The Short-term mentality that keeps us poor


A gas station attendant displays a large bundle of naira banknotes after selling fuel to a customer in Port Harcourt, Nigeria, on Friday, Jan. 15, 2016. With his security forces engaged in fighting Boko Haram's Islamist insurgency in the north, President Muhammadu Buhari can't afford renewed rebellion in the delta. Photographer: George Osodi/Bloomberg via Getty Images

A gas station attendant displays a large bundle of naira banknotes after selling fuel to a customer in Port Harcourt, Nigeria, on Friday, Jan. 15, 2016. With his security forces engaged in fighting Boko Haram’s Islamist insurgency in the north, President Muhammadu Buhari can’t afford renewed rebellion in the delta. Photographer: George Osodi/Bloomberg via Getty Images

O boy e its tough to live and work in Nigeria right now!’  

Every single conversation I have had in the last couple of months has begun with a tirade of complaints about how the economy is frustrating our lives but one particular conversation got me thinking about the parallels that can be drawn from the way our government handles money, with the way we think about money as individuals.

Na de change we vote for be dis’?

Chioma complained. She is an interior designer who has run a thriving business for the past five years but in the last six months her business was seriously struggling. Although she made some of the furniture she sold to her clients in Nigeria, she also imported some of the components as well as a substantial amount of finished products. She had never had access to the CBN official rate but at N160 to the dollar, her business could generate a positive cash flow even with import duties and servicing her bank loan.

However, with the dollar closer to N320 it was becoming harder to do business and maintain the quality that her clients had become accustomed to.  To compound her problems, the insistent fuel crisis meant, she had logistics issues because her trucks were constantly queuing for fuel, her workers were always late because there weren’t enough buses and transportation costs had doubled for them. Worst of all, business was slow, even her regular customers were not patronizing her as much because liquidity was tight and high end furniture was not at the top of their list anymore.

Needless to say like many business owners, Chioma blamed the government. She blamed the past government for its excessive spending and corruption and the new government for its inability to quickly effect the ‘change’ that was promised during the elections or provide an economic policy direction that both domestic operators and international investors can have faith in.

With double –digit inflation at 12.8%, the unending fuel crisis, CBN’s impractical foreign exchange policy and economic growth slowing down to a little over 2% from just over 6%. I honestly couldn’t blame her for wanting to hold the government responsible for our current predicament as a country. However, It could be argued that the leadership that we’ve had in the last 16 years is only a reflection of our own short -term greed, so we are all guilty. Guilty of the short- term thinking that got us here in the first place because there are many parallels that can be drawn from the way our government thinks about and handles money with the way we think about and handle money as individuals and in our businesses. We can continue to complain about everything the government has done wrong but we must also look at our own lives and see how we make similar mistakes in our own personal and business finances.

Some of the ways our thinking is keeping us poor

Spend now…save later mentality

One of the surest things in life is that there are ups and downs, economies have booms and recessions, the capital markets go up and down but regardless of these facts we are hardly ever prepared for the down turns as a country or as individuals.

If the government wasn’t so short term in their thinking, in times of surplus i.e when oil was at $80- $100 per barrel, they would have used an adequate amount of the proceeds to develop other sectors i.e. agriculture and manufacturing and invested in the infrastructure to support it.  This would have moved us away from our dependence on oil, created multiple streams of income and a buffer during an era of low oil prices.

Although, many small business owners like Chioma could not have foreseen the combination of factors affecting the economy, the fact is we are born knowing that doing business in Nigeria is unpredictable and policies and circumstances change almost over night sometimes, so we should be accustomed to planning better for sudden changes. However, instead of building an emergency fund during times of surplus that can act as a financial cushion during a down turn or diversifying our income streams, we tend to rely on our supersctious beliefs of ‘ ‘God forbid’ it wont happen and ‘ e go better’ which is great because it keeps us resilient but doesn’t keep us realistic or prepared.

Again, with everything that’s going on with the economy we should be asking ourselves some pertinent questions. How well do we prepare for emergencies? How well do we diversify our incomes?  How well do we invest in developing and mastering our skills, so we are prepared to take advantage of new opportunities that present themselves in a crisis?

Focused on the hype instead of sustainable results

I saw a headline recently that made laugh uncontrollably for at least ten minutes.

“ Nigerian Astronaut to land in space by 2030…Minister of Science and Technology shares his plans’.

One could argue that this is long -term thinking! Futuristic even. However, I have questions. Call me silly but why do we need a man in space when we haven’t finished conquering the problems of the 170 million people in this country. Shouldn’t the minister of Science and Technology focus on more pressing issues like developing technology that will create jobs, make businesses more efficient and reduce poverty?

2030 might seem like a long time but that’s just 14 years, think about where we were just 14 years ago, we were still complaining about the same things we are complaining about today, fuel scarcity, limited power supply, no jobs high poverty rate because we were not focused and failed to prioritize what was important.

The same could be said for individuals or businesses. Sometimes we focus more on the goals that are cosmetic as opposed to the things that will improve the bottom line.  For example, I was talking to someone who launched a new product a year ago and the business had quickly become unprofitable given the current economy. In retrospect they had realized that they had spent four times the amount on marketing and PR that would create the ‘buzz’ in traditional and new media at the expense of operational efficiency and weren’t able to measure the impact the ‘hype’ that had been created and its effect on the bottom line. So for all intents and purposes the business was ‘popular’ so you saw it everywhere but it was unprofitable.

The crippling effect of consumerism

It’s no secret that as a country we consume way more than we produce and therefore import dependent and don’t export much. This could also be linked back to the lack of planning mentioned earlier because we need infrastructure to be able to convert the resources we have been blessed with into exportable goods and services. This has left our country resource rich but with a large population of poor people.

This short- term mentality also manifests in the way that we think about our personal incomes. In Nigeria, we grow up knowing that we need to make money to become financially successful but we are not taught in any formal framework how to keep it or grow it. As a result, many graduates get their first paycheck and the first thought is what can I spend it on not how much can I start saving and investing so that I can systematically build assets that will protect me in the future. We’ll give ourselves lots of excuses for not putting some of our paycheck aside no matter how little. ‘I’m too poor to save’, I’m too young to start investing’, ‘I’ll have more time to do all that when I start making more money’ but the reality is that its that sort of short term thinking that keeps people poor and living from pay check to pay check, even when they start earning five times the amount they started out with as youth corper’s because the way you spend ten naira is the way you’ll spend ten million.  The key difference between wealthy people and broke people is that broke people think about their money in terms of acquiring ‘stuff’ and wealthy people think about their money in terms of acquiring assets.

In order to build wealth sustainably as a country and as individuals, we need to reframe the way we think about our income and make decisions for the long term.




Receive News Alerts on Whatsapp: +2348136370421

  • daniez

    very good talk, i know that many will not like to read this because of our short term way of reasoning,though the govt. is not helping the siutuation at all, they are even worse ,one govt. will award a contract the next one will come and thrash it. just look at the quality of graduates our universities produces now, little or not competent outside the country, why , because they are all after the certificate it doesn’t matter how they acquire it. and the govt. has no plan of reviving our institutions even they don’t see it as a problem.until we come to know that there is a difference between acquiring knowledge and acquiring certificates, we will continue to be in this siutuation.

  • emmanuel kalu

    Very good article and needed for Nigeria. I would add that easy money on the part of the federal government and most Nigeria also contribute to the problem. it is this reason that falling oil price has being the best thing for Nigeria and we should continue to hope that oil prices continues to fall.

  • Abdul Waheed Lawal

    What a beautiful piece. i really enjoyed the topic and will circulate it to friends to learn one or two things.

  • Anidiobi Eric Ejiofor

    The clear difference between the rich and the poor is just MINDSET. its simple as that.Nice article though.