When I was a wide-eyed 7-year-old, I used to love exploring the house and finding new nooks and crannies to indulge my imagination with. On one of these expeditions, I stumbled into one of the guest bedrooms whose wardrobe was usually locked. This time around, the handle swung open when I pulled it and the most astonishing sight met my precocious preteen eyes. From top to bottom, the wardrobe was stacked with crisp N50 banknotes, which at the time were the naira’s largest denomination.
In my childish imagination, which didn’t really understand how money or bank accounts worked, I thought I had stumbled across my father’s “secret stash.” While I was admiring my stunning find, the man himself walked in and my heart dropped into my shoes. I was going to get it now! Instead of getting angry with me however, he proceeded to sit me down for a good 10 minutes and tell me something that I did not fully understand at the time, but later made a whole lot of sense. Long and short, he told me, “That money is with me, but it does not belong to me.”
Nigeria’s economy has tiers
The explanation behind the cash haul itself was fairly prosaic – he was handling a real estate purchase transaction for a client and he was also a go-between delivering the cash from buyer to seller.
In the days before instant electronic bank transfers, and at a time when people
carrying out big transactions tended to avoid leaving a paper trail for fear of
attracting the attention of General Abacha’s SSS, finding a trustworthy agent
to get cash from A to B was not uncommon. In return for this service, he would
get a single digit percentage commission in addition to his service fee, so it
was a good deal all round.
Illustrating to me how this worked, he took out a small bundle of cash from the large pile and identified this as what was actually his cut. I will paraphrase what he told me: “Some people in Nigeria have this large pile and they will always have it. Some other people have to work for them to get small bundles like this. I am in the second category.
There is no huge pot of money anywhere for people like us. We have to work hard
to provide for you. Some other people just sign some papers and get everything
they want. You might go to school with their children and we might live in the
same neighbourhood with them, but we are not the same.”
It was difficult for my 7-year-old brain to process this information and I even forgot all about this incident for a while.
Over the years as I grew older however, it slowly came to me and it all made sense. I finally understood what he was trying to tell me – Nigeria has a dual economy. There exists an economic category where no matter how little work, innovation and competition goes in, people and entities there reap outsized rewards consistently. On the flipside, there exists the category the vast majority of us fall into, which is the one where participants actually have to work for a living.
In this column last week, I explored the curious case of Nigeria’s premier cement billionaire, whose post-tax profits more than double those of the nearest cement manufacturer globally. This entity did so without achieving record cement sales in Nigeria – a country with a 17 million housing deficit and low economic growth – by merely controlling the market via state capture and then price-gouging the hell out of Nigerians. That is a prime example of the “Tier 1” of Nigeria’s economy – minimal input and maximal, guaranteed returns.
Also in this column last week, I told the story of civil servants in Lagos who have spent decades on the job and barely make enough money every month to cover their repayments to loan-shark financing companies and payday lenders. These are extreme examples of “Tier 2.” However, in between Tier 1 and Tier 2, there are also those whose lifestyles and achievements somewhat mimic those of Tier 1. This category of people often falls into the dangerous delusion of thinking itself part of that tier. This is a terrible mistake.
Nigeria’s merchant class needs realism
One of the odd sights in the run-up to the 2015 presidential election was that of a relatively new class of Nigerian trading, commercial and educational strivers, actively lending their support to a candidate who promised to “protect Nigeria’s economy using the Army, Navy and Airforce.” It was visible to the blind and audible to the deaf at the time that the candidate in question would not be best suited to their economic aspirations – or at least it should have been. Instead, they threw their weight behind him
and the rest is history that has been rehashed ad infinitum. This is not another column about Muhammadu Buhari.
The issue that this new class of Nigerian achievers had in 2015 was similar to the issue that I had as a doe-eyed 7 year-old in Ogudu GRA – a lack of perspective. To my childish mind, the fact that I opened a door and met a ceiling-to-floor trove of cash meant that we were “rich.” In fact, only a relatively small percentage of that money belonged
to us, and with 5 sets of expensive school fees to pay, lifestyle maintenance costs, taxes, holidays, medical bills and school trips, that 2 percent did not amount to very much.
In other words, his interests were best served by servicing as many clients as possible, as against simply having N30M of their money jammed into the wardrobe of his guest bedroom where his 7 year-old son might get to it. Similarly, this group of Nigeria strivers failed to recognise that being apparently on the same page as the old political
establishment in terms of dissatisfaction with the incumbent president, did not
in fact mean that they were on the same page at all. Their interests were best
served by a pro-business, pro-market, pro-freedom national policy leaning.
One of the two candidates broadly satisfied these parameters. The other one absolutely did not. Such an analysis would have made it clear that regardless of whatever disaffection they felt for the incumbent, a vote for the other guy would literally be a vote for Christmas by a turkey. Just like when the N50 banknote spectacle distorted my perception of reality all those years ago, the spectacle of apparent freedom and power in
2015 – things that Nigeria’s Tier 2 was not used to – distorted their ability to properly contextualise Buhari as a candidate antithetical to their interests.
Too late they discovered that just because you align with something or have proximity to it for a time, does not mean that you actually control or own it in any meaningful way. As the road to 2023 continues to drag its heels, we are now reminded daily of the aphorism, “Act in haste, repent at leisure.”
Indeed.
