Global Financial Melt Down and Implications for Marketing in Nigeria

Introduction

The term "global financial meltdown" is a recognition of the globalize economy as we have today. In some fifteen to twenty years ago, it was possible to single out a country (economy) that would isolate itself from the vagaries of the world economy. Within the period under reference, there were no wide world web, no cable news network (CNN) and other like it, few interconnectivity of banks and stock exchange markets. All these have changed positively this unifying the world and making it a global village. We are not sure that we have read the actual definition of this global financial meltdown in any paper so far. In a common man's description global financial meltdown refers to a financial distortion that started at one point (Wall Street, USA) which has gradually but steadily affected all financial institutions and economies in the world negatively. We can further illustrate this concept by making reference to the human body. If an individual has a malaria parasite, the first symptoms might be headache and fever. It he does nothing to treat the malaria, it mighty get to a point where his entire body system would be demobilized. This is, in fat what the world economy is experiencing and unlessdrastic measures are put in place to check the speed with which it is touching individual countries economies, the present recession will crumble most economies. Financial meltdown has much to do with the crash of stock/share prices in the various stock exchange markets of countries. There is a linkage between the collapse of both the mortgage investments and auto industry in the US and the Wall Street crisis. These companies and their positive performance till the crunch came down on them was due to investor's confidence in their ability to manage their activities and return dividends to their investments. Once the companies publicly declared the state of their insolvency and the huge loses experienced by them, the investors' confidence was eroded. The result was a stampede where both small and large investors wanted to off load their shares in the market. In line with the principle of demand and supply, as more shares are off loaded into the market, the prices dropped as far investors showed interest in investing. The economy works like a web and what affects one affects the other. Banks would have extended loans which are being serviced monthly by these companies. Their inability to pay as the loans fall due would automatically affect the banking industry's liquidity. This will result to situations where the banks can no longer honor cash or credit obligations to their customers and the cyclical effect continues to the detriment of the economy and in the case of the US to that of the world economy. Given our working definition of the global financial melt down, it is myopic for any person to suggest that Nigeria is shielded from the global financial crisis ravaging the world economy. Nigeria is a part of the world economy and what affects it must of necessity affect the country. In concurring to this reasoning, offonagor (2008:41) in querying the Merrill Lynch report noted as follows: Is Merril Lynch saying we are immune to global recession? Nigeria is part of the international financial systems; I think we are just as vulnerable as any other economies system in the world that has link with the Western world and its financial system. We are not immuned because we are not isolated. If you looked at what is happening in the capital market since March these years, the Nigerian capital market has lost over N6 trillion in share value in the last six months, most of the stocks affected the banking stocks and it extended to every other equity on the exchange. The complexity of the global financial system and the increasingly linked nature of world markets mean that predicting how the credit crunch will play out is usually difficult. (Nwachukwu, Business Day November 25, 2008:7). A good example of the vagaries in the world markets is that of oil prices. In July, the light sweet crude was trading at $147 a barrel but in October 2008, the price came down to $50 necessitating OPEC cut in oil production. This cut did not ensure stability in the oil prices which continued to tumble down.download