Is ₦500k/month really that ‘small’? Let’s break down the numbers and see why context matters.
So, the other day, Twitter was buzzing with debates over the value of 1 million Naira in today’s economy. Some folks were saying that 1 million Naira is peanuts now, given how inflation has been messing with the currency. It’s not the first time I’ve seen takes like this recently. Just the other day, I came across a Facebook post where someone claimed that earning 500 thousand Naira a month practically means you’re poor.
But is this really true?
Well, this is a more nuanced discussion than it first appears, so let’s break it down a bit. First, let’s talk about the purchasing power of the Naira.
Purchasing Power
One of the biggest mistakes people make when discussing money in Nigeria is comparing Naira to dollars. Sure, if you convert 500k to dollars at today’s rates, it comes out to a rather disheartening $300. If you were earning that in the US, you’d be seriously struggling. But in Nigeria, that amount actually puts you comfortably above the poverty line. While the Naira isn’t exactly at its best right now, it still holds decent purchasing power, especially when compared to other African currencies with higher exchange rates.
Here’s what I mean:
– 1 Rand (ZAR) = 88 Naira (NGN) (exchange rate)
– With 88 Naira in Nigeria, you could buy 2 kilograms of rice
– With 1 Rand in South Africa, you’d only get 1 kilogram of rice
So, despite the Rand having a higher exchange rate, the Naira buys you more rice! That’s what we mean by better purchasing power. If you exchange your Rands for Naira, you’ll find that your money stretches further in Nigeria than it would in South Africa. You get more bang for your buck.
Take my South African friend as an example. She’s a teacher, earning around 20,000 Rands a month, which is over 1.7 million Naira. But her quality of life? Not as good as someone in Nigeria earning around 1.5 million Naira monthly. In Nigeria, that kind of money can afford you luxuries that she wouldn’t even dream of in South Africa.
With that in mind, is 500k still “little”? Especially when you consider that only about 5% of Nigerians even have that much sitting in their bank accounts.
Location matters too
Of course, there are other factors at play too. Location, for instance. Someone earning 500k in Ondo state will likely enjoy a better quality of life than someone earning the same amount in Lagos, where the cost of living is through the roof. So, 500k can mean very different things depending on where you live.
Individual or family income?
And then, you have to consider whether this 500k is a single person’s income or household income. 500k might be a good chunk of change for a single person living alone, but it’s a whole different story if it has to cover the expenses of a family of four.
In that case…
In conclusion, calling 500k a month “little” is a bit simplistic. Sure, when you do the dollar conversion, it doesn’t look like much. But within Nigeria, that amount can go a long way, depending on where you live and your financial responsibilities. So, while it may not make you rich, it’s certainly not an insignificant sum either. Whether it’s little or not depends entirely on the context.
P.S. Keep Our Emails in Your Primary Inbox!
We don’t want you to miss out on future newsletters like this one. If you find our emails in the Promotions tab, you can easily move them to the Primary tab:
For Desktop Users:
- Find our email in the Promotions tab.
- Drag and drop it into the Primary tab.
For Mobile Users:
- Open the email in the Gmail app.
- Tap the menu icon (three vertical dots) in the top right corner.
- Select “Move to” from the drop-down menu.
- Choose “Primary.”
To make sure our emails always land in your Primary tab, please add our email address to your contacts list. This tells Gmail that our messages are important to you!
