Thinking about socio-economic issues, I recently realise there are many Penkelemesi (peculiar mess) in our culture that must be addressed to give room for bigger economic improvement.
This is even if we have ‘perfect’ government with minimal corruption related to management of public funds.
There are lots of assumptions made on behalf of many poor Nigerians yearning to make ends meet. The assumption that people can always make the best decision especially when it comes to prioritising is not exactly true.
The more I think about it, I realise people do indeed need education not just about how to best invest their capital but most importantly is how to separate business accounts from personal ones.
Philanthropists, activists and lots of Western sponsored NGOs may genuinely want to help so wealth can be spread a bit better across our regions but in Nigeria for some reason we are blinded to the reality of how wealth created must be retained in business for higher turnover to occur.
Take for example this exchange I had with a friend recently.
About a year ago, Kola stood as a guarantor for a bank loan so a friend could increase his business capacity. The bank had trusted his judgement given record of long business with the bank and the bank knew he has assets they can rely on, so loan was approved for Kola’s friend to expand his business.
Commercial bank interest rate in Nigeria is in excess of 20% – clear sign for common man with no connections never to knock on their doors as it is out of the reach for small to medium size owners with no tangible assets. However, medium-sized business do get this high risked loan as there is more to gain with volume, so this was the case for Kola’s friend.
The way Kola talked about his friend’s commitment to grow his business and the fact he has worked really hard to get it off the floor is something many investors would be interested to support.
Earlier on this year, the friend was supposed to start the repayment back in instalment, the bank made a reminder call of their agreement. In February Kola’s friend disappeared leaving the bank no other option but to chase Kola to find his friend or his assets could be confiscated.
Kola was seriously worried. What he saw about his friend the week after his bank loan was approved was total change of lifestyle. Before the loan approval, he only had a truck for running his business, however weeks into the loan, he bought two cars, one for himself and the other for his wife – this was done to compliment the sudden growth of his business to the people around him.
Story such as Kola’s friend is very common in Nigeria, whereby people treat money loaned to them as ‘earned’ only to satisfy the yearning to fit in.
Maybe, there is other way to help people before given financial help – education on lifestyle.