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‘Women need to take their personal finances more seriously’

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Tomie Balogun

Tomie Balogun is a certified financial educator and a leader within the financial education space in Africa. She holds a Bachelor’s Degree in Economics, a Master of Business Administration (MBA), and also an alumnus of the Harvard Fintech programme. With over a decade’s worth of experience across management consulting, telecommunications and value-added technology, she contributes her technical expertise and extensive experience to creating fintech products and helping SMEs raise funding in Africa.

Founder and CEO of Vestract, a digital financial education company that provides financial education to millennials in Africa through the Green Investment club and connects them to vetted investment opportunities, she provides strategic leadership to her digital startup in alignment with the organisational vision of democratising investment opportunities for Africans. She has successfully facilitated crucial investment interventions for businesses across core sectors.

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Under her leadership, TGIC has grown from 35 members to 1700+ strong community of investors resident across 26 African countries. TGIC has also successfully mobilised $17m+ in investment in the capital market and across multiple sectors such as agro-processing, logistics, real estate development, logistics and consumer lending. Tomie manages the financial literacy goals of the company, successfully training 100,000+ millennials via online courses, free email courses and conducting financial literacy campus tours in six of the biggest universities in Nigeria in pursuance of the overarching goal of sustainable economic impact in Africa.

Prior to her current position, she functioned in high impact roles within other sectors of the economy. Tomie who is also an Amazon best selling author, contributes to social development through different volunteer initiatives, including being a volunteer facilitator for the Afara Leadership Development Programme, an initiative that targets female undergraduate females with the objective of bridging currently existing leadership gaps as well as the Microsoft #insiderforgood program for promising startups in Nigeria.

In this interview with TOBI AWODIPE, she talks about the importance of financial literacy and inclusion, especially among women, the danger of ponzi schemes, challenges of finding investment opportunities in Nigeria, financial freedom for young people and how investment clubs can lead to economic growth for women.

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What inspired TGIC and when did you realise that an investment club was something people needed?
BACK in 2015, I started a blog to share my investment experience; I was on a personal journey to figure out how to invest correctly and I decided to share my experience on my blog. At the time, I had a couple of email subscribers, but I noticed subscriber interest piqued when I shared about starting an investment club with friends.

In 2014, I started an investment club with four friends in a bid to get better with money, contribute money to invest and hold myself accountable on my investment journey. When I blogged about my investment club, I was surprised at the interest, so I held a couple of investment workshops to teach what I had learned about investing, share my experience starting an investment club and also invite experts to share their practical investment experience with those who attended the workshops. The workshops led to requests to start an investment club that was community-based, that anyone could join without knowing the other members. I thought it was a great idea, as we did not want more members in our private investment club at the time.

I created a framework for a community-based club and shared the idea with my email subscribers to see who was interested. When 35 people signed up and paid to join the Green Investment Club (TGIC), I knew it was something people needed. As a community, TGIC has continued to evolve in approach and offerings. We focus on financial education and connect the members of our community to credible investment options from the SEC-registered companies we work with. From 35 members in 2017, we currently have 1900+ members resident across 38 countries. We are very particular about the members who join us and require a referral code from an existing member or an application from new members. This is to ensure those who join, join for the right reasons, which include learning how to invest correctly and take action on achieving their financial goals.

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There are so many investment companies and firms today promising fantastic returns and the likes, how best can this be regulated to ensure people are making the right decisions?
Financial literacy is very important to ensure people learn how to tell the difference between a good investment opportunity and a ponzi scheme. As a community, we do not promise investment returns and neither do our partner companies. That’s because we know there is no credible investment without risk and there are no guaranteed returns. The only institution probably able to guarantee returns is the government of a country on financial instruments issued in the capital market, but even at that, we’ve seen some countries such as Venezuela and Greece default on debt obligations.

One of the reasons we prioritise financial education is to ensure members of the community can take investment decisions themselves. When you invest in a financial instrument or a company, it should be clear how you can get your money paid back with returns. Financial instruments issued in the capital market are typically raised by governments or corporate organisations that demonstrate the ability to pay back debt obligations.

In the stock market, you’re either trading or investing in the shares of a corporate organisation. If you invest directly in a business (debt or equity), then it should be clear what value that business provides in the marketplace to meet its debt obligation to you as an investor. When a business entity promises returns with no basis (i.e. no clear product or service they offer in the marketplace), it should be seen as a red flag. In terms of regulation, I’ll recommend a collaborative approach where the regulators work with companies looking to raise funding either by debit or equity to ensure they are actually in business to produce products or provide a service, provide employment and contribute to economic growth.

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A lot of these new companies are quite innovative and need funding to grow the impact and scale of their businesses. The regulators can create working committees to have open discussions on how to regulate and provide licenses for these businesses in a way to attract more investors to the country and contributes to economic growth.

From that humble start, how has it been for you to see the club grow to almost 2000 members today?
The journey has been remarkable for me as a founder and for the members of our communities as well. I am inspired daily, by the feedback from our members on how joining TGIC changed their lives significantly in terms of getting better with their personal finances, paying off debt and building investment portfolios they never thought was possible. What’s also remarkable is the difference financial education makes.

Our work with the members of the community proves that when young people are financially educated, they make better financial decisions that help them work towards financial independence and contribute to economic growth. It also proves that when a member is financially educated, they will do everything to ensure the members of their immediate family and friends are also educated. I am incredibly proud and grateful for each member and how they have taken the steps required to get themselves educated and build investment portfolios. I’m also grateful for the multiplier effect this has had on their families and friends.

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What has been the biggest challenge finding investment opportunities especially in Nigeria?
Nigeria is an emerging country with many investment opportunities across multiple industries. With an estimated population of about 200 million citizens, Nigeria is an investor’s dream location in terms of investing in a company that scales up significantly and offers significant returns. The challenge, however, is the business environment. The business environment is tough and quite volatile. So, yes, there are lots of investment opportunities, but for an investor, the challenge is seeing how entrepreneurs with innovative businesses have to grapple with a tough business environment and keep mitigating risk with respect to infrastructure, policies and talent.

As a result of these risk factors, the investor has to add a risk premium to the returns required from a business. This places an additional cost on the business and puts pressure on the business operations. Most businesses need funding to grow, but they also have to grapple with the high cost of sourcing this funding. As investors, we want the business to grow, but we also need to consider the risk we take on as businesses. Finding the balance is what we always aim for in TGIC. We always want to provide funding at a reasonable cost, but we also have to consider the risk premium to investors. This is currently a challenge, but we believe as the economy continues to grow and the regulators create the right policies, it will get better.

What does it take to be a certified financial educator and leader within the financial education space?
It takes a course and certification exam to become a certified financial educator. However, the course only provides a basic understanding of how to help people tidy up their personal finances in general terms. There’s a lot more required to teach financial education; you need practical experience to teach personal finance and investing. You really can’t teach investment in theory. I learnt pretty early that what I learnt, in theory, is quite different from life experience.

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For instance, it is easy to teach people to buy the dip when the stock market declines. However, when you need to do it with your money, you’ll realise it takes a lot of courage to invest when the stock market index is in the red. You’ll have to consider the opportunity cost of the money you plan to invest; this is what makes the difference between theory and practical life experience. There are so many things you can learn in theory, but when it’s time to take action, you’ll need the courage to take action. I believe this is what makes the way we teach investment education different in TGIC.

Personally, I invest my money alongside members of my community and always share my lessons from my experience; our members also share theirs with the community. I have also experienced investing through different life seasons; as a student, as a professional working 9-5, as an entrepreneur, a single woman and now a married woman with children. Every life season has taught me important personal finance and investment lessons I couldn’t have learnt in a book.

Finally, investing in Nigeria is not textbook knowledge; there are literally very few books that share insight on how to invest in Nigeria. I’m looking forward to writing a book about this but would love to read books from respected people in the industry who have actively invested in this market for multiple decades.

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You are an author, CEO and entrepreneur amongst other things. How do you prioritise and which of these sides of you gets more attention?
Everything I do has a central theme focused on promoting financial literacy, nurturing collaboration and reducing poverty. My book, Investment Clubs (How To Create Wealth Beyond Your Pay Cheque), shared my proprietary framework on how to start an investment club, based on my experience creating three models of investment clubs in Nigeria. It breaks down the benefits of collaboration and the pros and cons of each model. The Vestract Company uses tools such as investment clubs, e-mail courses, on-demand video courses, webinars, live events and campus tours to promote financial literacy. TGIC is the community-based investment club for millennials and GenZs ready to take action on investing correctly and building diversified investment portfolios.

In TGIC, we host a database of online courses, archive of webinar replays and educative articles for members. We’ve also carried out a campus tour to six of Nigeria’s biggest universities to hold seminars on personal finance. Currently, we’re delving more into the use of fin-tech to scale up our operations. Each expression of what we do to promote financial literacy is prioritised based on the impact and value it provides to our target audience at every point in time. TGIC has been a priority for us in the past three years to ensure we help members of our community create concrete results. The results have been remarkable and we plan to scale that up with technology in the next decade.

As a Harvard fintech alumnus, how much value does this add to what you do?
Technology is an enabler in multiple industries in this century, especially in the financial services sector. I got curious about the use of technology to drive financial inclusion and promote financial literacy, so I decided to take a course on fintech. It was quite enlightening to learn about the use of technology in financial services in specific areas such as payments processing, asset management and stock trading in other countries. The exposure and knowledge gained from the Harvard course were exciting.

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It was exciting to read about the impact of technology on financial services in Asia especially and to learn about the impact on the economy. Signing up for the Harvard course opened me up to immense possibilities in the financial services sector in Nigeria and Africa. I have since worked with my team to implement some of the lessons I learned on this course to scale up the impact of our work, especially in terms of automating how members of our community find and invest incredible investment opportunities.

What makes you so passionate about financial freedom for young Nigerians?
As a young Nigerian myself, I have lived through three economic recessions, experienced the effect of inflation on the cost of living and the continuous devaluation of the Naira. It is tough to survive or thrive in such a tough economic environment without financial education. I am passionate about financial education because it enables us to make life and money decisions that help us live life on our terms and not according to the dictate of economic indicators. I know the impact being able to make investment decisions correctly has had on me and my family and the members of our community also share numerous stories on how getting access to the right financial information at the right time has changed the trajectory of their lives. In parallel, the businesses we invest in are able to grow their operations, employ more people and contribute to economic growth. All of this inspires me and make me passionate about continuing to promote financial literacy and democratize investment opportunities for more young people like me.

In addition, according to World Bank data, young people within the demographic 18-45 comprise at least 60 per cent of our population. We are the future literally and we need the future of Nigeria to be financially literate so we can lift more people out of poverty and become a respected country again.

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You said TGIC has mobilized $17million in investment, what does this mean for our economy?
Every time we make an investment in a business, that business is able to scale up its business operations, provide employment, pay tax and contribute to the overall GDP output in the country. Small businesses makeup 70-80 per cent of businesses in Nigeria and are the lifeblood of this economy. We bridge the gap in funding for some of these businesses by mobilising funding from the members of our community. When our members invest, these businesses are able to continue to innovate and grow.

Investment is a critical requirement for every economy. While we continue to seek foreign direct investment, we can also encourage local investment from citizens who live here so they can contribute to economic growth and also earn returns as the businesses grow. Our work is focused on the twin impact of helping investors invest correctly and raising funding for innovative businesses that need funding to grow. We’ve raised $17m+ for multiple businesses in sectors such as agriculture, consumer lending, logistics, transportation and so on. In each of these businesses, growth has been remarkable, and we believe the community model we created can be a template for a lot more people resident and in the diaspora to contribute to economic growth in Nigeria.

How do you think investment clubs such as yours can lead to economic growth in Nigeria?
A quote by Bill Gates states: ‘If you want to go far, go alone, if you want to go farther, go together.’ Investment clubs are about nurturing community, taking advantage of the power of many, holding each other accountable and achieving financial goals together. The philosophy behind investment clubs is a traditional principle in Africa and even more so in Nigeria.

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Our parents grew up as members of social clubs, tribe associations and ‘Ajo’ groups. An investment club provides the perfect platform for anyone to collaborate with friends, colleagues or family in a way that helps them learn how to invest correctly together and hold themselves accountable as they work towards investment goals. Investment clubs can scale up financial literacy, reduce poverty and provide funding for local businesses to grow. These factors are important for comprehensive economic growth.

I strongly believe we need more investment clubs across the nation in multiple models. I have studied the change it brought to developed countries like the USA and it is significant. Some of the models I studied created wealth for generations as people could pass on wealth to the next generation and leave them a legacy of financial education as well. It was enlightening for me to study this and that’s why we’re excited about the next phase for us as a company to scale up our work across communities, campuses and corporate organizations.

As a facilitator for the Afara Leadership Development Programme, how are young girls and women benefitting from it?
The programme is a 20-week one in leadership and entrepreneurship for female students. This programme has been in existence for eight years and its philosophy is leadership through self-leadership with a strong in-built social responsibility component. I have had the opportunity to teach the class on accounting and finance for three years and each time, I am inspired by these students who are excited to learn all that’s required to lead effectively and pass on these lessons to others who do not have this access.

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I love the fact that the female students are encouraged to participate in outreach programmes to help market women add structure to their businesses and earn more income. The girls graduate from the program with a higher sense of responsibility to society and core leadership skills that will serve them for life. This is such an important activity for me and I loved being a part this program as a facilitator.

What are your long-term goals?
TGIC is evolving into a digital financial advisory start-up that provides an online community for investors to discuss multiple investment opportunities, build new connections and make investment decisions all in one place. We also plan to provide tools for other investment clubs, groups or syndicates across the world to host their club activities, portfolios, find credible investment opportunities and build connections with the members of their clubs. We also plan to launch campus clubs across 10 universities in 2021 to engender financial education for undergraduates across the country.

A lot of people believe investing in crypto, bitcoins are a quick way to riches, what’s your take?
Cryptocurrency is a trend that’s here to stay, especially in terms of its use to drive financial inclusion and reduce the cost of financial transactions in emerging countries. Cryptocurrency and blockchain technology are both disruptive innovations we need in Nigeria to get more people banked and included in the financial services industry. That said, it also has a use case as a speculative way to earn additional income. Each cryptocurrency has its unique practical utility and some, not at all. The currencies that offer a use-case or practical utility are an option to invest in in the long term. By invest, I mean purchase with a long-term mindset for three to five years.

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However, the currencies that do not offer a strong utility or a use-case are simply speculative currencies that can be volatile in value. While we’ve seen some get rich from skyrocketing crypto prices, the truth is, it can go either way. The same way you can lose a lot of money is the same way you can earn a lot as well. I always recommend portfolio thinking when considering crypto assets. As a speculative investment option, it should not comprise more than five to 10 percent of your portfolio based on your risk appetite, stage of life and financial goals. Honestly, there is no quick way to building wealth that is sustainable. If you earn money from a quick trade, you should invest it in a sustainable asset. Earning a quick return is not a guarantee of future income. Building wealth requires owning high-quality assets over a period of time.

What would you like to see change for Nigerian women in say, the next couple of years?
I would like to see more women take their personal finances serious. I would like to see more single women seek financial literacy to create the lives they want. I would like to see married women seek financial literacy to contribute to their homes as well. Multiple case studies show the difference it makes in society and in smaller family units when women are financially educated and financially included.

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In TGIC, 70 per cent of our members are women and we’ve seen the incredible change they have experienced with being able to take time off work if they want, go on study programs, seek better job opportunities and invest in their children all because they took the step to get financially educated and invest actively. I strongly believe that women need to own more assets.

Final words you would like to leave with readers?

As women, most times, we like to wait for the perfect time to do things. Every day is a great day to start. We need to stop waiting and start collaborating with others to create investment clubs and invest in a way that creates wealth. Build a money circle, start an investment club. Just start! Finally, money and wealth is not the same thing. Money is a tool an investor uses to create wealth and by creating wealth, an investor gets to live the life she wants; not pressured by the need to hustle or survive. Investing puts money to work so we don’t have to keep working for the rest of our lives.

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