By Francis Ewherido
The stay at home order as a result of the Corona Virus Pandemic has exposed the financial underbelly of majority of Nigerians. Our oil wealth notwithstanding, we are very poor people. By the second day of the stay at home, murmurs against the lockdown were becoming louder. By a week, there was grumbling everywhere. Then protests and criminality followed. There are way too many people who will go hungry unless they earn income daily. In addition, there are many others who earn big but will run into a financial mess within a month if income stops.
As usual many people directed their gaze at the government and for good reasons. Providing for the most vulnerable has not been institutionalised as part of governance in Nigeria. There are scarcely safety nets for the vulnerable like the elderly, the sick, the poor, the unemployed, etc. This makes it imperative for people to strive to be in charge of much of their lives. Every human being is a combination of two lives: micro life and macro life. Your micro life are those things you must do yourself, while your macro life is others-dependent. If we were to apply the Pareto 80/20 principle, your micro life should constitute 80 per cent of your life, while macro will be 20 per cent.
Let us start from life immediately we are born. A new born baby must cry on his own. External forces can make him cry, but they cannot do the crying for him. Also, once the baby is born, the mother can stick the nipple in his mouth, but the mother cannot suck for him. The baby must suck by himself or starve to death. The baby must also defecate and urinate on his own, while external forces clean her up. External forces can facilitate the processes, but they cannot do either for the baby.
As he grows, he will be taught how to sit, crawl and walk, but he must do these activities on his own. When he is old enough to go to school, his parents will take him to school, the teachers will teach him, but he is solely responsible for assimilating what is taught. No external force can assimilate on his behalf. Let us fast forward. When he gets to a certain age and decides to get married. Friends and family will contribute resources and join him in all the marriage ceremonies, but it is his sole responsibility to get his wife pregnant and provide her sexual pleasure. Anything outside this is an abnormality.
That is how life is. God created us to take responsibility for our lives and it starts the minute we are born. If we took responsibility when we were not even conscious of it, it means that now we should do it even more effectively. In a VUCA (volatile, uncertain, complex and ambiguous) environment like ours, there is more need to take responsibility for our lives.
One basic lesson they teach us in personal finance is that we should start saving with our first income. Experts put it in various forms: “pay yourself first,” “a part of what you earn is yours to keep.” It means once you start earning income – whether daily, weekly or monthly – keep a part of it as savings and/or invest it. Apparently majority of Nigerians have ignored this basic lesson and we are paying dearly for it now. You will think it is only the low income earners who suffer from this lack of saving/investment, but it also applies to some people who earn as much as N2m monthly. It all boils down to whether or not, you keep something aside periodically and subsequently invest it to generate more income. Also, some people who earn big money carry way too much expenses and liabilities. Somebody earns N30m and spends N35m within the same period, say a year. Such people are also unable to keep something aside.
We have had this argument once in my marriage class. We talked about keeping a portion of what we earn aside. Then one participant asked how he could keep something aside when his take home pay does not take him home. Then, I painted a scenario. “Assuming the 25 of us in the lecture room were employees of a company going through a patch. The management gave us an option of a 20 per cent pay cut for all staff or disengagement of 20 per cent of the staff.” And I added that “you do not know who will be affected by the downsizing; what option will you choose?” They all chose a pay cut. Then I asked, “what would you do about your 20 per cent shortfall in income, borrow?” They said no, that they would restructure their expenditure and live within their income. I turned to the participant, who said his take home could not take him home. “You just proved that you can keep aside 20 per cent of your income every month.” It is something we all need to think about and work towards.
There is another guide of personal finance that did not work for many of us during the period: “do not spend more than you earn.” This rule was flung through the window for many self-employed Nigerians. People were home and spending without earning. Very few SMEs earned income during the lockdown: agriculture, pharmacies, foodstuff shops and supermarkets, etc. And the income was reduced because of low patronage. Many self-employed Nigerians do not operate in these critical service sectors, so it was a case of no work and no income. The lockdown has taught us is to reorganise our micro lives so that we can respond better to such emergency situations in future (I do not mean a virus o, just any emergency situation) so that thunder will not strike one place twice.
Personal finance training also encourages us to develop multiple streams of income. It is not because of situations like the COVID-19 pandemic only. You need multiple streams of income in a VUCA environment. A new technology or government policy can bring down your business and what do you do if that is your only source of income? For instance, many printers have had their income reduced by as much as 80 per cent due to new technologies! People also need to diversify into sectors where they can do business online or earn income. This is a necessity because the world is going virtual.
Some people also need to organise their relationships. They need to be involved in their churches/mosques, town associations, social clubs, old students association, extended families, trade associations and with colleagues in the office, etc. Many people were stranded during the pandemic and had to seek help from acquaintances/relatives they have not spoken to in decades and sometimes total strangers. You need to be involved with your immediate environments. Emergencies are part of life: a sick child who needs immediate attention, a financial opportunity you must deal with immediately, etc. If you have no close circle of people you can run to, it can become tragic or you lose a good opportunity.