The consequences of
the process that has made Nigerians poorer as the years have gone by
have been as diverse as they have been disruptive. I try today to buy
stuff off Amazon, and besides books, the standard reply is that Amazon
does not ship the designated items to the destination indicated –
Lagos, Nigeria. The response to attempted purchase of digital stuff is
clearer: copyright worries make it impossible to send the items.
Conversely, of five books bought online, depending on how recent the
titles are, three get through.
It’s of little use
protesting to the post office. Not all online purchases come with
“tracking numbers”. Tell that to the attendant at the post office and
the shrug of shoulders, and the question, “So, how can we look for it?”
settles the matter.
Yet it was not
always this way. I still recall that some of my father’s dress shirts
came off orders from glossy catalogues, and all the way from the UK. In
the 70s, these orders were delivered by the old post office system to
the house. This, incidentally, was not a Lagos thing, for the house was
in Ilorin. Moreover, all deliveries came through on time.
So we were not
always this dodgy. Although we have been poor for a while now, I was
recently impressed by this latter fact, when I tried to prepare my
kids’ favourite cereal with warm milk. Growing up, milk used to be of
the evaporated or fresh variety – either way, it poured out of some
container. And I felt nostalgic enough to try something different, only
to be told by my kids that the milk didn’t quite make the grade. “It
tasted funny”! Admittedly, it tasted somewhat different from the milk
powder they’d been brought up on. But more important was the
realisation that the use of evaporated/fresh milk made sense only if
electricity from the mains is regular, and steady. Otherwise, food
poisoning becomes a real and present danger. Reduced “quality of life”
issues and poverty, handmaidens both.
However, the more
interesting outcome of the gradual impoverishment of the Nigerian has
been the response of product/service providers in the economy. As
disposable incomes have fallen, shoppers have bought in increasingly
smaller quantities. In the fast moving consumer goods sector, the
changing face of shelf-spaces describes this trajectory: large cans of
food long since gave way to the medium- and then to the small-sized
tins. The now predominant sachets came only later. This value
transition has also happened in the faster growing sectors of the
economy. Today, with recharge card values as low as N50, not many
remember that the GSM-licensed telecom companies started business
almost a decade ago, with recharge card values as high as N7,500. The
card makers’ numbers tell a fascinating story. Given that the margin on
each card is the same, irrespective of the recharge value it carries,
small, frequent, discrete purchases return higher net margins than the
lumpier variety.
Unfortunately,
besides the contraction in domestic final demand, domestic businesses
face a plethora of structural impediments to profitable operations. One
of these – access to formal sector credit – so concerns the Central
Bank of Nigeria (CBN) that it has been forced to cross several
firewalls in its bid to give traction to the market for private sector
credit. It would seem, in spite of the CBN’s quasi-fiscal operations,
that the problem with formal credit growth in this economy is the
failure of the banking sector to mirror the trajectory of the economy.
Talk to bankers
about their concerns over the CBN’s efforts to get a grip on monetary
management by tightening policy, and the central worry is the adverse
effects of the CBN’s policy on the main transmission agents, the banks.
Apparently, whereas banks have come under intense cost pressures as
depositors have insisted on matching the yields on their deposits with
the return on the CBN’s standing deposit facility, the banks have not
been able to pass these new costs on to their borrowers. So the
expectation is of shrinking margins over the next nine months.
But isn’t this
because the banks are at the beginning of the curve, and are still
focussed on the big corporate customers? Would they not be better
served by bulk-breaking their loans and re-packaging them in sachets?
