Hello readers, good to have you here. I hope you are staying safe wherever you are? We cannot overemphasise the importance of our individual responsibility toward our collective safety at this time; please stay safe, the world does not have to lose you now.

You might have heard of or perhaps you are a beneficiary of the ongoing Covid-19 Support Loan. The programme is a provision from the Central Bank of Nigeria, executed through the Nirsal Micro-finance Bank (NMFB); I personally commend the effort of the CBN and all stakeholders involved. This article is to open our eyes to the unplanned negative economic effect that can happen after a huge supply of money like this. My goal is to stir you, my reader, to see the more need to support production as the Nigeria government makes for supply of fund. Once again, I commend the effort of the CBN, more particularly as they have included Micro, Small, Medium Enterprises (MSMEs) in the loan programme.

It is normal for a government to release money during a global economic downturn like the one happening now. However, the possibility of currency devaluation is present and must be looked into. An answer from study.com describes inflation as too much money in the economy leading to devaluing of currency. In a time like this where the government is doing its bit to make funds available, beneficiaries of these funds must look into ways to increase of production such that as demands increase (due to the funds that will be available), there will be increased production and availability of resources to meet these demands. If this is not done, we are looking at serious inflation.

One of the ways this can be done is for beneficiaries of funds like this to invest in businesses that are into production of goods and/or services; farming, baking, processing, etc. Beneficiaries should invest with firms that do these things with a good returns, thereby supporting production.

I have heard of one or two beneficiaries of this current Covid-19 loan who got more than what they need and one of them honestly confessed not knowing what to do with the fund. This is what we are talking about, the possibility of availability of funds without increase in production will lead to currency devaluation; inflation.

Let’s think wisely. Investing in production-oriented businesses not only ensures returns but also helps the economy in the long run. A good example of such good investment is one that offers upfront ROI (Return on Investment).

More than fund availability, let’s go for increased production.

This post supports my article, read it here Why does financial sector growth crowd out real economic growth?