Why Nigeria Can’t Print Its Way Out of Debt

Let's say there are only 200 tubas of yam in the entire town. But the government gives 30 million naira to everyone. The number of yam will not suddenly increase. Instead, the seller will see that everyone now has too much money.

But there are few tubas of yam to manage this. If a tuba of yam was 1,500 naira before, he will increase the price to maybe 100,000 naira. This is what we call inflation. When excessive money is going for less goods, the value of the money drops. So if the government print money for everyone today, by tomorrow the prices of food, clothes and transportation will rise very high. The money will become worthless. You may even need a full bag of cash just to buy a single bottle water.

At the same time, it can make people lazy. Even the farmer now has his own 30 million naira. So, he may not want to go to the farm again except to provide for his own family. How can you have a lot of money but still not be able to buy things because they are not available and they are too expensive.

Let's consider Zimbabwe for instance. So, the government took a decision to print more money to overcome financial issues. But instead of making people rich, it destroyed the economy. Prices were doubling every few hours. At one point, they printed a single bank note $100 trillion. Even with that amount of money, people could not afford basic things. The money became useless to them. Now about why a country borrows money instead of printing it.

Nigeria, for instance is currently owing over 150 trillion naira. Why can't they just print the money and pay back the debt? This is because international trade is done using currencies like the US dollar. To pay back a debt, a country must sell things like oil, crops, or minerals to earn those dollars. If a country prints its own local currency to pay foreign debt, other countries will not accept it because it has no real value to them. The exchange rate will fall and the local currency will lose its power. Money is meant to represent the work we do and the goods we produce.

If there are enough goods and the money supply is controlled, prices can stay stable. The money system must keep money limited so it can have value. If everyone becomes a millionaire by printing money, nobody will want to work. In fact, the country will go gaga. True wealth come from production, not from printing paper. You see, when you see some of us speaking against bad governance, you think we hate somebody or something. No, we want a better country. That's why Nigeria is not producing enough. And that is why the country keeps borrowing money. Instead of empowering the people of the country rather they spend more on importation of things we can make here in our country. Because of this, we keep needing foreign money to pay for these goods.

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That is why the country borrows in foreign currency. If Nigeria was producing more food, fuel and basic goods, we will not need to import so much. This will reduce borrowing.

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