Your Currency, Your Poverty: why focusing your thoughts on the Naira might be the reason you are poor…

I was a millionaire in my early 20s. But I quickly recognized even then that a few millions (dollars) did not amount to much. I could not afford my preferred lifestyle on such a small fortune.

– James Dale Davidson, “Affording the Good Life in an Age of Change.”

Exorbitant Exchange


I had this idea few years ago but an event occurred a few weeks ago that has triggered my sharing it with you. I was fortunate to be around a young business man who kept receiving calls from clients, and in a somewhat penitent tone, he insisted that his price of 165 was not exorbitant because the CBN just announce an exchange of 161.5. Apparently he was talking about the dollar. In another call, to a friend probably, he said that Nigerians are in trouble because prices will sky rocket. Pragmatically, his statement seems to possess a good deal of verity, but by the end of this essay, I’ll try to show why it might be an illusion.


The Nigerian Millionaire


Early 2007, I was unfortunate to be within ear-shot of a couple of young men arguing over the millionaire status of the MD of the company in which they worked. The fulcrum of the first man’s argument was that; since the MD drove a N6million Toyota Camry 2007, then the MD is a millionaire. The other man, on the receiving end of this grave assault to the human ear, aptly pointed out that; N6million was just about $45thousand. The first guy ruptured my ear drums by sharply retorting: “a millionaire in America is a millionaire in America and a millionaire in Nigeria is a millionaire in Nigeria.” Hmmm…this led to my postulating the first (and I dare to campaign; only) rule of the millionaire status:

A millionaire has “NO” geographic restriction.

A millionaire in New York is one in Rio de Janeiro, Reykjavik, London, Lagos, Istanbul, Tel Aviv, Dubai, Moscow, Bombay, Tokyo, Bangkok or Sydney.

It’s all in the mind…


My Wallet; My Footstool


Last year, a friend of mine proclaimed on his personal page: “When I stand on my wallet, my head touches the ceiling!” The statement seemed metaphorically ingenious and also hilarious. One could only wonder what standing on a wallet stuffed with lots of money will feel like. But on a closer look, coupled with a little thinking, you’d realize that my friend is not as ambitious as he thinks… If only he could see that if he stuffs his wallet with, say, the old Ghanaian Cedi, his head will probably be scraping the sky, or more ambitiously, with the Zimbabwean Dollar (with inflation in 9digits), he’ll probably be speaking directly to God! Although I doubt God will be very impressed with this fit, judging by my only known historical precedence of such an event; The Tower of Babel.

But what if my friend was gripped with true ambition, and he stuffed his wallet with, say, the US Dollar or the British Pound? I’m sure he wouldn’t make a stack high enough to form the heels of his girlfriend’s latest shoes!

It’s all in the mind…


Who wants to be a Millionaire?


I always imagined myself speaking to a group of students at one of our universities and throwing this question out to them: “Who, in this hall, wants to be a Millionaire?” The response is predictable; most people will thrust their hands up eagerly, save some who, probably, weren’t listening or who think I’m bad looking.

Now, I take my thoughts a little further and imagine speaking with a group of students in an American university, University of Michigan peradventure, and I throw the very same question to them: “Who, in this hall, wants to be a Millionaire?” The result will probably be similar to that of the Nigerian University.

But now, I’m throwing this question at you: “Do you think the Nigerian students and the American students were thinking of the same millions?” The answer is No! There is a Mathematical deception here; while 1000000 in Nigeria is 1000000 in America, 1million US Dollars is NOT 1million Naira, it is now 165,000,000 Naira! The same question, the same result, but not the same mind-set! While we align our ambitions targeting our millions in multiples of ‘1’, our American counterparts align their ambitions targeting their millions in multiples of 165! The difference is high, the economic results are overwhelming.

So it doesn’t surprise me that a student says he is comfortable with N50000 ($310) a month, or that another naively describes a millionaire as one who has accumulated N8million ($50000) or that someone who gets paid; N200,000 a month and drives a 10year old Honda Accord he polished with a few thousands, assumes he has arrived…

It’s all in the mind…

While I admire the “Who Wants to be a Millionaire” show sponsored by MTN for its promotion of knowledge, I’m not a big fan. This is because it fosters the illusion that winning the ultimate prize money (N10million) makes you a millionaire. It doesn’t. That show is supposed to be a Nigerian impression of the original American version, however, it was copied poorly; the American show really makes you a millionaire ($1000000). (By the way, MTN probably makes real millions from the calls you make to get on that show.)


Think in Dollars


So what I’m I driving at, you ask? You should begin to think of achieving your goals with a dollar mind-set. (Consider that a completely untouched salary of N1million a month i.e. N12million a year hits a million dollars in about10years if left unfertilized (assuming an imaginary average exchange rate of N120 to the dollar)).

Remember that guy in the beginning that said Nigerians are in trouble and how I’m supposed to prove/disprove that statement? Here goes: Taking an extremely simplistic situation;

Assume you are in the business of importing quality ball-point pens for retail. Two things to consider:

• i. The currency of international trade is the dollar
• ii. Most goods in Nigeria are imported, giving credence to the guy’s conclusion

(If the goods weren’t imported, the materials to make them probably were).

Now, the exchange rate is N120 to the dollar. The unit price of your pens is $1. So you sell at N150 to pocket a N30 profit. But late one evening, on the evening News, CBN announces a sudden change of rates to N165 to the dollar. To stay in business, you shore up your suddenly depreciated capital to buy more ball-point pens, which are N165 each now and sell to consumers at N195 (or higher) to maintain your profit margin.

To you and to your customers, prices have gone up! Things are expensive! (And they are; like my friend told me yesterday, even artificial eyelashes are affected by the dollar price).

But wait; there are two sides to a sale. What happened to the man who sold the pens to you? He still gets his $1!

Prices will go up because employers do not raise or lower salaries commensurate with the vacillation of the dollar.

How do you beat the system? Make your money in Dollars. How? That, my friend, is your assignment. But first internationalize your thoughts and think in dollars.