The High Cost of Being Only a Consumer

I rarely write about personal finance. But I keep getting asked to explain, in plain language, why life has become so expensive in Nigeria, and what an ordinary person can do about it. I write this as someone who grew up here and still actively runs businesses in the country, so it is not theory from a distance. This is not to blame anyone, and it is not financial advice. It is how I understand it, and what I would tell a friend.

Why almost everything costs more

The usual reasons are real. Inflation, the exchange rate, insecurity, fuel, taxes, how much we import. But underneath them sit two things we rarely name. Money is expensive here, and running a business is expensive here.

A small business that manages to borrow from a bank pays between 20 and 46 per cent a year, while prices rise about 15 per cent. It pays far more for money than prices are rising. And that is the lucky business. Only about 4 in every 100 small businesses can get a bank loan at all. The rest borrow from family, cooperatives or informal lenders, usually for even more.

Then there is the cost of simply operating. A manufacturer here generates its own power, hires its own security, and pays extra for bad roads. Now follow the product to you. The manufacturer borrowed to buy materials, the distributor to hold stock, the retailer to fund inventory. Each adds their cost. By the time the item reaches the shelf, its price carries far more than what it cost to make. We have built an economy where businesses privately supply what a working environment should provide. Somebody pays for that. It is you, at the counter.

Expensive money plus an expensive place to operate equals an expensive life.

You lose at both ends

Now look at where you sit. Your savings pay you almost nothing, because banks would rather lend to the government at over 20 per cent with no risk. Meanwhile the shop down the road, one of the 96 in 100 that cannot get a bank loan, borrows expensively and puts that cost into its prices. So you earn almost nothing on your money and pay dearly when you spend it. You lose at both ends of the same system.

That is simply what happens when your only role in an economy is buying from it. The people who do better already own something, and can hold things that earn while prices rise. A salary just absorbs the higher prices. The real story is not that some people are rich. It is that an economy treats owning and consuming very differently, and most of us are only consuming.

The advice you already know

The standard advice is correct and not enough. Track where your money goes, cut the small leaks, build an emergency reserve, and clear your most expensive debt first, especially app loans, which often cost several hundred per cent a year once you count every fee. If you invest, use only regulated institutions, check the firm on the Securities and Exchange Commission register, and treat any unusually high promised return as a warning.

One thing this advice skips. Interest protects you from rising prices, but not from a falling currency. Anyone who held naira savings through 2023 and 2024 watched them lose most of their value against the dollar no matter what interest they earned. And all of this is defence anyway. It slows the bleeding. It does not change where you stand. That takes four moves, and if you have nothing spare today, begin with the second.

One. Pool money and own something that produces

Alone, most people cannot buy anything that generates income. Together, they can. Esusu, ajo and cooperatives have done this for generations. What is usually missing is aiming them at ownership instead of only at saving. A hundred people contributing one hundred thousand naira each is ten million naira, enough for a delivery vehicle, a grinding machine, cold storage, or a shop that collects rent. The group now owns something on the earning side of the economy instead of only the paying side.

Three warnings. Put the asset in the group's name, not a person's. Register as a cooperative or a company and let the asset belong to that entity. Otherwise, the day the group disagrees, the chairman owns a vehicle and ninety nine people own an argument. Structure before trust. Written rules, a separate account no one controls alone, two signatories, records anyone can inspect, and a clear way to leave with your money. Set money aside for repairs, because anything that earns will also break, and a group that shares every naira is left with scrap.

Two. Build a skill until it becomes capital

If you have little to invest, your first asset is probably not money. Capital just means something you own that keeps paying you, and a skill people pay for is capital. A tool or course costing one hundred thousand naira that raises your income by thirty thousand a month pays for itself in under four months. The same amount in a treasury bill earns about twenty thousand in a year.

The honest condition is the test. Are people already paying somebody for what this skill produces, and can you reach them? If not, you are buying a certificate, not an asset. Lean towards skills tied to problems this economy already has. Repair instead of replacement, solar and inverter installation, cold storage, bookkeeping for small businesses. Those businesses are desperate and they pay.

Three. Build a second source of value

When prices rise faster than salaries, budgeting runs out of room. The only real answer is to earn from somewhere else. Not a second job, which just sells more of your fixed hours, but a second source of value that uses something you already own. Rent out equipment. Teach what you know. Sell a service at weekends. Distribute for someone who cannot reach your area. The direction that matters is income that does not need you to sell another hour of your life.

And one that costs nothing

If costs pile up at every stage between the producer and you, removing stages puts money back in your pocket. Buy staples with neighbours in bulk. Buy direct from producers where you can. Share transport. Plan predictable expenses early instead of buying in a hurry at the worst price. Money you stop losing is money you did not have to earn.

Where to start

If nothing is left at the end of the month, do not start with investing. Start with the leaks and the expensive debt, and start building a skill, the only move here that needs almost no money. If a little is left, build the reserve first, then split the rest between a regulated place to keep money and a skill that raises your income. If you already have savings, keep your reserve, use regulated options for the rest, and look for a group with real governance where you can own something that produces. Wherever you begin, put part of what comes back into the next thing.

The real transition

None of this is a quick escape, and personal discipline cannot replace stable power, decent roads and affordable credit. We should keep demanding those. But while we wait, we still have to live inside the economy as it is. If you own nothing that produces, every price increase simply takes from you. If you own something that earns, you have a defence, however small.

From spending every naira to keeping some as capital. From buying alone to buying together. From only consuming what others build to owning a piece of something that creates value.

You probably cannot change interest rates, fix the roads or steady the currency. But you can stop being only a customer of this economy. Stop asking only how to afford what keeps getting more expensive. Start also asking what you can gradually own, build or join, so that some of the value being created here comes back to you. That will not fix the economy. It can change where you stand in it.