Saving Culture For Nations And Individuals Alike Cannot Be Over-Emphasised By Samson G. SIMON, Ph.D

There is this popular saying attributed to the Nigerian serial entrepreneur, Tony Elumelu “If I didn’t save when earning $1 then I wouldn’t save even if I earned $1 billion”. The same applies to nations and not only individuals. Some people think you can only save after feeding fat. The nations with the biggest sovereign wealth funds did not achieve that because there was no problem to solve or didn’t know what to do with the money. As some are wont to believe or say.

Saving is not only done when in abundance. As human wants are insatiable. But, you save as an individual or a nation because you are prudent, visionary, and farsighted, and you are pushing for sustainability and inclusivity in spending. It is equally about priorities not because you have exhausted all your wants.

I know many might have been sold on the idea of borrowings are not bad. But, what you do with them is what matters. Platitudes like this one have made nations fail. And our fatherland is neither excepted nor is it immune from being torpedoed by some received wisdom that is as pernicious as they come.

Borrowings are terrible. As a person or an economy, you should only borrow as a last resort. And you have to weigh the repercussions in the long run and not only the short-term benefits. The best approach is to save and invest aggressively. Most especially in high-yielding investments. Savings and investments that will support yourself or the state in perpetuity.

There are conditions that warrant borrowing even when you have a huge nest egg. Borrowing if the interest accruals are below what your investments or savings can generate. Meaning it is cheaper to borrow than to use your own resources.

For example the S&P 500 Index, the annual average return for that is in the region of 10%  compounded since its founding almost 100 years ago. What’s the compounding interest for a loan to build roads and bridges? Not the simple interest now but compound interest in the long-run. If it’s way below the 10% S&P 500 Index offers then it might be in your best interest to borrow instead of depleting your savings.

And you can use the return on the investments to defray the interests and the principal of the loan over time and still keep your nest egg.

I know is not a one man’s decision in a democracy and many “stakeholders have to be carried along” (whatever this means). For example when Jonathan and Okonjo wanted to save for a rainy day; Amaechi and Fashola fought them tooth and nail saying which rainy again that it’s already raining.

Nigeria as a state needs leaders that can help it not only to save but save aggressively while still meeting present needs. With results to show. It is a balancing act that requires a lot of guts, gumption, and grit.

With the coming of the Buhari Presidency, which met the nation’s sovereign debt at exactly N12.12 trillion in June 2015 according to the Debt Management Office (DMO).  But it is now projected to be  N77 trillion by the end of 2023. I think this might be underestimating the debts and overestimating revenues just like it has always been done.

And these tens of trillions in borrowings are neither necessary nor are they wise. And would likely haunt our nation for generations. As if this spectre is not bad enough. The authorities do not seem to be letting off. They seem to be saying “We are just getting started!!!!

The good advisors around leaders might have their voices drowned out by the bad pieces of advice from those that do not want to “offend the leader” by suggesting the right things instead of the easy ones.

But, as President, you have to stand your ground and insist the right things be done. And not only insisting but following up to ensure it’s unfailingly done. Because, if you don’t, it’s your government that will be messed up and it’s your failure and you’d take the fall for everything on your watch.

While meeting immediate needs is key, saving for a rainy day is equally crucial. The importance of saving for an economy or an individual can never be emphasized. It should be a guiding principle for prudent, astute, far-sighted, and visionary persons and leaders.