This is to warmly welcome us all to a brand New Year – 2021! Here’s praying that the year will be a fruitful and easy one for us all.
Today, we will be looking at the money and life lessons we can glean from the ongoing global race to administer COVID 19 vaccinations.
It is no secret that the major issue currently facing many countries is how to administer COVID 19 vaccines to their citizens in the face of increasing number/wave of infections and death (unfortunately).
This situation affords us many lessons that can be useful in our personal finance and life journey. Below are the lessons I see:
- Cash is truly king: Money really answers all things! The wealthy nations are currently getting the vaccines because they can afford to pay for it.
Countries like the US, Israel, Canada and UK prepaid hundreds of millions of dollars to secure vaccines and have benefited from that. This has ensured that they were amongst the first to start vaccinating their citizens.
On the other hand, according to Bloomberg; Pfizer had to cancel South Africa’s order when it missed the December 15 deadline to submit a guarantee for the balance payment for its initial order.
The lesson here is that we should always remember to have our emergency funds intact and to keep a portion of our portfolio in near cash assets in order to be able to take care of emergencies or advantage of opportunities as they arise.
- In every crisis, there is always an opportunity: Unlike AstraZeneca, who had committed to sell its vaccines at cost (to developing countries only); Pfizer and Moderna are selling their vaccines for profit and will definitely make money from these sales.
According to The Intercept (an American news agency), Pfizer (with a profit margin of 60%-80% per vaccine) made $975 million from these sales in 2020 and is on course to earn $19 billion this year.
Moderna on the other hand, is expected to make $10 billion in 2021 from the sale of its own vaccine. Watch out for the 2020 financial reports of these companies.
Irrespective of your thoughts on whether or not these companies should be making money from this pandemic, it is clear that they (and several other companies) are amongst the biggest winners of this pandemic.
In the words of Abraham Lincoln, “I will prepare and some day; my chance will come”. We must all learn to position ourselves to take advantage of opportunities as they present themselves.
- Necessity is the mother of invention: Although a lot has been said and written about the speed with which the COVID 19 vaccines have been developed and approved for use; it is clear that the companies have truly risen to the challenge this virus presented mankind.
Like Ololade Jesufemi mentioned last week, COVID 19 has reinforced the fact that people are resilient. Many countries, companies and individuals have either had to pivot or adapt to changes brought about by this virus.
The key take-away here is the need for us to be willing to look for alternative options in the face of challenges – financial or otherwise.
An example of this, is how Nigerian investors in 2020 moved from the fixed income market (in the face of declining yields) to the stock market and crypto currency.
- It pays to prepare: The EU is paying slightly less for the Pfizer vaccines because they negotiated earlier, unlike the US who needed to pay premium to secure the first shipment of 100 million doses of the vaccines in the face of record number of infections and deaths. The EU is paying €15.50 ($18.90) per vaccine as opposed to $19.50 paid by the US.
According to Reuters, the EU made a prepayment of €1 billion to AstraZeneca, Sanofi and Johnson & Johnson and €1.45 billion to Prifzer-BioNTech, Moderna and CureVac in October 2020. It is currently in talks with a 7th company, Novavax.
Avid travellers can confirm that planning ahead – booking flights and hotels early is very cost effective and is a habit that is highly commendable. Another example is bulk buying or shopping when prices are cheaper.
- Life truly no getbalance: the developing and poor countries who cannot afford to pay or prepay for these vaccines have had to stay at the end of the queue and watch as the developed (A.K.A rich) countries scramble and jostle for the available doses of vaccines.
In fact, over 92 developing countries are relying on a WHO fund (funded by donors such Bill Gates through his foundation and the UK amongst others).
The Covax arrangement unfortunately initially guarantees only 20% of the required vaccines per country compared to a country like Israel that has already placed orders for enough doses of vaccines for 7 million of its 9.4 million people.
The irony of it all is that South Africa, one of the 4 countries that hosted the Pfizer vaccine trials is not likely to get the vaccines until 2022 even though it is being produced in its country.
Solomon was and is still right, the borrower will always be a servant to the lender. As such, it behoves on you and I to ensure that we manage our resources effectively so that we will not be stranded in the time of need.
- The beginning of a matter does not guarantee its success: There is a Yoruba adage that says “Ibere o n’se onise” (the beginning of an event is not everything).
Israel started its vaccination programme on December 20 after the UK & US and in less than 2 weeks, had vaccinated about 10% of its population. Its small population of 9.4 million is an added advantage.
As at December 31st, the UK and Israel, had administered 1 million vaccines each; despite the fact that the UK was the first country to start vaccinating its citizens on the 8th of December.
We have in the past discussed the examples of Mark Zuckerberg and Warren Buffet who joined the billionaire league at 23 and 56 years of age respectively. In fact, Mark was just 2 years old when Warren made his billion in 1986.
Consistency and mastery are virtues that any investor (and individual) must imbibe as it pays off on the long run.
As we are all aware, the second wave of COVID 19 cases in Nigeria, especially in Lagos State is unfortunately fully here. As such, we must continue to take personal responsibility for ensuring our safety.
Remember that the vaccines are currently unavailable in Nigeria. Keep washing your hands, maintain social distancing and wear your face masks in public.
Once again, I wish us all a fantastic and prosperous 2021!