Book Review: Flipping financial forte through “Borrowing Made Easy”

Book title: Flipping financial forte through “Borrowing Made Easy”
Reviewer: Segun Balogun
Publisher: Grace Spring
Place of publication: Lagos State
Date of publication: January 2019.
Number of pages: 140

Jerry Osagie’s book, “Borrowing Made Easy”, could engender a paradigm shift capable of accelerating the global pursuit to end poverty.

Reading Jerry Osagie’s “Borrowing Made Easy” will leave you with one sharp impression: that democratising the knowledge of borrowing profitably, is where the global pursuit to unlock prosperity and end poverty by 2030 should start.

Worried by the slowing rate of decline in extreme poverty, which raises “concerns about achieving the goal of ending poverty by 2030,” the World Bank in a press release in September 2018 called for “increased pro-poor investments.”

Such investments may, however, achieve little if it does not correspond with growing evidence of financial literacy, particularly regarding access to credit, experts who reviewed the book posit.

“Every economy that aspires to expand must understand the principle of effective credit and how to utilise smart credit towards production,” says Yele Okeremi, a professor of business strategy at Nobel International Business School, Ghana.

Due to the crucial role that credit system play at various points in the life-cycle of a venture and by extension in growing the economic potentials of a country, the knowledge of accessing credit could prove to be a more progressive and sustainable way of fighting poverty than any other strategy, especially in developing countries.

This assertion is somehow reinforced by comparing World Bank data with a ranking recently released by Interbrand, the publisher of the annual Best Global Brands report.

In the ranking, which shows movements of brands across the top 15 positions between 2000 and 2018, Coca-Cola retained the best brand until 2013 when it was displaced by Apple.

By 2018, it was in fifth place, and the top four brands are all ICT companies.

Though, a potent tool to eradicate poverty due to its low entry barrier, lean startup model, and a strong focus on human capital development, ICT’s reign in the global economy is not translating to a faster reduction in poverty, as would be expected.

“In the 25 years from 1990 to 2015, the extreme poverty rate dropped an average of a percentage point per year – from nearly 36 per cent to 10. But the rate dropped only one percentage point in the two years from 2013 to 2015,” the World Bank notes.

The cause of this dissonance could be traced partly, to low access to credit plaguing the ICT sector.

Even though almost every human endeavour has virtually succumbed to the new rules of ICT’s disruptive innovations, the sector itself is still subject to financial principles because access to credit cannot be coded -it can only be taught and learnt.

The problem over the years is that the expert knowledge needed to improve access credit has remained the exclusive preserve of the few who work in the finance sector, at whose mercy the myriad go-getters of this world exist.

Book’s input to discourse

It should, therefore, be cheering the news that Jerry Osagie, the author of the book, finds it necessary to provide access to that knowledge, which is the prized asset and the bragging right – if we may call it so – of his colleagues in the financial sector.

“Many books have been written on how banks and other financial institutions can lend money as well as apply best practices to lending while ensuring a loan portfolio with good quality and sustainable profit,” Jerry writes in the Introduction to the book, to underscore its purpose.

“However, not much has been written on how individuals, micro and small business owners and other corporate entities can borrow wisely and manage debt from the array of lending options available…”

This curtain-raiser tells us that lending opportunities are as diverse as there are those needing them, but few get to access to the needed loans and very fewer get to borrow profitably.

We have ‘many books’ containing knowledge needed by many but accessible only to few. “Borrowing Made Easy” is an attempt to flip this over and place in the potential borrower’s hands the requisite knowledge to borrow wisely and profitably.

‘Untangling knot’

By carefully untangling the web of the barrier to financial knowledge weaved using the thread of financial jargons, Jerry has opened the gate to us all into the closely guarded chambers of financial experts.

“Borrowing Made Easy” is written in simple language that is accessible to everyone with secondary education, at least.

Rasheed Olaoluwa, a former MD/CEO of Bank of Industry, in the forward to the book says its alternate title should be “Borrowing for Dummies”.

This is why the book can engender a paradigm shift capable of accelerating the global pursuit to end poverty.

The 140-page book, divided into five chapters, is handy enough to be taken around and read anywhere. It is amazing the vast knowledge that could be gained within the few hours needed to finish reading it.

Nuggets

Chapter 1: “A Person in Need of Cash” lays the foundation for different situations, the benefits and the risks of taking out a loan.

In essence, do not even consider borrowing if you are not in any of the situations, or if borrowing would not lead to any of the advantages or if any of the stated risks is too much a burden to bear.

This understanding is the beginning of wisdom as it relates to borrowing wisely.

Chapter 2: This is a compendium of the types of loans and the conditions under which they could be accessed. The key take away from this chapter is that the decision to borrow should be made only after “an understanding of your need, how best to meet it and at what cost to you now and in the future”.

Due to a dearth of knowledge in determining the type of loans they should access, borrowers are usually at the mercy of financial experts – who may or may not act in their best interest.

The urgency of the need for the loan usually outweighs the need to be cautious, and consequently, many have accessed loans they could not repay and have lost more than they gained. Such incidence should reduce with this book as it prepares everyone ahead of the need to borrow.

Chapter 3: “How you can borrow as an individual or business,” is the real deal.

It demystifies some myth surrounding taking out a loan, like the need for collateral and the danger of defaulting in the loan payment.

It states what you need to access loans and the most important is your income and how regular it is – not the collateral you are banking on. There are other crucial requirements like your credit history and identity.

This chapter explains to me why I might have missed out on a big contract around 2008.

I had worked with someone to prepare a tender for a multinational company, and despite being the underdog, we won.

It was a big contract that covered maintenance services for half of Nigeria. I thought banks should queue and even lobby to finance the contract. They would show interest at first sight but after they might have gone to do their ‘due diligence’, they would come back to reject it.

Chapter 4: “Understanding collateral in a borrowing relationship”, puts this important aspect of borrowing in proper context and explains the right perception we should have about it.

After reading it, I would not place a bet against the fact that many out there have the wrong perception of collateral.

Last word

The best benefit of reading “Borrowing Made Easy”, as I find, is that people can begin to take their credit-worthiness more seriously and proactively. Many do not think it wise to properly protect and nurture this “alter ego” of theirs until the need to access credit arises, by which time it may be too late as their credit-worthiness may appear malnourished.

I think that a good recommendation for those actively involved in social change is to ensure that all students demonstrate sufficient knowledge of this book by the time they exit secondary school.