How to survive inflation in Nigeria

Posted by Felix Okoli on Friday October 7, 2016 at 17:3:2:

In Nigeria, one of the things that makes people poorer or less richer than they were used to is annual inflation. Since the 1980s, Nigeria has been running an economy which is mostly import dependent and this is one of the reasons why there has been consistent inflation.

What is inflation? It's simply the general rice in the prices of goods and services and this seems to be be consistent after every year. The price of things in Nigeria keep increasing on a periodic basis without a corresponding increase in the income of people. For people who don't plan for it, they find it hard to survive and that's why people get poorer than they used to and may end up dying before they get old.

In November 2014, the Vanguard reported that the price of a 50kg bag of rice was about N10,000 and this was considered a high price at that time since it was initially sold for about N9000 then. However, in September 2016, the Vanguard also reported that the price was N17,500 even though it now sells for above N20,000 per 50kg bag in October 2016. The truth is that the prices of things keep rising in Nigeria while the disposable income of Nigerians keep shrinking.

Things you can do to survive inflation in Nigeria:

1. Buy things in advance: You should buy things in advance if you have the money and stock them for later use. You should buy things that have a long lifespan such as 1 to 2 years and stock them well. The more you hold on to your cash, the more it loses value and that's why it's better to use it to buy the things you will actually need in the future rather than waiting till you urgently need it.

2. Keep less money: Some Nigerians are fond of keeping money either as cash or in the bank but the truth is that the more they hold on to money, the more it loses value and the more they lose their purchasing power. If you live in a country like Nigeria where there is annual inflation, it's better to convert your cash to other assets that appreciate during inflation like foodstuffs, cars, car parts, electronic gadgets and so on. Holding on to money makes you poorer.

3. Pay bills in advance: If you normally pay bills from time to time, it's better to pay them in advance than waiting at the last minute to pay them because their rates may go up later. Things like cable tv, electricity bills, tenement rate, water rates, house rent and so on. You could even get a discount when paying some bills in advance than making late payments.

4. Convert your Naira to forex: If you have excess Naira, rather than keeping all of them in a bank to lose value, you could convert it to a strong foreign currency such as the US dollar, British Pounds or Euro as they tend to be more stable than the Naira. Since we import more than we export, it's safer to convert it to a currency that we mostly prefer. So, having a foreign currency fund is a smart thing to do. You could save the currency in a domiciliary account for safekeeping.

5. Invest in assets that appreciate with inflation: There are always things in Nigeria that appreciate with value such as real estate, cars, small business and so on. You could buy land, build a house, buy an apartment, buy cars, car parts, etc. Invest in assets that you can resell or use later since they hardly lose value.

6. Do subsistence farming: This is what helped many ancient Nigerian families survive for many years. Subsistence farming is a type of farming whereby a farmer grows crops for personal use and if you can do this, it will save you a lot of money such that you don't have to be spending too much money buying food stuffs and so won't be bothered with rising prices of crops during inflation. You can grow yams, cassavas, tomatoes, corn, vegetables and so on.

7. Do a small business: If you have the capital and the time, you should invest in a a small business that would be profitable. Small businesses have the ability to to survive inflation because their prices can be adjusted even in times of inflation. You can engage in trading or production. It can also be a service oriented business and as long as it's profitable, it will be an inflation shock absorber to you and your family.