In Nigeria today, the monster of inflation is rearing its head with unrelenting intensity. Prices are spiralling out of control, and the average business owner and individual are grappling with the harsh reality of inflation’s bite. While this economic challenge is not unique to Nigeria, its impact is profoundly felt by those at the bottom of the pyramid.
According to the National Bureau of Statistics (NBS), Nigeria’s annual inflation rate climbed to 25.8 per cent in August 2023, from 24.08 per cent in July, marking the highest rate since September 2005. Experts point out that the rate reflects the impact of the removal of fuel subsidies, the devaluation of the official exchange rate and security issues in food-producing regions.
To survive and indeed thrive in the face of skyrocketing inflation, there are strategies that individuals and small businesses can deploy. Let’s look at 12 comprehensive blueprints for navigating these turbulent financial waters:
Diversify Income Streams – In a nation where inflation can erode your purchasing power, diversifying your sources of income becomes paramount. Businesses and individuals should look beyond their primary income streams and explore other opportunities, such as part-time jobs, freelance work, or side businesses. By doing so, you reduce your reliance on a single source, making you more resilient in the face of rising prices.
For instance, a school can explore alternatives on how to optimize the use of its premises and faculty; those with spaces can consider using it for events; and individuals who write and speak well can look at public speaking roles or writing gigs.
Budget Wisely – The cornerstone of any sound financial strategy is a well-crafted budget. Create a detailed plan that meticulously tracks your expenses and income. Prioritize essential items, such as food, housing, and healthcare, while cutting back on non-essential spending. The discipline of budgeting can help you save money and protect your financial stability. If you need help, don’t hesitate to contact a financial advisor.
Invest Wisely – To outpace inflation, consider investment options that offer better returns than traditional savings accounts. Stocks, real estate, and commodities are assets that have the potential to grow in value over time. Investing wisely can help your money work for you and maintain or increase your purchasing power.
It is unwise, at this time, to leave cash endlessly in the bank.
Hedge Against Currency Devaluation – Inflation often goes hand in hand with currency devaluation. To safeguard your wealth, consider holding assets in more stable currencies or investing in foreign currency accounts. This strategy can act as a hedge against the naira losing value, providing a safety net during tumultuous economic times.
Negotiate and Haggle – Inflation can create an environment where businesses are more willing to negotiate prices. For both individuals and businesses, don’t shy away from negotiating for better deals. Whether you’re buying goods or services, bargaining can lead to substantial savings. Be open. Be willing. Be prepared to haggle.
Stay Informed – Knowledge is power. Stay updated on economic and financial news to make informed decisions. Understanding how government policies and market dynamics are affecting prices can help you adapt your financial strategies accordingly. Get knowledge.
Look for Discounts and Deals – Shopping wisely is essential during inflation. Keep an eye out for discounts, promotions, and bulk purchase options. By making the most of these opportunities, you can stretch your budget further and reduce the impact of rising prices. Actively seek and pursue deals.
Increase Productivity – Businesses need to be agile and responsive to the changing economic landscape. To maintain profitability despite higher costs, focus on improving efficiency and productivity. Streamlining operations and reducing waste can go a long way in cushioning the impact of inflation on your bottom line.
Consider Bartering – In some cases, bartering goods and services with others can be an effective way to meet your needs without relying on cash. This age-old practice can provide relief when cash is in short supply.
Seek Financial Advice – When navigating uncharted financial waters, it’s often wise to consult with financial advisors or experts who can provide personalized guidance. They can help tailor your financial strategies to your specific situation, helping you make well-informed choices.
Community Support – In challenging times, your local community can be a valuable source of support. Consider collaborating with neighbours or fellow entrepreneurs to share resources, reduce costs, or initiate cooperative ventures. Community support can be a lifeline during times of financial distress.
Save and Invest for the Long Term – While addressing short-term inflation is important, don’t lose sight of your long-term financial goals. Continue saving and investing for your future, even if it means making smaller contributions. Building financial resilience over time is crucial.
Inflation, undoubtedly, may be a formidable foe, but with a well-thought-out strategy, businesses and individuals can not only weather the storm but emerge stronger.
To get ahead, diversify your income, budget wisely, invest strategically, and adapt to the changing economic landscape. By embracing these principles and making informed financial choices, I believe, that Nigerians can navigate the challenges of inflation and pave the way for a more secure and prosperous future.
Elvis Eromosele, a Corporate Communication professional and public affairs analyst lives in Lagos. He can be reached at elviseroms@gmail.com
