May 31 (THEWILL) — There is a specific kind of euphoria that comes with a bank alert in Nigeria. It is that high-pitched “ping” on your phone that suddenly makes the world look brighter. Imagine, for a moment, that after months of business plans, back-and-forth meetings, and endless documentation, a commercial bank finally approves your loan.
You check your phone, and there it is: N50,000,000. In that instant, you feel a surge of power. You feel like a “Big Boy” or a “Madam” who has finally arrived. You might even be tempted to walk into a luxury car showroom or start pricing that designer wristwatch you’ve been eyeing on Instagram. But before you call the car dealer or start planning an “appreciation party” for your friends, you need to hear a very cold, hard truth: that money does not belong to you.
The greatest psychological trap an entrepreneur can fall into is confusing liquidity with wealth. Just because you have the authority to sign a cheque for N5 million today does not mean you are a millionaire. That N50 million sitting in your account is not a reward for your hard work; it is a temporary guest that has come with a very strict departure date and an expensive “gate fee” called interest. In the world of finance, this is known as leverage and while it is a powerful tool for growth, it is also a double-edged sword that has decapitated many promising Nigerian businesses.
Let us look at the reality of the math, away from the emotions of the alert. Suppose you take that N50 million and, through sheer grit and smart trading, you manage to generate a profit of N4 million over a few months. You now have N54 million in your account.
To the untrained eye, you are a wealthy person. But here is where the “wahala” usually starts. Many business owners at this point begin to live a lifestyle that matches the N54 million balance. They fly business class, upgrade their office furniture to the most expensive leather, and start picking up the tab for everyone at the lounge.
The disciplined entrepreneur, however, understands that their real world is not the N54 million they see, but the N4 million they earned—and even then, only a fraction of it. If your business generated N4 million in profit, you should ideally be living like someone who has less than half of that in their personal pocket.
Why? Because out of that N4 million, you still have to pay the bank’s interest, cover your operating overheads, and reinvest in the business to ensure it survives the next cycle. If you spend N5 million on personal luxuries because you feel “loaded,” you have not only consumed your entire profit but have also started eating into the bank’s N50 million. You are essentially borrowing money to fund a lifestyle you haven’t earned yet.
This struggle with debt and discipline is a global one, but the stakes are much higher in our backyard. In countries like the United States or Japan, where interest rates might be as low as 3 percent or 5 percent, a business owner has some “breathing room”.
We must shift our mindset from seeking the “Big Boy” status to seeking “Sustainable Growth.” Borrowed money is simply seed capital; it is meant to be planted, not eaten. In many developed credit cultures, the wealthiest people are often the most modest because they understand that their assets are heavily leveraged.
The goal of every loan should be to reach a point where you no longer need the loan. You use the bank’s ladder to climb to a height where you can stand on your own two feet. This requires a level of discipline that is often at odds with our social pressure to “blow” and be seen as successful. It means staying in your modest apartment even when your business account says you can afford a penthouse.
Ultimately, wealth is what remains after all your debts are paid. If you were to pay back the bank tomorrow, what would you have left? That remaining silver—that profit—is your true worth. Everything else is just an illusion provided by the bank. Don’t spend the bank’s money on a life you can’t afford yet. Think clearly, trade wisely, and remember that the real celebration happens when the loan is cleared and the profit is yours to keep. Build a business that survives long after the “Big Alert” has faded.
The author, Adeniyi Bamgboye is a chartered accountant, tax expert, policy analyst and managing partner of Empyrean Professional Services.
