A Guide to Understanding Basic Economic Terminologies in Nigeria


I was watching TV and realized that people kept misusing some basic economic terms! So, here’s a list to help Nigerians who’ve forgotten their basic Economic terms (or who failed it!). They’re all explained using the everyday Nigerian scenario: the average Nigerian and the rich corrupt Nigerian (we all know one ). We’ll abbreviate this to CGO (Corrupt Government Official). After all, we seem to love obscure acronyms in this country.

I’ve also broken it down into levels, so if you’re unable to understand the first level, maybe starting Secondary School again might not be a bad idea. 😉 Kiddin! If you don’t get it, click on the subtitles. They lead to a more ‘academic’ explanation of these terminologies. And if you still don’t get it, well….

BEGINNER’S LEVEL:

Opportunity cost:

Citizen’s Version: Choosing to eat Eba instead of Pounded Yam at Mama Put’s eatery. The opportunity cost is Pounded Yam.

CGO’s Version: Choosing Between a mansion in Abuja or a mansion in Lagos (Easy. There is no opportunity cost. With the amount of money stolen, they just buy both of them!)

Law of Demand:

Citizen’s Version: As the price of the meat increases, the lower the number of meats in the pepper soup ordered.

CGO’s Version: The higher the price of Jets, the number of jets demanded remains the same.

Law of Supply :

Citizen’s Version: As the price of the meat increases, the more meats are supplied (the meat gets smaller too!)

CGO’s Version: The higher the price of Range Rovers, the higher the number of Range Rovers supplied.

Market equilibrium:

Citizen’s Version: occurs when the amount the taxi driver demands is equal to the amount one is willing and able to pay.

CGO’s Version: occurs where demand (and amount of cash in State coffers) for new houses, cars, and jets meet the supply of these ‘necessities’.

INTERMEDIATE LEVEL:

Diminishing Marginal Returns:

Remember when you saw that road open years ago? Hardly any cars on it. Diminishing Marginal Returns occurs when there is a decrease in the satisfaction of using the road while the number of cars on the road increases and the width/number of the road stays constant. Go to Lagos (and recently, Abuja) and you’ll completely understand this. The traffic is insane! Some enterprising folks have turned these places to markets. Given my simulation of the traffic in Abuja over the next year, I’ll start investing in selling mattresses and pillows on the streets.

NOTE: Who can guess why this isn’t the best example of diminishing marginal returns? Diminishing marginal returns starts off as increasing. I personally would like a road all to myself! (yeah.I’m selfish) The point at which I see someone else’s car on the road, the returns being to fall..well, for me it does.. Maybe a better example would be eating pounded yam(all the guys with big belles, stop licking your lips). You start with one wrap, finish it and you want another. By the time you get to your third one, you probably won’t want to even look at another wrap of pounded yam(except you’re guys with big belles). This is specifically referred to as Diminishing Marginal Utility.

 

Comparative Advantage:

Let’s assume your state sells cows and cars. Another state (Let’s say Lagos) also sells cows and cars. Now, your marginal cost of rearing a goat is lower than the Lagos’ marginal cost of rearing a goat too. And on the reverse, your state’s marginal cost of making a car is greater than Lagos’ marginal cost of making that same car. You achieve comparative advantage when you focus on rearing and selling cows, while Lagos focuses on making and selling cars.

I.T.K (I TOO KNOW) LEVEL:

Privatization, Deregulation, Subsidization and the rest of the big name ‘ions’ you hear on the news… :

You don’t need the definition of these. Just understand that after these policies are enacted, a government official somewhere gets more money in his account than you’ll get after diligently and honestly working for 10 years.

So as you can tell from the Beginner’s list, Nigeria is an interesting place when you’re very rich. Most of the rules of Economics don’t apply to rich and corrupt government officials . Heck, even the Rule of Law doesn’t apply! I’m sure I’m missing a number of economic terminologies. Let me know in the comments! Oh. Please don’t forget to share on Facebook and Twitter! Cheers!

  • tBrown

    What about ‘Money Supply’? There are two types in Nigeria – ‘Oil Money’ and ‘Work Money’. Unfortunately, the two chase d same goods, so we suffer a peculiar type of inflation. It occurs in multiples of the lowest denomination in notes even if it means double. Even the poor loath coins. And as we convert more of these low denominations to coins, the threshold of price increase shifts further – the envisaged effect of a recent policy by the CBN that became truncated (they failed to see it though).

    • Great Point! I’ll be expanding on this point of Nigeria’s unique causes of inflation in a future post. Thanks for reading and commenting!

  • chidi umeh-ujubuonu

    Another simple classic from your stable—-great stuff–took me back to roots.

    • Thanks a lot! Figured a reminder of basic Econ would be good! 😀

    • I couldn’t agree more about gtreairics. I miss sitting with some of the elderly individuals I used to help and they would tell me stories for hours about the things that they witness when they were younger, and the lives that they lived up to the point that they needed care. I have always felt that the elderly know how to live their lives better than anyone, and they for sure never take it for granted! Sometimes the people taking care of them are not good people though, and it always breaks my heart to see someone talking badly to an elderly man or woman.I like how you made a switch from little tiny babies that have no real experience with life, to elderly men and women who have lived life to its fullest and still have more life to share with others. Such opposites!

    • Alakazaam-information found, problem solved, thanks!

  • Freakonomics, draft content outline for naija version? If yes, kindly consider including bad faith, bad belle, pepper eye, PhD (pull him down), flippancy, “wash” as key elements of economic behaviour especially among out of power Nigerian elite.

    • Keep up the good work. Blogs in the niche you have chosen are best when they tickle, entertain, challenge and educate – and I see you are well on course to doing all of these. Jisie ike. Waiting to read read your next post!

    • Wow, I think you will be a great OB. It seems like you have a real love for children, faimiles, and people in general. Sad to say that those qualities are rare traits in todays world. I believe not just anyone should be in just any job because you could be in a job that you hate and end up making everyone who comes in contact with you at work miserable. You have the joy and care to be great at your job and effect those you will be working around not only by your knowledge , but by your love for what you do.

  • Reblogged this on visionvoiceandviews and commented:
    Freakonomics naija style?

  • Good tonic for our “gloom and doom” times!

  • Chinwe

    Very correct indeed

  • Chudi Ezeks

    Lovely piece! Something on the almost perfect mobility of labor in the country, should be interesting as well. Where the banker can double as anything, even a doctor. And my uncle is a lawyer; a cobbler; a mechanic; an electrician; a plumber, and every other thing..

    • Haha.Thanks brov! I’ll look into writing one on that. I already see an interesting angle to it. Thanks for reading and commenting, Chudi.

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