In a country like Nigeria, where inflation eats naira like termites in a wooden ceiling, the value of money is no longer in its paper form but in what it can do now.
Conversations about debt in Nigeria are often shrouded in fear. From loan sharks to rising national debt, we’ve come to associate borrowing with crisis. But amid the economic challenges, 22.97 percent inflation, double-digit lending rates, and a volatile naira, there’s a counterintuitive truth that more entrepreneurs and businesses must come to terms with: debt, when rightly deployed, can be the most valuable asset in an inflationary economy.
“Debt becomes an asset when the return on capital employed (ROCE) outpaces the cost of capital, even at 25 percent interest. Many small businesses already practice this intuitively.”
Let me be clear: this is not an argument for borrowing to fund rent, vacations, or flashy consumption. Instead, this is an invitation to rethink debt as a tool for capital expansion, especially in high-growth areas like manufacturing, logistics, agribusiness, and technology.
The time value of money in real life
The concept of the time value of money is simple: ₦1 today is worth more than ₦1 tomorrow because of its earning potential. In Nigeria, this principle is magnified. ₦1 million held in a bank account today could lose 30-40 percent of its purchasing power in a year if left idle. But that same ₦1 million invested in expanding production capacity, acquiring revenue-generating assets, or even bulk procurement to hedge against rising costs can yield a return far higher than the cost of borrowing.
Debt becomes an asset when the return on capital employed (ROCE) outpaces the cost of capital, even at 25 percent interest. Many small businesses already practice this intuitively. A furniture maker who borrows to buy equipment or a wholesaler who takes a facility to lock in stock ahead of peak season isn’t being reckless; they’re understanding money through time.
Nigeria’s economic climate demands urgency
Nigeria’s economy is currently in a phase where economic agility is a survival skill. The naira has depreciated by over 100 percent since the last administration, and power, fuel, and input costs continue to surge. In this setting, waiting to “save up” for expansion is often a losing game.
Capital investments that could cost ₦10 million today may cost ₦14 million in 6 months. Labour, materials, and even basic infrastructure are tied to a volatile exchange rate and weak purchasing power. The longer one waits, the more expensive growth becomes. Ironically, not taking action may be the most expensive decision of all.
Read also: FG plans N1.76trn NTB issuance amid N1.98trn debt maturities
Debt is a bet on the future
Smart debt is not just a function of interest rate; it’s a bet on efficiency, scale, and future cash flows. It requires discipline and foresight, but it also signals confidence in your own model. In fact, many of the fastest-growing Nigerian companies, from fintechs to manufacturing firms, owe their scale to credit. While they keep burn rates under control, they don’t shy away from using external capital to accelerate growth.
We must normalise conversations around productive debt: the kind used to build, grow, and expand—not just survive. With the right strategy, debt becomes a tool to protect purchasing power, hedge against inflation, and increase net worth.
A mindset shift is required
We need a shift from seeing debt as a trap to seeing it as a lever. Of course, financial literacy, risk analysis, and cash flow planning must improve alongside access to credit. But perhaps more importantly, we need to equip more founders, operators, and SMEs with the right frameworks for thinking about money in motion.
Ask any successful entrepreneur, and they’ll tell you the same thing: you don’t wait for the economy to stabilise to grow—you build in spite of it.
In a high-inflation economy, access to capital is not a luxury. It is oxygen. And in the right hands, debt is no longer a liability. It is an asset—one that, when combined with time, becomes a bridge to long-term prosperity.
Ololade Joel is a marketing and growth strategist and also a chartered accountant with a background in economics and capital markets. He leads marketing at a licensed asset management firm and consults for startups on growth and positioning. Email: ololadejoel@gmail.com
