thought that believes that Nigerian men and women are not occultic the way many of us have been brainwashed to believe.
They have a lifestyle and a pattern of how they make money.
Once you understand that system and pattern, you are on your way to being financially free as well.
Trust me, it is not rocket scienc and not hard.