slowdown, when repaying such loans, what is being paid is actually a fraction of the amount borrowed in real terms-”A country experiences inflation when there is a continuous increase in the general price of goods and services.
National Bureau of Statistics reported a 22.95% food inflation rate in March 2021. It also reported an unemployment rate of 33% and a negative economic growth rate. The trio is what economists refer to as stagflation . Nigeria’s stagflation was triggered by the COVID-19 pandemic, which induced a global drop in the price of crude oil, Nigeria’s primary source of income. This negatively impacted government revenue. Productivity also nosedived, particularly during the lockdown. The Central Bank has been printing more money to support government expenditure. There has, however, been no corresponding increase in national productivity.
A sustained input price increase is not all bad news if the business can pass additional cost to customers. They are ultimately better off as they maintain the same margins on more expensive products.Most businesses, however, are unable to do this. In such instances, it directly impacts the bottom line, significantly reducing their profits. Many go out of business.During inflation, lenders are worse off while borrowers enjoy the benefits.
Is your business part of the frenzy, desperately searching for gold? Or is your business model objectively taking advantage of the economic situation?A relatable example of ‘selling shovel’: By the time you are done reading this article, 2,500 new websites would have been created, with most of them ultimately not meeting the business objectives. That is a gold rush. A company like Google, on the other hand, provides shovels. Google made USD150 billion in 2020 on advertisement alone.