Nigerians may find it difficult to spoil their loved ones with lavish gifts this Valentine’s Day. It is the month of February, and today is the eagerly awaited Valentine’s Day, which is traditionally celebrated by lovers and married couples all over the world.
Every year on February 14, Valentine’s Day—also known as Saint Valentine’s Day or the Feast of Saint Valentine—is observed as a day to show love to particular people. Though gift-giving among friends and relatives may also take place on this day, it is traditionally referred to as a day for lovers.
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Valentine’s Day is typically associated with giving, going to the movies, lighting red candles, going out to dinner, and having a little extra fun for lovers. It goes without saying that these activities demand significant financial outlays, which in turn have effects on the national economy.
This historic day, however, may be in jeopardy due to recent and underlying problems in the largest economy in Africa, including persistently high inflation and excessively prolonged cash shortages. We quickly review some of the issues that can prevent couples from overspending on Valentine’s Day.
High cost of goods: Nearly all Nigerians are familiar with inflation, one of the key macroeconomic concepts in fundamental economics. Every month, the consumer price index data, which is used to determine the monthly inflation rate, is made available by the National Bureau of Statistics (NBS).
- Inflation has become a particularly hot economic topic in Nigeria due to the country’s ongoing rise in the cost of goods and services.
- Due to the conflict in Ukraine and Russia, the global energy crisis, the depreciation of the local currency, and other factors, Nigeria’s inflation rate is currently at a nearly 17-year high standing at 21.34% in December 2022.
- Prices for several prominent commodities and services have increased by over 100% year over year throughout the nation, significantly reducing the purchasing power of the populace. This is made worse by the fact that there haven’t been any genuinely profitable investments, which has lowered investor confidence nationwide.
- Therefore, those who wish to shower their significant others with gifts on Valentine’s Day this year will have to pay more than they would have, say, last year.
High-interest rate environment: The CBN’s hawkish stance, which led to the MPR being raised to a record-high 17.5%, portends the apex bank’s attempt to reduce surplus liquidity by restricting access to credit.
- Notably, the bank lending rate rose to 29.13% in December 2022, on the backdrop of multiple interest rate hikes in the year. This implies that businesses and individuals will be disincentivized to take loans from banks going forward.
- Although some whose business requires a loan for sustainability will have to obtain it at a premium. A high-interest environment oftentimes means that people do not have as much monies lying around for merriment.
Lack of cash: The Valentine’s season is a time when lovers give their loved ones money cakes as gifts. This is essentially a cake made out of mint money. Some people use N200 or N500 notes to decorate the cakes. Depending on how wealthy they are, the person may decorate the cake with N1,000 or USD notes.
- The drawback is that Nigerians have recently had to deal with a significant cash deficit, making it challenging to build such a money cake at this moment.
- It is important to note that while getting access to money may not be completely impossible, the costs may be much higher than in previous years.
Bottom line: While there is never a wrong amount of money to spend on your loved ones, the rising cost of products and services in the nation and the recent shortage of naira notes have left very little to cheer about.