Feature/OPED
How Policy Flip-Flops Are Making Nigerians Poorer
By Blaise Udunze
Nigeria’s deepening poverty crisis is no longer speculative; it is now statistically inevitable. Although the latest Consumer Price Index figures released by the National Bureau of Statistics (NBS) suggest that headline inflation is cooling and growth indicators show tentative improvement, regrettably, more Nigerians are slipping below the poverty line. Reviewing the recent projections from PwC’s Nigeria Economic Outlook 2026, it is alarming, which reveals that no fewer than two million additional Nigerians are expected to fall into poverty next year. This is expected to push the total number of poor people to about 141 million, roughly 62 percent of the population and the highest level ever recorded in the country’s history.
This grim outlook persists despite eight consecutive months of easing inflation and modest economic recovery, and as one can perceive, the contradiction is telling. The fact remains that macroeconomic signals are improving on paper, yet lived reality continues to deteriorate. It is glaring that the widening gap between policy metrics and human outcomes exposes a deeper truth in the sense that Nigeria’s poverty crisis is not simply the product of external shocks or temporary adjustment pains. It is the cumulative result of fragile policymaking, inconsistent reforms, weak institutional coordination, and a failure to sequence economic changes with adequate social protection. With these, it becomes clearer that poverty in Nigeria is no longer an unintended side effect of reform; it is increasingly its most visible outcome as identified today.
It would be recalled that the current administration in 2023, when it assumed office, promised a bold economic reset. At this point, the nation witnessed the fuel subsidy removal, exchange-rate liberalisation, and tighter fiscal discipline being introduced swiftly and applauded internationally for their courage and long-term logic. Notably, these reforms unleashed an economic storm whose aftershocks continue to batter households and currently resulting to the cost of a bag of rice that sold for about N35,000 two years ago now costs between N65,000 and N80,000, while a crate of eggs has risen from N1,200 to over N6,000 and basic staples like garri, tomatoes, and pepper have drifted beyond the reach of ordinary Nigerians. For millions, the economy did not reset; it snapped.
Inflation, often described by economists as a “silent tax,” has punished productivity, mocked thrift, and rewarded speculation.
Reports from the NBS’s December 2025 disclosed that headline inflation eased to 15.15 percent and according to it, this is due to a rebasing of the Consumer Price Index, down sharply from 34.8 percent a year earlier, this statistical moderation has brought little relief to households. Food inflation, at 10.84 percent year-on-year, and a marginal month-on-month decline may look reassuring on spreadsheets, but for families spending 70 to 80 percent of their income on food, such figures feel detached from reality. These figures are not only implausible but also insulting to those whose lives have been torn apart by the skyrocketing prices. With the realities facing the larger populace, Nigeria must be using another mathematics.
Nigeria may have changed its base year, but it has not changed the harsh arithmetic of survival.
PwC’s data underscores this disconnect, as nominal household spending rose by nearly 20 percent in 2025, real household spending contracted by 2.5 percent, reflecting the erosive impact of rising food, transport, and energy costs. The painful part of it, is that Nigerians are spending more money to consume less, and this is to say that growth, hovering around 4 percent, is not strong enough to absorb shocks or lift households meaningfully. As analysts note, Nigeria would require sustained growth of 7 to 9 percent to make a significant dent in poverty. That is to say that anything less merely slows the descent.
The structural weakness of the economy is compounded by policy inconsistency. Nigeria’s economic landscape is littered with abrupt shifts, subsidy removals without buffers, currency reforms without stabilisation mechanisms and trade policies that oscillate between restriction and openness. For households and small businesses, which employ most Nigerians, this unpredictability makes planning impossible. The economy has constantly being faced with price volatility, income shocks, and lost jobs because these are the ripple effects of every policy reversal. Uncertainty itself has become a poverty multiplier.
Nowhere is this fragility more evident than in food systems and rural livelihoods, and this has been where insecurity has merged with policy failure to create a new poverty spiral. Across farmlands in the North and Middle Belt, crops rot unharvested as banditry and insurgency force farmers off their land. Nigeria’s largely agrarian economy has been crippled by violence that disrupts planting cycles, destroys infrastructure, and displaces communities. The result is both income poverty for farmers denied access to their livelihoods and food inflation that erodes purchasing power nationwide.
For record purposes, earlier last year, the NBS Multidimensional Poverty Index showed that 63 percent of Nigerians, about 133 million people, are multidimensionally poor, with poverty heavily concentrated in insecure regions. Findings showed that about 86 million of the poor live in the North, and this is where insecurity is most severe. This record showed that rural poverty stands at 72 percent,c compared to 42 percent in urban areas, and while the states most affected by banditry and insurgency record poverty rates as high as 91 percent. Insecurity is no longer just a security problem; it is one of Nigeria’s most powerful poverty drivers.
The economic cost of insecurity in Nigeria today is staggering. This is because the conservative estimates suggest Nigeria loses about $15 billion annually, which is roughly equivalent to N20 trillion, due to insecurity-induced disruptions across agriculture, trade, manufacturing, and transportation. At the same time, security spending now consumes up to a quarter of the federal budget. In just three years, over N4 trillion has been spent on security, which crowded out investment in health, education, power, and infrastructure. Every naira spent managing perpetual violence is a naira not invested in preventing poverty, even as poverty deepens, the state’s fiscal response reveals a troubling misalignment of priorities. The 2026 federal budget, estimated at N58.47 trillion, ironically allocates just N206.5 billion to projects directly tagged as poverty alleviation and this only amounts to about 0.35 percent of total spending and less than one percent of the capital budget. In a country where over 60 percent of citizens live below the poverty line, this allocation borders on policy negligence.
Worse still, over 96 percent of this already meagre poverty envelope sits under the Service Wide Vote through the National Poverty Reduction with Growth Strategy, largely as recurrent provisions. All ministries, departments, and agencies combined account for barely N6.5 billion in poverty-related projects. This fragmentation reflects a deeper institutional failure, that is to say, poverty reduction exists more as a line item than as a coherent national mission.
Where MDA-level interventions exist, they are largely palliative and scattered, grain distribution in select communities, tricycles and motorcycles for empowerment, and small scale skills acquisition for women and youths. The largest such project, a N2.87 billion tricycle and motorcycle scheme under a federal cooperative college, accounts for nearly half of all MDA-based poverty spending. The fact remains that the various interventions may offer temporary relief, and they do little to address structural drivers of poverty such as job creation, productivity, market access and human capital development.
Even the Ministry of Humanitarian Affairs and Poverty Alleviation illustrates the problem just as its budget jumped sharply in 2026, much of the increase went into administrative and capital items, office furniture, equipment, international travel, retreats, and systems automation rather than direct poverty-fighting programmes. This reflects a familiar Nigerian paradox: institutions grow, but impact shrinks.
International partners have been blunt in their assessments. The World Bank estimates that Nigeria spends just 0.14 percent of GDP on social protection, which is far below the global and regional averages. Only 44 percent of safety-net benefits actually reach the poor, rendering the system inefficient and largely ineffective. PwC similarly warns that without targeted job creation, productivity-focused reforms, and effective social protection, poverty will continue to rise, undermining domestic consumption and straining public finances further.
Fiscal fragility compounds the crisis. The N58.18 trillion 2026 budget carries a deficit of N23.85 trillion, with debt servicing projected at N15.52 trillion, nearly half of expected revenue. The public debt has ballooned to over N152 trillion. The contradiction here is that Nigeria is borrowing not to expand productive capacity but to keep the machinery of government running. The truth is not far-fetched because, as debt crowds out development spending, households are forced to pay privately for public goods, education, healthcare, water, deepening inequality and entrenching poverty across generations.
To be clear, not all signals are negative. This is because opportunities exist if reforms are sustained and properly sequenced. Regional trade under the African Continental Free Trade Area could diversify exports and create jobs. But reform momentum without inclusion and institutional capacity risks becoming another missed opportunity.
This is the central tragedy of Nigeria’s moment. The country is attempting necessary reforms in an environment of weak buffers, fragile institutions, and low trust. Poverty is therefore not accidental. It is the predictable outcome of inconsistency, reforms without protection, stabilisation without security, and budgets without people.
Nigeria faces an undeniable choice. It can continue down a path where fragile policies deepen deprivation and erode trust, or it can build a disciplined, coordinated framework that aligns reforms with social protection, security, and inclusive growth. Poverty is not destiny. But escaping it requires more than courage in reform announcements; it demands consistency, compassion, and the political will to place human welfare at the centre of economic strategy.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: bl***********@***il.com
By Blaise Udunze
From a general observation, comparisons are powerful political tools. They simplify complex realities, inspire supporters and shape public perception. Another side of this is that they can also become misleading when symbolism replaces substance.
The latter appears to be the objective behind two recent interventions in defence of his excellency, President Bola Ahmed Tinubu. Respectfully, it was observed that veteran journalist Martin Oloja likened Tinubu’s political journey to that of football icon Lionel Messi. He portrayed him as a resilient strategist whose patience and tactical brilliance eventually produced victory. As this now appears to be a trend, Imo State Governor Hope Uzodimma further elevated the narrative, comparing Tinubu to Singapore’s founding Prime Minister, Lee Kuan Yew. He didn’t stop at that; rather further argued that today’s painful reforms would eventually transform Nigeria just as Lee transformed Singapore. They are compelling analogies.
Unfortunately, it was observed that both began to unravel once governance, not politics, was used as the standard of measurement.
It is a known fact to the world that Lionel Messi is celebrated not because he endured criticism or finally lifted the World Cup after years of disappointment. He is celebrated because his greatness is measurable. His goals are counted. His assists are recorded. His trophies are displayed, and not just that, his records speak louder than the opinions of his admirers, which may have taken a different turn now after the outcome of the 2026 FIFA World Cup.
The same is also true of Lee Kuan Yew. History has shown that he is not revered because he introduced difficult reforms or enjoyed the support of loyal political allies. Governor Hope should be reminded that Lee is remembered because he fundamentally transformed Singapore. Amongst his achievements were transforming a poor trading port into one of the world’s richest, cleanest, safest and most efficiently governed nations.
Lee’s records speak for him because under his leadership, Singapore built world-class infrastructure, an incorruptible public service, globally competitive education, affordable housing, investor confidence and one of the highest standards of living anywhere in the world.
Neither Messi nor Lee Kuan Yew became legends through carefully crafted narratives. Yes, they became legends because the evidence became impossible to dispute. That is precisely where comparisons with President Tinubu become difficult.
It is an error to assume that winning elections is the same as winning governance, and at the same time, political brilliance may secure power, but only effective leadership secures history’s approval.
For millions of Nigerians, governance is not measured by campaign strategy or political resilience. It is measured by the realities they confront every morning.
Can they afford food? Can they pay transport fares? Can they pay rent with the current landlords’ economy? Can they keep their businesses open? Can they sleep or travel freely without fear of kidnapping? Can they find jobs after graduation? Can they access reliable electricity and healthcare? These are the scoreboards by which governments are judged.
Supporters of the Tinubu administration frequently point to encouraging macroeconomic indicators. Foreign reserves have improved. Government revenues have risen. States now receive significantly larger allocations through the Federation Account Allocation Committee (FAAC). Well, these ‘achievements’ will be reviewed soon through the lens of news narratives. International financial institutions have welcomed several policy reforms. The removal of fuel subsidy and exchange-rate liberalisation are presented as courageous decisions that previous administrations avoided.
These developments deserve acknowledgement. Yet macroeconomic improvements are not the same as improvements in citizens’ welfare.
In reality, an economy cannot be declared successful merely because government revenues have increased while household purchasing power continues to deteriorate, as this would be a complete aberration.
Again, it is considered an anomaly that Nigeria reports stronger fiscal numbers, but millions of families continue to struggle with soaring food prices, rising transport costs, expensive housing, high electricity tariffs and shrinking disposable incomes.
Statistics may comfort policymakers. They rarely comfort hungry citizens. Messi never celebrated possession statistics after losing a match; rather, he cried and cried over losing the opportunity of winning the trophy at the concluded 2026 FIFA World Cup. To him, results mattered.
The reality is that governments should be judged by the same principle. This is open to dispute, but of a truth, Governor Uzodimma’s comparison to Lee Kuan Yew deserves even closer scrutiny because it raises an important question, though it may appear hard to answer.
If Tinubu is Nigeria’s Lee Kuan Yew, where is Nigeria’s Singapore? What exactly made Lee Kuan Yew exceptional? Was it simply his willingness to implement painful reforms? Certainly not.
Many leaders across the developing world have introduced painful reforms. Very few transformed their countries.
One thing stands out here: Lee’s legacy rests on outcomes, not intentions. Judging from all indications, it is obvious that his reforms dramatically reduced corruption, attracted investment, strengthened institutions, expanded industrialisation, improved education, guaranteed affordable public housing and steadily raised incomes across generations. Unlike Nigeria’s ongoing experience, Singapore’s rise was not a promise repeatedly postponed to the future. Citizens experienced tangible improvements in their daily lives. That is why history celebrates Lee Kuan Yew. Nigeria’s present reality tells a different story.
It is glaring and ironic that despite improved fiscal revenues, many Nigerians continue to grapple with rising inflation, worsening poverty, declining purchasing power, youth unemployment, struggling businesses and persistent insecurity. If they must know, these are not merely economic statistics; they are the lived realities by which citizens judge any government.
The Lee Kuan Yew comparison also overlooks perhaps the most important ingredient behind Singapore’s success, which is primarily the institutions.
It is obvious and practically doubtful if Governor Uzodinma’s kind of Singapore is the same as the one on which its transformation was built upon an efficient bureaucracy, disciplined public institutions, predictable regulation, meritocracy, uncompromising anti-corruption enforcement and consistent long-term planning as championed by Lee Kuan Yew. An honest question here is, can the same be said of Nigeria today?
The truth is not far-fetched; Nigeria is nothing close to it because the realities and lived experiences of Nigerians are that the country continues to grapple with weak institutions, policy inconsistency, bureaucratic inefficiency, corruption concerns and widespread insecurity.
His impeccable achievements are built on the institutions; hence, without institutional transformation, every effort to invoke Lee Kuan Yew risks confusing aspiration with achievement.
One common trend witnessed lately is that the supporters of the administration often argue that Nigerians must be patient because meaningful reforms require time. That argument deserves consideration.
Let it also be made known that patience should never become an endless substitute for accountability. Citizens are also entitled to ask whether the sacrifices demanded today are producing measurable improvements tomorrow.
History remembers leaders not because they prescribed hardship, but because that hardship ultimately produced prosperity for those alive and not for the dead.
Another weakness in both comparisons is the tendency to confuse political mastery with administrative excellence. These are totally two different things, because when it comes to winning elections, it requires coalition building, negotiation and political calculation. Whilst running a nation demands competent institutions, sound economic management, transparency, public trust and measurable improvements in living standards.
Again, the two are not the same, and for this reason, many exceptional politicians have governed poorly. Many successful administrators never became political giants. Democracy ultimately rewards governance, not political mythology.
This is not to suggest that President Tinubu’s administration has achieved nothing. Tax reforms, infrastructure investments, fiscal restructuring and efforts to stabilise public finances represent important policy initiatives whose long-term impact remains to be seen. Well, acknowledging those initiatives is consistent with honest public discourse.
Equally important, however, is recognising that millions of Nigerians continue to judge the administration through the realities and their lived experiences rather than the promises they hear.
Football supporters judged Lionel Messi by the trophies in the cabinet. In like manner, history judges Lee Kuan Yew by the Singapore he built. The same measure should be applied in this nation, as Nigerians will judge President Tinubu by the Nigeria he leaves behind.
The key metric here is that if inflation falls sustainably, poverty declines significantly, insecurity is substantially reduced, electricity becomes more reliable, industries expand, jobs multiply, and citizens regain confidence in the future, history will acknowledge those achievements without requiring comparisons to Messi or Lee Kuan Yew.
Neither Messi nor Lee Kuan Yew needed political allies to persuade the world of their greatness, and that distinguishes both as the greatest of all time (GOAT).
Their records spoke for themselves. Political endorsements may dominate today’s headlines. History, however, listens only to evidence. Even Messi needed trophies. Lee Kuan Yew needed results. Nigerian leaders should be judged by no lesser standard.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: bl***********@***il.com
By Jerome-Mario Utomi
There are moments in the life of a nation when leadership is measured not merely by the ability to command institutions but by the courage to transform them. Such moments demand more than administrative competence; they require vision, strategic communication, and an unwavering commitment to rebuilding public confidence. The keynote address delivered on behalf of the Inspector-General of Police (IGP), Mr Olatunji Rilwan Disu, at the Lagos PR Fest 2026 grand finale was one of such defining moments.
Held at the iconic MUSON Centre, Onikan, Lagos, the event transcended the boundaries of a conventional police engagement. It became a national conversation on security, governance, public trust, and the indispensable role of strategic communication in nation-building.
More importantly, the IGP, who was represented at the event by AIG Simeon Udofia Akpanudom, Head of the Force Criminal Investigation Department (FCID) Annex, Alagbon Close, Ikoyi, revealed a policing philosophy that is quietly but deliberately redefining the image and operational culture of the Nigeria Police Force.
For decades, public perception of policing in Nigeria has largely been shaped by mistrust, misunderstanding, and an unfortunate history of strained relations between citizens and law enforcement agencies. While successive administrations have introduced reforms, many struggled to address the most fundamental ingredient of effective policing-public trust.
IGP Disu appears determined to confront that challenge from an entirely different perspective.
His declaration that “security is everyone’s business” was not a rhetorical flourish. It was a profound statement of intent. It reflected an understanding that sustainable security cannot be achieved through coercion alone but through partnership, inclusion, transparency, and continuous engagement with the people. Indeed, what the IGP has introduced is more than institutional reform. It is a comprehensive rebranding of policing itself.
Unlike cosmetic rebranding that focuses on uniforms, slogans, or public ceremonies, this initiative is rooted in changing institutional culture and public perception simultaneously. It seeks to replace fear with confidence, suspicion with collaboration, and silence with meaningful dialogue.
The brilliance of this approach lies in its recognition that trust is not demanded; it is earned.
Throughout the keynote, the IGP consistently emphasised evidence-based communication, accountability, and transparency as pillars upon which public confidence must be rebuilt. At a time when misinformation travels faster than facts, and public institutions are constantly subjected to intense scrutiny, his insistence that policing should be supported by credible information rather than propaganda reflects both wisdom and contemporary relevance.
Perhaps nowhere is this transformation more visible than in the establishment and expansion of the Violent Crimes Response Unit (VCRU). Rather than allowing achievements to remain hidden within internal reports, the Nigeria Police Force is increasingly communicating measurable outcomes, demonstrable operational effectiveness, and encouraging independent public assessment.
This deliberate openness and transparency represent a significant departure from the communication style traditionally associated with many security institutions.
Equally commendable is the renewed emphasis on accessible channels for complaints, feedback and citizen engagement. Every modern democratic institution understands that accountability strengthens authority rather than weakening it. By inviting public scrutiny instead of avoiding it, the Nigeria Police under IGP Disu is gradually redefining what institutional confidence should look like. The Inspector-General deserves particular commendation for recognising that public relations is not an appendage to policing but an operational necessity.
Far too often, public relations is misunderstood as image laundering or crisis management. In reality, effective public relations is about building relationships, creating understanding, managing expectations, and sustaining credibility. It is this broader and more professional understanding that permeated the Inspector-General’s address.
His decision to engage public relations professionals at Lagos PR Fest was therefore highly symbolic. It demonstrated that security communication must evolve beyond press statements announcing arrests or crime statistics. It must become a continuous conversation with citizens, communities, opinion leaders, professional bodies, and the media.
Equally remarkable is the renewed focus on community policing and the revitalisation of the Police Community Relations Committee (PCRC). These initiatives acknowledge an enduring truth: communities understand their security challenges better than distant bureaucracies.
By encouraging local participation, youth engagement, religious leaders, traditional institutions, and civil society organisations to become active stakeholders, the Nigeria Police is moving policing closer to the people it serves.
This approach is consistent with successful policing models across the world where intelligence flows more freely because communities trust law enforcement agencies enough to share information.
The emphasis on participatory campaigns such as “Security is Everyone’s Business” and “If you see something, say something” further reinforces this philosophy. These messages wisely redefine every citizen from being a passive observer into an active contributor to national security.
That represents strategic public relations at its finest. Perhaps the most compelling dimension of the Inspector General’s address is his deliberate connection between policing and nation-building.
Security does not exist in isolation. It supports economic growth, encourages investment, protects democratic institutions, and creates the stability necessary for social development. Safe highways promote commerce. Secure schools guarantee educational continuity. Protected communities attract investment. Professional law enforcement strengthens constitutional governance.
Viewed through this broader lens, policing becomes an essential instrument of national development rather than merely an agency of law enforcement. The Inspector-General’s appeal for “Nigeria First” narratives equally deserves commendation. In an era characterised by misinformation, polarisation, and divisive narratives, institutions must intentionally promote messages that unite rather than divide.
Strategic communication has become an important national asset. This is where professional public relations practitioners have an enormous responsibility. Their expertise extends beyond media visibility to fostering social cohesion, encouraging responsible public discourse, and strengthening confidence in democratic institutions.
The Nigerian Institute of Public Relations (NIPR), therefore, occupies a strategic position in supporting this national assignment.
Naturally, scepticism remains understandable. Public confidence, once diminished, cannot be restored overnight. Institutional reforms require consistency, measurable outcomes, and sustained leadership commitment.
Fortunately, the Inspector-General himself demonstrated refreshing realism by acknowledging that rebuilding trust remains an ongoing process. That honesty itself strengthens credibility.
His clearly articulated roadmap-rebuilding institutional credibility through transparency, strengthening community intelligence through grassroots participation, and promoting national cohesion through coordinated communication-provides a practical framework for long-term institutional renewal.
Importantly, these objectives align with internationally recognised principles of democratic policing. What distinguishes the current leadership is the willingness to place communication at the very centre of institutional transformation rather than treating it as an afterthought.
Leadership is often remembered less for the challenges inherited than for the direction established. Judging from the philosophy articulated at Lagos PR Fest 2026, IGP Disu is laying the foundation for a policing model that recognises that legitimacy derives not only from constitutional authority but from public confidence.
That distinction is profound. A police force may possess legal powers, but without public trust those powers become increasingly difficult to exercise effectively. Conversely, when citizens willingly cooperate, volunteer intelligence, respect lawful authority, and see themselves as partners, security becomes collective rather than confrontational.
That appears to be the future envisioned by the Inspector-General. His concluding appeal that all stakeholders must work together in transparency, accountability, and shared responsibility captures the essence of democratic policing in the twenty-first century.
Ultimately, the significance of the Lagos PR Fest address extends far beyond one conference or one keynote presentation. It represents a declaration that the Nigeria Police Force is prepared to measure success not only by arrests made or crimes prevented but also by relationships built, confidence restored, and communities united.
For me, the recent elevation by the IGP and express approval by the Nigerian Police Service Commission of some senior officers to the rank of Assistant Inspectors-General of Police (AIGs). Commissioners of Police (CPs) and others truly proves beyond reasonable doubt that the IGP is a man who understands that professionalism, strategic thinking and operational excellence are the defining features of global policing. In fact, analysts in particular and Nigerians of goodwill in general are beginning to view the recent appointment of IGP Disu as a very huge blessing to the nation.
If sustained with consistency, integrity, and measurable performance, this strategic shift may well become one of the most consequential institutional reforms in contemporary Nigeria. For at the heart of every peaceful nation lies a simple but enduring truth: security thrives where trust flourishes.
By placing strategic public relations at the centre of policing, IGP Disu has demonstrated an appreciation of that timeless principle. In doing so, he has presented Nigerians with something far more valuable than a communication strategy. He has presented a vision.
A vision in which the police badge symbolises not fear but reassurance; not distance but partnership; not mere authority but earned legitimacy. That is a vision worthy of national support, thoughtful reflection, and sustained implementation.
Utomi, a media specialist, writes from Lagos, Nigeria. He can be reached via Je*********@***oo.com/08032725374
By Gloria Onosode
For generations, conventional financial advice has treated debt like a trap — a final, desperate resort for emergency cash or a slippery slope toward financial instability. But as Nigeria’s economic terrain evolves, this defensive mindset is changing. Progressive business leaders, entrepreneurs, and forward-thinking individuals are realising that it can be an important financial tool for achieving personal or business objectives when used responsibly and within one’s repayment capacity.
To build a sustainable financial future, we must change our relationship with credit. Borrowing shouldn’t be a cycle of survival; it should form part of a broader financial plan designed to support sustainable growth. The secret lies in masterfully understanding borrowing for productive purposes and learning how to leverage purposeful borrowing to hit your most ambitious milestones.
At its core, the difference between constructive and destructive borrowing comes down to one fundamental principle: what does the cash do once it lands in your account?
Bad debt funds depreciating lifestyle assets or temporary consumption. Borrowing to buy luxury clothing, fund a lavish party, or upgrade to a consumer gadget that does not increase your income simply pulls future earnings forward to pay for a fleeting present moment. It drains cash flow without offering a return.
Conversely, good debt acts as an investment in your future self or your company. It is capital deployed to acquire assets, increase productivity, or generate recurring revenue that far outpaces the cost of the interest. When you borrow to buy a delivery truck for your logistics company, stock up on inventory ahead of a peak retail season, or fund a specialised certification, you aren’t spending money — you are investing in assets that may contribute to increased productivity and income generation.
When integrated into a clear, long-term plan, purposeful loans may enable eligible borrowers to respond more quickly to business opportunities that would otherwise take years to save for. For small and medium enterprises (SMEs), cash-flow timing mismatches are the silent killers of momentum. You might get a massive corporate purchase order but lack the immediate working capital to fulfil it. Waiting weeks to organically pool cash from existing revenue means losing the contract. Appropriately structured commercial financing can help businesses address temporary working-capital gaps, ensuring that viable opportunities turn into realised revenue.
In inflation-heavy environments, waiting to save up the full purchase price for vital business assets like manufacturing machinery, solar power installations, or commercial vehicles can backfire, as equipment costs often outpace savings rates. By using asset-backed financing, you can acquire the equipment today, put it to work immediately, and allow the asset to generate revenue that may contribute towards financing costs over time.
Investment in skills and capacity development can generate significant long-term benefits. Utilising credit to fund high-value education, technical upskilling, or operational training directly expands your earning capacity. The resultant career advancement or business efficiency multiplies your income potential for decades to come.
Shifting from a defensive borrowing stance to a wealth-creation strategy requires strict financial discipline. Truly responsible borrowing is anchored in three non-negotiable practices.
First, borrow only for a productive purpose. It can be tempting to redirect a portion of a business loan toward personal expenses. Resist the urge; borrowed funds should be applied primarily to the purpose for which the financing was obtained.
Second, know your repayment runway before you sign. Borrowing decisions should be supported by realistic cash-flow planning and repayment capacity assessments. Review your cash-flow data, factor in market fluctuations, and map out exactly how the investment will generate the funds needed to clear the balance.
Finally, prioritise speed and transparency. In today’s fast-moving market, opportunity doesn’t wait for weeks of manual paperwork. Borrowing decisions should be supported by realistic cash-flow planning and repayment capacity assessments that offer transparent pricing with no hidden fees, giving you the clarity needed to compute your precise cost of capital.
When you strip away the historical stigma surrounding credit, you find that borrowing is simply a neutral financial tool. In the hands of an undisciplined spender, it creates friction, but in the hands of a strategic planner, it can support business growth and financial planning when used responsibly.
As you look toward your next major milestone — whether that is expanding your storefront, digitising your corporate supply chain, or acquiring productive assets — Before taking on any borrowing commitment, carefully assess your financing needs, repayment capacity, and long-term financial objectives. Instead, ask yourself if your business can afford the cost of standing still. When used responsibly, purpose-driven credit can support individuals and businesses in achieving sustainable financial goals.
Responsible borrowing also means understanding that credit creates a legal repayment obligation. Borrowers should carefully assess affordability, understand all applicable charges, and avoid taking on debt beyond their repayment capacity.
Gloria Onosode is the Director of Enterprise Sales at FairMoney Business
