Friday, May 8, 2009

Story of Tamedu & his Foo-Foo Isiewu Company

Tamedu is the proprietor of a Foo-Foo and Isi-Ewu Shop (Exotic Nigerian food) in Lagos, Nigeria.

Sales are low and, in order to increase them, he comes up with a plan to allow his customers to eat now and pay later. He keeps track of the meals consumed on a ledger.

Word gets around and as a result increasing numbers of customers flock toTamedu’s shop. His suppliers are delighted and are very willing to sell more and more raw materials for the meals he prepares. Tamedu showsthem his ledger of receivables and they extend him credit.

A young and dynamic customer service consultant at the local Nairaland bank recognizes these customer debts as valuable future assets and gives Tamedu a credit line and then increases Tamedu’s borrowing limit.

Taking advantage of his customers' freedom from immediate payment constraints, Tamedu jacks up the prices of his Foo-Foo and Isi-Ewu.Customers don’t mind as they are not required to pay on the spot. Sales volume increases massively; Banks and suppliers lend more; Tamedu opens more outlets in Abuja, Kaduna, Port Harcourt and Ibadan. He sees no reason for undue concern since he has the debts of the customers as collateral.

At the bank's corporate headquarters, expert bankers recognizeTamedu's customer loans as assets and transform these customer assets into Bonds. These negotiable instruments are given exotic names such as FoofooBond, IsiBond, EwuBond and EgusiBond.

These securities are then listed on the Stock Exchange and traded on markets worldwide. No one really understands what the names mean and how the securities are guaranteed but, nevertheless, as their prices continuously climb, the securities become top-selling items.

One day, although the prices are still climbing, a credit risk manager ofthe Nairaland bank decides that the time has come to demand payment of one of the debts incurred by Tamedu. Tamedu in turn asks his clients to pay up. One by one they refuse; the clients cannot pay back the debts. Tamedu refuses to serve them anymore. The clients stop coming.

Tamedu is really screwed now. He cannot fulfill his loan obligations andtherefore claims bankruptcy. All bonds drop in price by between 80 to 95%.

The suppliers of Tamedu, having granted generous payment due dates andhaving invested in the securities are faced with similar problems. The goat-meat supplier defaults on payment to the Mallam who sells goats to him and to the cattle supplier and claims bankruptcy. The yam supplier is taken over by a competitor; Tamedu lays off the cook and staff. Bankruptcies soar, unemployment mushrooms.

The Nairaland bank that lent the money in the first place is set to collapse. It is saved by the Government following dramatic round-the-clock consultations by leaders from the Peoples Undemocratic Party with Tamedu commuting back and forth in his Executive jet and Mercedes 500SEL, brokering the deal.The funds required to save the economic collapse are obtained by a tax levied on the citizens, most of whom do not eat Foo-Foo or Isi-Ewu.

Adapted by Idris Bello for the Nigerian audience (2009)

Sites where you can find this story-

1 comment:

  1. Welcome to blogsville!!! Looking forward to reading about more dreams about Nigeria that will definitely come true!