Let Us Start By Defining Standard of Living.
It is the degree of wealth and material comfort available to a person or community.
The generally accepted measure of the standard of living is GDP per capita.
This is a nation’s gross domestic product divided by its population. The GDP is the total output of goods and services produced in a year by everyone within the country’s borders.
What are countries doing differently during this pandemic to upgrade the standard of living?
In advanced countries, they are making finance accessible at low and no interest with longer repayment periods.
Let’s take a look at some countries
In the United Kingdom, the government introduced The Bounce Back Loan Scheme (BBLS) that enables smaller businesses to access finance more quickly during the coronavirus outbreak. The scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.
The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.
The United States of America introduced The $2 trillion Coronavirus Aid, Relief, and Economic Security or Cares Act, or Cares Act, included up to $1,200 in stimulus payments for individuals and up to $2,400 for couples, plus $500 for each dependent child.
The Central Bank of Nigeria has set out a number of measures to tackle the impact of the coronavirus, including establishing a fund to support the country’s economy (of 50 billion naira; i.e. EUR 121 million), targeted at households and micro and small enterprises. The interest rate has also been cut, a moratorium has been announced on principal repayments for CBN intervention facilities and tax measures are being taken.
In China, various ministerial level regulatory authorities have promulgated a package of financial policies to ease the financial distress of enterprises caused by the outbreak of the novel coronavirus pandemic (“COVID-19”) since January 2020. The financial policies include providing loans with preferential conditions through financial institutions to certain frontline companies, reducing the costs of financing guarantee services, postponing the repayment of loans, optimizing corporate bond issuance procedures and facilitating cross-border financing, which are generally available to eligible companies regardless of whether they are controlled by PRC or foreign shareholders.
One common thing from the countries reviewed and many more countries across the world is that they all MADE MONEY ACCESSIBLE
What does this tell us?
It is not the governments that run the economy or keep the people alive but the people themselves are the ones who hold the keys to the economy, various businesses run by various people across various sectors.
The sad thing about this is that it took a Pandemic for some governments to realize that the GDP of a country lies in the hands of the people and for standard of living to improve, the government’s MUST MAKE FINANCE ACCESSIBLE.
Let’s look at the REAL ESTATE sector and the role it plays in a countries GDP.
The real estate sector and construction provides a lot of jobs for millions of people across various sectors as no matter the business you are into, there has to be a roof over your head or the land you are stepping on.
In 2018, real estate construction contributed $1.15 trillion to the economic output of the U.S. That’s 6.2% of U.S. gross domestic product.
REAL ESTATE sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13 per cent of the country’s GDP by 2025.
We’ve seen that REAL ESTATE is one of the most important sectors of the economy. They contribute to balancing the economy of a country.
What are governments doing to make FINANCE ACCESSIBLE in the REAL ESTATE sector?
CHINA kicked off a REIT(Real Estate Investment Trust) trial in late April that will initially focus around pooling capital to fund infrastructure projects like highways and airports. If successful, the program may be expanded to include traditional real estate, exposing individual investors to a market Goldman Sachs Group Inc. estimates could be worth as much as $3 trillion.
China is not only trying to develop their country, they are giving every individual an opportunity to make an investment in a REIT that will finance many sustainable projects across the country.
I call it sustainable because these projects are needed by the people and will generate cashflow from rent. The investors will all earn from rentals for as long as the investment is sustained.
This will create millions of Jobs, tackle housing deficit and improve the standard of living thereby contributing to the GDP
It is for this reason that I say, “Governments must Emulate CHINA’s REAL ESTATE Move.
Governments that interfere in the economy and want to do everything for the people should know very well that it only increases the budget and puts the country in more and more debt.
I would Recommend to consider a free market economy model which makes finance accessible for businesses across various sectors.
An economy run by the government is always in chaos as it is the day to day activities of the people that determine the state of an Economy.
It is the people that run the economy and not the government, and for the government to improve the standard of living, Finance has to be made accessible by reducing cost of debt.