As an Accountant and one who thinks he understands some of the financial nomenclatures/numbers that we are bombarded with on a daily basis I can’t help but wonder how the common man on the street think of such numbers. Everyday we hear of GDP, Inflation Rate, Lending Rate, MPR, Exchange Rate, Crude Oil Price, Job numbers, Cash-less Lagos etc. How does this affect that man who has eight children and wakes up every morning thinking of how to feed them? How does a young school graduate reckon with such statistics when all he cares about is how to gain employment and contribute to the food chain that he so greatly depended on? How does an ambitious geek seeking to revolutionize the world he lives in by introducing a brand new product that he has nurtured through sleepless nights and candlelight get funding just to set up shop? What about a couple celebrating five years in marriage and wondering how the next five years will bring them the joy of a new home without having to do the usual…”deal”, how does such stats make his dream plausible?

Unfortunately such stats really matter and affect the way each and every one of the examples highlighted above live their lives. It’s a sad truth and one everyone should never gloss over even if all they care about is socializing be it on the cyber space or on a dance floor. I will illustrate these by juxtaposing real life situations with stats that matter.


Esosa has just celebrated the birth of a second child with his wife and family. The birth of the child was planned in such a way as to ensure that it came at the fifth year of marriage and just when the first child was three years old. Sadly their joy is blemished by the reality of their inability to get a salary increase since they moved from two to become one.  Unbeknownst to him Nigeria was recently selected as one of the fastest growing economies in the world with the National Bureau of Statistics predicting a growth rate of 6.5% for 2012 and a GDP of N42.6tr or $275b at the end of 2012.  Sadly that is little comfort for a country of over 150 million people. GDP the total value of all the goods produced in a country is a measure of how rich the country is. Is like the value of a company. For example, the USA, the richest country in the world is that rich because it has a GDP in excess of N13tr.


But then, that’s not even a realistic measure of how rich the citizens are. To get an idea you would have to divide that value by the country’s population. Its like two families each with a net worth of N5m per year. However, family A is a family of 8 thus giving an average of N625,000 per person. Family B on the other hand is just four, Husband and Wife and two kids, giving an average of N1.25m per person. Surely, Family B is richer on this basis. Such is the quagmire that we face as Nigerians.  Using GDP per capital, total GDP divided by the number of citizens in the country, Nigeria has a per capita of $2,203 and is ranked a lowly 156 by the Human Development Index, under the category “Low Human Development”. Lower than Cameroun, Senegal and Kenya who incidentally fall in the same category as us. South Africa has a GDP Per Capita of 10,279. So for Nigeria to get to that level we should be aiming for a GDP growth rate 4 times what we are have now. 24% GDP growth rate, is that possible? Well to create 2million jobs per year, then that is what we should be thinking of otherwise people like Esosa will continue to dream till thy kingdom come.


Coronation Research

Interest Rates

Bukky a high flying staff of a multinational corporation in Nigeria and in her third year of employment has decided it was time to buy a car. She had saved N1m but the car of her choice is “just” N2.5m. She couldn’t wait any longer and decided to take a car loan at a bank where her salary was domiciled. After all, the bank executives had for months dangled before her all sort of consumer loans at “attractive” terms or so she thought.

At the CBN just down the road from her 8 storey tower building in downtown Marina Lagos Island a group of men, or mostly men, sat down to decide on the Monetary Policy Rate “MPR”. The MPR as it stood was an interest rate that these men set and use as a basis to fight off inflation and abnormal price increases that is typical of any “booming” economy. When it is increased, it is perceived that there was too much money circulating which only but increases the cost of goods and services, the definition of the word Inflation.  Coincidentally, the Bureau of Statistics had announced a rise in Inflation rate indicating that it stood at a double digit rate of 12.1 percent for March 2012. Usually a higher inflation rate attracts a rise in the MPR but this time the CBN decided to hold it at 12% like they have done for the last 5 months.  Thus banks must lend to borrowers like Bukky at rates between 16% and 22%. Banks always put a spread on the MPR of between 4% -10% depending on who is borrowing. Just over a year ago MPR was about 6.25%.

For Bukky though, that’s far from a consolation, she must pay interest of N768,000 over the 4 year period if she is to get the loan.  For those group of men though, its all about bringing prices down. People like Bukky are on their own unless of course she wants to steal


Stock Market

Major John has decided to invest in the stock market only after retiring from active service of over 25 years in the Military. He decided it wasn’t enough for him to depend on his pensions and though the N10m he saved was enough for him to play in the market that everyone was making a fortune from. That was back in 2007 at the height of the booming market. Then the market had an All Share Index (ASI) of over 50,000. Oh, the ASI was a guage used to measure the value of all the stocks quoted on the stock exchange. 50,000 was an all time high at the time, sadly its just about 21,000 today. The Major has lost nearly half his N10m in the market. He is only left to depend on dividends from company’s which he owned stocks in. But the company’s paid dividends that yielded a paltry 5% of his cost of investment, a percentage that he has failed to understand. But it isn’t so complicated Major, stocks like humans, react to things around them such as demand and supply. Why should anyone buy shares that pay just 5% returns when they can invest in Risk Free Government securities like Treasury Bills which pay a handsome 12%.  People who drive volumes, which affect demand and supply, aren’t that interested in stocks. They rather buy safer Government stocks which are 12%, and if I may add a result of the MPR which is staunchly set at double digits.





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