Categories: Op-Ed

Pepper Dem: Nigerian Economic Development And Popular Music

By Feyi Fawehinmi

One day, hopefully not too far from now, Nigeria will get lucky with the kind of leadership that unlocks economic growth and pulls millions out of poverty (it’s not going to happen under APC so we have to wait for Buhari and his party to carry their wahala and go).

But, as with so many other things in life, when you finish one thing and do it well, your reward is simply another hard thing to do. So when you imagine a future where economic growth has taken off in Nigeria — say 10% GDP for 10 years straight (don’t let the current small minded government tell you this is impossible — in a country of almost 200 million people with a lot of poverty, it is very very possible), I often find myself wondering what Nigerians will do with the extra income.

Consider the 3 charts below from a recent Credit Suisse report titled The Market Impact of Emerging Savers.

Monthly Spending by Category in China

The chart shows how Chinese people spend their income on a monthly basis. Look at the green part in the middle — savings. There has to be something more to this, something cultural, given how it is consistent across age groups. 30% of income gets squirrelled away. I’m pretty sure that 30% was close to 50% a few years ago even.

Saving’s distribution mix across China, India and South Africa

Now this chart compares where the Chinese, Indians and South Africans put away their savings. You can see that the famed Indian love for gold is not a myth. It looks like the Chinese and Indians tend to put most of their savings in bank accounts but this is somewhat misleading.

Savings as a percentage of total expenditure across our EM countries

 

This is where the difference becomes really stark. When you think about the effect of over 1 billion people saving 30% of their income, you can begin to imagine the firehose of capital that this generates. This is also further evidence that there is a cultural phenomenon at work — the Chinese are saving more than countries who are not as rich as they are.

Nothing illustrates this better than the incredible story of Yu’e Bao — Alibaba’s wealth management product. In early 2013, this product had $1.9bn in it. Today it is the world’s biggest money market fund with $210bn of assets.

The flag-bearer was Yu’e Bao, which translates as leftover treasure. Launched by Tianhong Asset Management, a small fund house that had $1.9bn in assets in March 2013, and Alibaba, the ecommerce giant that is China’s equivalent of Amazon, the money market fund drew in more than Rmb500bn in nine months, making it the fastest-growing fund of all time.

Other asset managers, banks and platforms quickly jumped on the bandwagon, offering their own online money market funds. Since the second quarter of 2013, the assets under management in China’s money funds jumped from Rmb300bn to Rmb4.4tn today, according to Mr Powers.

The Germans are the Chinese of the Western world as a recent FT report pointed — their savings rate of 10% of disposable income is double that of the European or American average. And for the German cultural angle:

The world’s first savings bank was founded in Hamburg in 1778. Inspired by Enlightenment ideas of social progress, the institution was seen initially as a tool to help the plight of the urban poor. By saving small bits of their pitiful earnings, they might one day be in a position to pay for the education of their children, and to soften the financial blow of old age and illness. That motivation, however, would soon be replaced by something altogether different.

When you have a high internal savings rate, you’re less reliant on the vicissitudes of foreign investment. As you may have noticed, now that the Chinese have deployed these savings as investments locally (and even over-invested in a lot of cases), they now have to export all that savings-as-capital to countries like Nigeria. The British used to be high savers but not anymore. So if you don’t save what do you do? You will be heavily reliant on foreign investment for economic development and growth which means you have to be a place that is very friendly to business such that you regularly attract that foreign capital. The worst thing you can be is a country with low savings rate and poor business climate — you will take 50 years to get the kind of growth you can get in 5 or 10 years. The thing go slooooooooow d

Money in the music

All of that brings us nicely to Adekunle Gold and his new album About 30.

I’m on my 3rd listen or so and the album is very sweet. I like it. He’s one of those Nigerian musicians who seems to always deliver (and in live performances too). At the moment my favourite song on the album is Money — track 7 on the album.

Haters gon’ hate

A year ago, I wrote a piece on how Nigerian music isn’t doing enough to document history as it happens. But in reality something is being documented. As a way of being somewhat self critical, I’ve been paying more attention to what Nigerian musicians are saying in their songs. It is useful in answering the question that opened this piece — when the day of economic growth and higher income comes, what are Nigerians going to do with the extra money? If they save more of it, then it means the country might enter a virtuous cycle of high economic investment which leads to more roads and bridges and power plants. If they turn it all the waaaaay up, then the country will have to rely on foreign investment to keep the economic show on the road. This is of course harder — if you misbehave like Nigeria did in 2015 and 2016 and start fooling around with exchange rates, the foreign investment will dry up and you get a recession that sets you back many years. When I listen to Nigerian music — and if Nigerian music is telling us something about present day Nigeria — the only conclusion is that the latter option is what Nigeria is going to take.

Some weeks ago, I listened to a song called Bye Bye Poverty by some chap named CDQ. The title of the song caught my attention so I listened closely.

Desiring to banish poverty is a good and fine thing. But then what does Mr CDQ want to do with the money?

Oshi oda bye bye poverty (wobi)
Olowo lon shaiye
Oshi oda bye bye poverty (woss)
Plenty money follow me
Plenty baby follow me (yeah yeah)
Educational follow me
Ómó to Chache owun lon gbawo
Plenty money follow me (owo)
Plenty baby follow me (owo)
Education follow me (owo)
Ómó to Chache owun lon gbawo
Wón le le le wón le ba
Baba loke ginger mi
Enemies wón para
Dem no fit hinder me

In fairness he seems to want to spend some of the money on education (although when you listen it sounds more like ‘elevation’ and not education). But the trouble is that he wants plenty babes to follow him and more troublingly, he wants to do hobi to his enemies. When spending is motivated by the desire to pepper dem then it is safe to say that a lot of capital is going to be misallocated. More importantly, that money is not going to be saved which can convert it into capital that builds all those nice things Nigeria desperately needs. This is a shame because Mr CDQ wants to be as rich as Dangote, Mike Adenuga and Otunba Akin Alabi.

Hobi

Back to Mr Gold’s Money. After pleading with the One who created the heavens and the earth to bless him with money, he reveals what he wants to do with all that extra cash:

Money money, ego apekanuko owo owo
Money money, ego ego ego ego, jowo yale mi, dakun mo be o
Bless me, bless me papa, give me good life father
Ki’n ma yan fanda loju elegan mi o
Money money ego ko ma bo o

Ah, there it is — he too wants to pepper dem. He wants his haters to see him flourishing and be consumed by bitterness. You might say this is a universal human condition not unique to Nigerians and you will have a strong point. But it is Nigeria we are talking about. The trouble with a pepper dem philosophy is that you cannot pepper the haters by having say N100m and buying a cheap second hand car and saving/investing N99m — how are the haters going to see it? You have to buy a big and intimidating car so when they see you drive past at 10mph, the bitterness can be amplified in their sad hearts and they will know that your Gawd is good all the damn time.

He goes on to say

I dey do my best everyday, I pray make e add up baba
I don’t want to still o, jhor mo bebe
Kowepe, kowopo, ani mo bebe
Tori debit mi po, o po o, family mi po, o po
Have mercy on me and give me good life with a lasting peace of mind
Everyday as I dey grind, make your favour follow me baba

This is another troubling part of Nigeria’s economic story. How much do you need to take care of your (extended) family? It is hard and money is hardly ever enough. It is also a big driver of corruption in ways that we often don’t acknowledge which has been with Nigeria for a very long time

Getting ready to get rich

As I said earlier, Nigeria is going to get lucky soon once Buhari and APC have gone with their wahala (I can’t hear your amen). But if popular music is an accurate reflection of society and a predictor of how increased incomes will be deployed, then there are things that can and should be done now to prepare for that bright and sunny future (I still can’t hear your amen).

It is better to get people saving now before they get rich because riches only show you what you already were. Since I trolled farmers yesterday, we can start with them — this practice whereby farmers get loans, reap a bigger harvest and then proceed to marry a new wife or go on religious pilgrimage needs to be flogged out of them.

There are some encouraging signs with startups like Piggybank, CowryWise and Wema Bank’s Alat. Both of them make it easier to save money. Nigerians will need to be nudged into saving more of their income. For a country that badly needs capital to deploy as investments, delaying gratification and saving more is one of the most patriotic things any Nigerian can do.

Of course this is not easy. Saving in naira in Nigeria can be quite a dangerous thing. The CBN can just start printing money anyhow and you will watch your savings lose value right before your eyes. There is no way to avoid this one — the government will just have to behave more responsibly. Borrowing pension funds to pay salaries just guarantees that the future is going to be like it is today. Perhaps making it easier for Nigerians to save in dollars might be an option even though this carries its own problems.


I’m thinking aloud here. The person who made me love economics also made me realise that the data alone will never tell you everything. Culture — and what people believe — is just as important as whatever it is you put in your spreadsheet and your policy documents. I suspect that popular music is telling us something and that pepper dem is quite a thing.

But history is not destiny.

Recently I was reading about the Chinese reforms that broke the Iron Rice Bowl. And you know what I have found most amazing? In the late 70s and early 80s — in my lifetime — these same Chinese people were referred to as lazy, unproductive, unmotivated and entitled.

I still can’t hear your amen from the back.

 

Source: Aguntasolo.com

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