The Naira Plummets: We're spending more for less

4개월 전

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Nigeria is in a...unique economical position to say the least. Unique but in a distinctly fucked up way akin to that of previously crumbled economies that were over-reliant on crude oil and its derivatives.

Now we find ourselves neck-deep in inflation and governed by a class of citizens that embody the ideology of "killing everything we don't understand".

Well, judging by how the country's currently being run, it's safe to say that the people in charge have no clue about how it's done. So, why not just kill it like they did everything else.

Oh look, inflation again

The latest and one that's also been on our lips for the longest time is inflation. In an ironic situation, the government's attempt to curb inflation is actually worsening the situation, and trust these pigheaded people to be steadfast to their errors.

In one article I read on Nairametrics, they likened the situation to that of the PS5 scarcity in Nigeria. The summary is that there are not enough PS5 in the market, so the available ones are sold at an inflated price.

The basic idea behind the Sony PS5 analogy is that while the game is sold at $500, in Nigeria, the game actually retails anywhere from $800-1200 depending on where you find it.

I was speaking to my cousin about it earlier today and the cheapest he's seen is somewhere that sells it for 400k Naira or roughly $800. I was astonished because I've never seen it that cheap.

Anyway, before I digress, the point is that the reason why the game is so expensive in Nigeria is that it's not available. Put in a different way, it is expensive because there's demand for it but an extremely limited supply of the game.

Lost in the Forex

The PlayStation analogy was solely to explain the Forex situation in Nigeria and highlight the reason behind the Naira's plummet to the dollar.

I don't know if it's the same in other countries but in Nigeria, we have the official rate and the parallel or black market rates.

It is almost impossible for the average Nigerian to access the dollar at the official rate, and so we rely on the black market rates. In fact, it's so bad that even banks use the black market rates.

So why's forex so hard to access you ask? Well, our government thought it was a genius idea to limit everyone's access because well, our foreign reserves are in the shitters. So, as it stands, only certain high-value entities can actually touch forex at the official rate.

Ironically, this has led to a corrupted version of arbitrary trading between the official rate and parallel market. Again though, that's a story for another day.

But why is forex so important?

I'm glad you asked that question because the proof as they say is in the pudding.

The problem is that Nigeria is heavily reliant on importation. Put in another way, we don't produce shit, so we have to import a lot of shit.

Now, ideally, we should be taking baby steps to fix the problem by addressing the core issues behind our lack of production. You know, issues like electricity, insecurity, fiscal policies, curbing corruption, and whatnot that don't encourage manufacturing activities.

Instead, our dictator in chief decided to ban a lot of importation in a bid to strongarm people to produce I presume. Also, due to the situation with our depleted foreign reserves, he then proceeded to institute stiff policies that limit the average person's access to forex.

Humans must survive

So what did the people do? Well, they did what they always do, they tried to survive by circumventing the government and did it in their own way.

This led to the "boom" in the black market where the dollar is easily accessible but at exorbitant prices. This invariably trickles down to the price of virtually everything because, well, they were all imported at an inflated rate.

Shoot your own foot

So, at the end of the day, the government only proved what we've always known that Draconian policies often lead to a backlash.

Now, the naira that the government tried to "protect" is constantly plummetting. Regardless of what the official rate says, the reality is much grim.

The purchasing power of the Naira is constantly dropping and this means hardship. If nothing is done to fix the problem, things are going to get much worst.

Living in the balance

Personally, it would be unwise to say it's not affecting me because it is. Yeah, most of my earnings are either in stable coins or are traded against stable coins so by the time it gets to my bank account, it evens out.

That's not the case though, because we decided to live off a certain salary in Naira. Thanks to this reduction in purchasing power, the quality of life we live will be affected.

Surprisingly though, there's a silver lining in this whole debacle. As the naira continues to drop against the dollar, it also means that I'll have to pull out less crypto than I usually would to pay our salary.

Also, certain things like rent, school fees, and stuff like that weren't affected(yet), so that means we'll be spending less crypto.

Finally, this situation invariably means that we'll have extra income in crypto that we can save or reinvest. You know what they say, when life gives you inflation, make inflationade.


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Greetings @belemo 💕😊

I don't even know where to start my comments from because you've actually nailed every thing. It just as if you poured out most of the things I've been thinking in my mind for the past few days inside this post. The only advice I can give to Nigerian citizens is to never be too dependent on the government, the citizens most especially the youths need to start having multiple sources of income to cater for their need and this is why cryptocurrency and digital jobs are available for those who have the required skills to utilize it.

Thanks for sharing this great post with love from @hardaeborla and I hope you have a great day ahead ❤️💕😊

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Glad I could share this man. The thing dey pain me

Reading you many times brings me a comparison to our country (Venezuela) where most of the problems are similar, in a bigger or smaller scale, but problems at the end, and hyperinflation is our daily bread. Crypto is not yet taken in a highly demanding way but we are on the way to that.
thanks for your post.

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I hope crypto makes things better for you. Does your earnings in dollars make life easier?

The topic alone attracted me to this post. Of a truth we are spending more for less and this is bad in every angle. To make it worse, our president is as good as nothing and there is no avenue or measures in place to ensure that we fight ourselves out of this mess. All we keep seeing and hearing is nothing undone. If we continue like this we pray it goes well.

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It's a fucked up situation man. There's no hope like this.

I believe that the economy of your country and the economy of Venezuela have many similarities, that Venezuela's currency is also collapsing, next October 1st we will have a monetary reconversion, it is already the third one, where 6 zeros will be removed from the currency. The communist government of Venezuela has already removed 14 zeros from the currency.

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Fucking hell, that's horrible.

Inflation is seriously killing the country