How do banks make money in Nigeria? Have you ever wondered?
Bankers are allegedly some of the most well-paid people for entry-level positions but it’s not pretty clear where the income comes from.
So, how do financial institutions earn this money?
Fees, fees, everyone gets a fee.
This is one of the easiest ways banks make a tonne of money from people. Imagine card maintenance fee, SMS charges, Atm fees for withdrawing from other banks, being collected from a large number of people. In the battle of banks vs customers, banks always walk away with a neat sum. Something light.
From Deposits.
It’s like this, your bank says take this interest for saving your money with us, and they, in turn, loan out your money to other customers at a high-interest rate and make more money than whatever you are getting as interest returns.
The game is the game.
Don’t panic about the lending, your money is insured against loss by the Nigeria Deposit Insurance Commission.
Income from investments.
This ranges from Treasury bills to Bonds to Real estate. Essentially, longterm assets that can be profitable to them is what they invest in. Some with a lot of money go as far as investing in big building projects either to resell or to rent out.
So, there you have it. A summary of how banks in Nigeria make money. Did I miss any? Let’s have a conversation in the comment section.
Curriculum Vitae aka C.V, the one place where it’s okay to lie through your teeth as a Nigerian because everyone else is doing it. Well, almost everyone.
In Nigeria, there are common lies that you’ll find in almost every C. V because jobs are competitive and unemployment is real.
You don’t believe us? come see for yourself:
1) “Proficient in Microsoft Excel and Microsoft Word.”
*Me refusing help from colleagues on a difficult project*
5) “Motivated.”
*Motivated to sleep*
6) Work experience.
*Me counting I.T as part of work experience*
7) “Resourceful.”
*Resourceful only at finding good food spots* Did you guys think it was work-related?
8) Referees.
*Adds name of a friend, cousin, girlfriend*
Intentionally or not, the probability that your mere existence has ruined a few solid relationships is quite high. So, we created a quiz that can guess how much of a homewrecker you’ve been in your lifetime.
Take to find out
Being the breadwinner is more pressure than perks, but what does it mean for a family when their breadwinner can no longer provide? Most of the time, it means the rest of the family will step up to plug the gap. This week’s story is about that.
Every week, Zikoko seeks to understand how people move the Naira in and out of their lives. Some stories will be struggle-ish, others will be bougie. All the time, it’ll be revealing.
My favourite first question is, what’s your oldest memory of money?
I mistakenly saw my father’s annual payslip in 2004 or so. More than half a million Naira. I didn’t know if it was too much or enough. I was too young to understand anything.
How old were you?
11. Two years later, he got laid off, and that was the beginning of everything.
Woah.
After 28 years of service. Just like that.
He was an engineer working at the Nigerian Ports Authority and got retrenched during the Obasanjo’s tenure. My kid sis was 2 back then. My mother had to pick things up from there – this woman hustled, and still hustles sef. I guess that’s where I got my relentless spirit from.
What was she doing before this happened, and what changed after?
She worked as a Community Health Officer at the Local Government level. At that point, she became the primary source of income for the family.
For instance, she’d trek from her office to the bus park, treat the drivers there and anyone who needed treatment. Then trek to the market to buy foodstuff from whatever money she made then take a bus or trek from there.
Work to Park: 1.7km
Park to Market: 3.3km
Wow. What were things like for your dad?
My dad got his gratuity at some point. It was in the millions of naira back then but he lost it all to fraudsters two years later. He’s yet to fully recover from this – he’s hypertensive.
And that in itself is a monster of expenses.
You get it. Thank God my mum was a healthcare worker. Things are much better now, at least he’s collecting his monthly pension, but it’s never enough. I don’t know how much o, but it’s never enough.
I’m just grateful I’m no longer a dependant – to an extent at least. They can focus on my baby sister now – she’s going to uni with the 20/21 session. I have an older brother too, basically the scapegoat of the house. And somehow, all the pressure’s on me.
I don’t know how to explain it.
Try maybe?
First daughter pressure. Must be perfectly moulded for a husband we’re yet to meet. Near perfect in every other aspect. It also doesn’t help that I’m the only one that inherited my mother’s drive out of all her children.
My siblings are so laid back, they can’t come and kill themselves.
Stress. I imagine this pushed you to want to make money on time?
I’d say it made me more driven, but work for money? Not really. The first time I got paid for anything though, I supervised a team for some immunisation exercise. About 10 years ago. It paid ₦4k. I was 16 at the time.
I got into uni and school work didn’t give me the luxury of trying to do anything. Also, I had leadership responsibilities in my department that made it even more difficult. I did a couple of small jobs here and there though. One time as a data collator for a week; that paid ₦10k. Industrial Training at an FMCG paid ₦10k a month and ₦400 for weekend shifts.
I graduated in 2014 on paper, but in reality, 2015.
What does that even mean?
Strikes.
After graduating, I came home to do the usual; job hunting. Job hunting is how I Ianded in the hands of job scammers. I don’t know where they got my number from, but they told me to come for an interview.
I got there and I met people from different age groups applying for the same job – first red flag – but I wasn’t thinking again at this point. They gave us an aptitude test which I passed, I was so happy, hahaha.
Then they started the aspire to perspire yarns for those of us that passed and failed – another red flag. It’s like they used jazz on us.
Then they said we should all bring about ₦11k to start. I didn’t even have it but I was ready to go back home to bring it. When I stepped out of the premises, it’s like my senses came back.
The next day, my mum told me to go look for a fashion school – I’ve always been interested in that.
Mad oh!
I found one near my house. Buying sewing materials and tools alone cost me 80k, but not at once. It was what it summed up to from collecting money every day. I was tired of asking for money daily, but I had no choice.
One Friday night, I showed up at home and you know what was waiting for me?
What?
A brand new sewing machine. God bless that woman for me. Anyway, I learned how to make both male and female clothing. In that time, I also got a job.
Nice!
I was fired that weekend.
Small play.
I took the job because I was just tired of being dependent. It was a fashion house – I was a huge fan! The job title said Stock Manager, but a few days later I found myself sweeping the living room of my boss – they worked from home.
Wollop.
One Man Business in Naij 101. My contract said, 10 am – 4 pm for four days in a week, so I figured it was flexible for fashion school not to suffer. We had an event on Sunday. That whole week was very stressful and we agreed I’d take the next Monday off.
She didn’t stop shouting at me at the event. At this point, I was already feeling sick from the stressful week I’d had so it even made more sense to take the Monday off. I also didn’t know I needed to give another notice to my employer.
Oops.
I was using a night time data plan at the time. So Monday at 9pm, I got a message from the brand manager telling me I was no longer needed and I should send my account details: I got ₦10k for the week.
There were other things about it I didn’t like. My boss’ husband, for example, was sending me on errands.
A mess.
Anyway, NYSC was calling, and I had to cut short fashion from my one year plan to 8 months. I got posted to the Southeast, to a school in the middle of nowhere.
So, picture this: the only Muslim Yoruba woman in one Local Government in the Southeast in IPOB’s active days in 2016.
What was that like?
It was very very exhausting. I encountered a lot of unpleasant experiences both from fellow corp members to indigenes. One Corps member was discriminated against, simply because she’d lived in “Yoruba Man’s Land”. I ranted about it and got in serious trouble for it. I literally had to leave where I was when it started to backfire. People said I was a target. It was less than three months until I was done with NYSC, so I counted the days.
My escape was that some of the students I taught were very pleasant. Then there was this tailor I’d go stay with after school. He gave me space to sew sometimes. Then I’d go to Onitsha and Awka Markets to buy fabrics to sew. Made some outfits for a few of my mates. I really wanted to go to Aba but I felt it was too dangerous to travel alone.
Then I was tutoring some kids for jamb and WAEC, but I had to stop because it was interfering with school time table and because they didn’t even know the basics few weeks to their exams. ₦1k per lesson.
Anyway, my NYSC salary was the usual; ₦19,800. Then the state paid ₦10k.
I’m sorry you had to go through that. After NYSC?
I came back home and was ready for the labour market. I was tired of being broke. Although I still had some stashed away from service – I’m quite prudent. Then my mum and I had a back and forth:
Mum: Go for your Master’s.
Me: No. I want to make money. It’s a trap. You’re going to pay my school fees and I won’t be able to fend for myself.
Mum: …
Me: …
Mum:…
Me: Okay, fine. I’ll go.
And so, I ended up applying for a Pharmacology Masters.
Just as I was waiting, my dad put me through to someone at an FMCG, and they asked me to come interview.
Progress!
Yeah, except the job, as I later found out, was not in fact related to my course. It was for a marketing canvasser. Because of the circumstances around the opportunity, I couldn’t say no. Also, I needed the money.
What was the job like?
I was required to go out and market the company’s products to customers for ₦40k a month, plus transport and airtime allowance. There were commissions too.
It was a 6-month contract, but I hated that job. Also, it was a tough 6 months, because I had to do the job, prepare for exams, and sew on the side.
When I finished the marketing gig, they didn’t want to pay us our honorarium and commission, so we sharply brought out our employment letter to show them the terms again.
How did that go?
I got an alert of about 160k in January 2018, at the end of it. By the end of January, all the money I had was ₦200k.
A few days later, I gained admission. I needed all these small wins at that point.
Any specific reasons?
My useless boyfriend had started dating someone else. Menarescum.
I –
I slipped into a depression and migraine crisis for six months. My parents covered my tuition and all. But I had to fend for myself via tailoring to get my allowances.
I finished a little over a year later, in 2019, then I started applying for jobs again. Some health challenges again made me realise that I needed a job to propel my dreams, and tailoring wasn’t going to do it at this time. So I started applying more aggressively.
Did anything click?
By the middle of the year, yes. One of the places I’d applied to wanted to have me. They were especially pleased with my volunteering experience in the past. Best part? I didn’t live far away from the office.
One month later, I started as a Scientific Data Analyst at a Pharmacy. 8 am to 5 pm, Mondays to Saturday, ₦100k net. The beggar in me didn’t have a choice at this point, so I took it.
Sigh.
To be honest, my role feels more like an Assistant Operations Manager. I handle chronic disease management, with emphasis on hypertension and diabetes management. Data collation and analysis. I also head the counselling department. I do business development and strategy. Programs, health promotion and advocacy. Social media management.
That’s a lot.
Six months in and I’m already tired. For instance, I was supposed to start a data course today, but I had to postpone because I’m actually drained.
You see, right now, I’m done with the Nigerian labour market. I’m planning to japa very soon. I’m gathering all the experience I’d need for a PhD in Diabetes and Depression management.
How much do you think the work you do should pay you?
₦250k net. It just feels like a decent amount for the work I do.
Fair enough. How about we break down your current monthly expenses?
I’m low maintenance. I may make an extra 35k per month from sewing, I don’t document that a lot.
What’s something you want right now but can’t afford?
My own space abeg. I’m tired of living with my parents. Also, I’d like to hire a tailor that actually knows how to sew well. I deserve a vacation too.
Look, I just want to be a Glucose Baby. I’m tired of this hustle.
Hahaha. Do you have an emergency fund for if anything goes south?
Your question is making me dizzy. Maybe I should get myself a Glucose Guardian? Jokes.
On a scale of 1-10, how would you rate your financial happiness?
5. It’s like, I need money for a lot of things, but I’m also grateful to earn money. Whenever I think about my dad’s condition, I just go to my machine.
I get home and I go straight to the machine. I don’t want my skills to die because I have a day job. My mum too goes to her shop when she leaves the office, before heading home. Mastering tailoring myself means I have the luxury to stop working any time I like in the future.
You feel me?
I do. I do. Thank you for taking the time.
Quick announcement:
Finding #NairaLife stories and making sure you find them useful is a tough task every week. So when Barter indicated interested in a partnership with Zikoko over #NairaLife, we said yes!
What’s in it for you? Well, you still get stories every week. But Barter will be bringing some more firepower. They’ll be sharing insights and tips they’ve learned helping thousands of users flourish over the past few years.
I have a good feeling about this. I hope you do too.
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Just tell me, all the trichomes and oxalate crystals we were looking at under the microscope, to what end? Use it to find job na.
2) Dispensing lab:
Nothing more painful than hearing “your emulsion cracked” or looking away and someone has stolen your lab equipment.
3) One million courses in a semester:
So many pre-requisite 2 unit courses that had the capacity to ruin your life. To what end?
4) Devilish Pharmchem:
I.R? mass spectrometry? flying arrows? organic chemistry? – all of the devil. Imagine telling the doctor to change Levofloxacin to Sparfloxacin because the alcohol group on the 7th carbon increases its absorption. Alaye jor jor.
5) Steeplechase:
Running around the lab on a timer like a clueless person especially in Pharm micro lab. Why? It’s not like I know the difference in color between Salmonella and E.coli. Don’t stress me.
6) Lab reports:
The ghetto. How did we survive writing 5 of this per week? and we somehow had to study in between.
7) Forensic:
Who made 60 the pass mark for this course? I want to have a word in private.
8) Dress code:
Tie, shirt, skirt, trousers, inside heat and stress. Affliction will not rise a second time.
9) Mass failure:
If there was no semester that over 70% of a class failed a course, did you really go to Pharmacy school? The magic word used to be: “they are upgrading from 45.”
10) The dreams they sold:
“You are professionals, you will never have to struggle again in your life once you graduate.”
It’s never a bad time to interrogate your love life (or lack thereof). So, we created a quiz that tells you why you’re not in a relationship. From your insanely high standards to your lack of time, we discover why you’re still single.
For most people, the number one thing on their list of New Year resolutions is joining #FitFam. Well, if you made that promise to yourself as you entered 2020, then this post is for you.
1. Your body, when you promised to join #FitFam in 2020:
“We’ve heard this before.”
2. You, dusting off your gym clothes from #FitFam2019:
I swear this time will be different.
3. You, refusing to return to the gym after one session:
Nah. Nope. Never. I can’t come and kill myself.
4. When you see how much you spent on healthy food.
From where to where?
5. You, shamefully waking up at midnight to eat eba:
Don’t look at me.
6. You, judging yourself whenever you cheat on your diet:
“After all the mouth you made?”
7. You, begging the calories in shawarma to reduce:
Please na. Just reduce for today.
8. When you climb the scale and the number has gone up.
What sorcery is this?
9. When someone posts their body transformation.
Abeg, shift.
10. When someone who is eating says “come and join me”.
Please, don’t tempt me.
11. How you reward yourself after eating a salad:
I’ve earned this.
12. You, secretly hoping the Okada ban helps you lose weight.
At least, let one good thing come out of this nonsense.
Are you an ajebutter or not? Well, if you’ve gone through life blissfully unaware of its harshness, then you probably are. Now, we want to know just how high you rank on that ajebutter scale, using your food preferences as a (very accurate) measure.
Take to find out:
Growing up as a Nigerian, there were very few career options to aspire to, unless you wanted your parents to kick you out. So, we’ve created a quiz that can guess what your younger self hoped to become, whether it was a doctor, a pilot or a lawyer.
Take and see if we got it right:
Working in Private Equity is quite the dream for many young people in Nigeria who have the kind of qualifications they’re looking for.
The subject of this story didn’t get in by chance. She’s 23, recently finished NYSC and has been working since the first week she completed her final year project in school.
She studied accounting but decided to pursue an investment banking career. She hasn’t looked back since.
Every week, Zikoko seeks to understand how people move the Naira in and out of their lives. Some stories will be struggle-ish, others will be bougie. All the time, it’ll be revealing.
Let’s go all the way back, like way, way back – you know, to your childhood.
I wanted to be a doctor – finding the cure for HIV was supposed to be my life’s purpose. Then, one day in SS1, my Accountant uncle was like “why don’t you study accounting. You can work anywhere,”
And that’s how I ended up in commercial class.
I pretty much knew that I could survive in any career path but I particularly liked accounting because it had a sprinkle of maths here and there
So, it wasn’t money, but in fact maths.
While it was a spur of the moment decision, it wasn’t a path that was uninteresting for me because there was math involved so I had fun with it.
Speaking of money, I love, love money.
Hahaha. About money, when did you first clock the importance of money, ever?
Look, I grew up in a low-income family. Three siblings and my mum – my dad is late.
I’ve always known that money is the koko. My sister and I have always dreamed of ways to get rich from a very young age.
Considering the fact that my dad died when I was 12, the hustle sort of intensified. Immediately we could navigate how to board buses properly we were on our way to building our Dynasty – that’s what we called it hahaha.
We pretty much have the ‘driven’ gene. It’s overwhelming.
And intense. Sorry about your dad.
Thanks. I was 12, about to write my Junior WAEC.
Must have been tough for you mum.
We actually had great financial support from my uncles on both sides of the family. One of them was the main sponsor – the person that pays for tuition and major bills.
That’s amazing. What’s the first thing you ever did for money?
I needed to go to prom in SS3 but we didn’t have enough money. My sister was a budding fashion designer and I was her model, so we made a sample prom dress. I took pictures and we wanted to show people the sample, so they can make their prom dresses with us.
We tried to go to one of the fancy schools – they didn’t make it past the gate, hahaha.
Hahaha. This is hardcore. Do you remember the first money you made though?
That’d be my first salary as a research intern at my pre-NYSC job. 2018. 60k.
Ah ahn, enjoyment.
Hahaha, not really. Family responsibilities sort of come in but I’m grateful. Anyway, I went on to serve at an investment bank in Lagos, and they paid me 100k a month.
I imagine these guys retained you.
They wanted to but I needed to work with a bigger company.
This energy, which market can I buy it?
Hahaha. I got a job working in Private Equity. I don’t know how long I’d be here but my little time here has exposed me to different businesses. In the near future, it’d be easier to run my business, if the time comes.
Interesting. What are your biggest WOAHs since you started working in Private Equity?
Considering that I’ve been here for a little over two months, the biggest WOAH has really been working for a company that not operating in only Nigeria. It’s strange but interesting understanding of other Anglophone African economies. For example, I never really cared about how the Ghanaian economy worked until I started working here so it’s quite challenging and interesting.
Unlike Nigeria, Ghana actually has an oversupply of power in its economy. Can you beat that?
You had to bring in electricity.
Haha! While the demand for electricity overshadows that of supply in Nigeria, the reverse is the case in Ghana. Now they have long term power contracts that they have to renegotiate so that the government doesn’t continue to pay for unused power.
Meanwhile, you are here, worrying about electricity and Okada bans. How has that affected you, by the way?
HORRIBLE. It makes me rant on my WhatsApp status every morning. One of my friends told me he fell ill and landed in the hospital.
Woah. I hope he’s okay.
Yes. The doctor just prescribed a drug called “Less Lagos Madness”
Hahaha. This is the funniest, not-funny thing ever.
It’s like I go to work with an open mind every day.
Questions like “would I get a bus?”, “how long am I going to wait for one?”, “how many people would I successfully shove trying to get into a bus?” My work colleagues can’t relate, I look like the crazy one
What’s your monthly income like now, and how does it disappear monthly?
300k net. One would think I’d have lots of Investments considering I’m a finance person but it’s not so. I have to write exams – ACCA and co. I also have to settle the school fees of my younger siblings. Currently saving up for rent. I’m sure I’d get a grip of myself mid-year and I can have lots of disposable income. Also hoping for a full-time role, from intern to an analyst.
Wait, are you an intern currently?
Yes. The way these multinationals work, they need to sort of see you work for a period before you transition into full time. It’s basically budgeted in dollars.
How much will you earn when you go full time?
I’m not sure. Wild guess? 800-1 million. It’s a year’s internship, but you can get a bump up earlier being a high performer.
I’m rooting for you.
Thanks.
It’s time to get our hands a little dirty in the nitty-gritty of your monthly expenses.
Let me explain the numbers. The family part includes monthly upkeep, part-payment for my sister’s school fees and brother’s school expenses.
Feeding is cheap because I try to cook. That transport part is definitely going up this month with this Okada ban. My skin and body maintenance is really cheap because I generally don’t wear makeup and all.
Being a girl is so expensive by the way, and I’m just doing the barest minimum at the upkeep department. That’s why I’m big on making more money and changing my life.
Tell me more about the upkeep part.
I mean, I don’t go shopping every other month, I don’t buy Vietnamese hair – at least not yet. No manicure or spa treatments. I don’t spend 50k on body oils and an extra 50k on fragrance. It doesn’t mean that I don’t like them but it’s not just time. Soon. I just need to stash good and smart.
The way I grew up has always made me approach things with a unique mindset, and it has worked to a good extent.
I see big things as very achievable. Like, “what’s the worst that could happen?” I have no problem banging on every dream company door if I need a job.
Interesting fact: Before I got this job, I wrote lots of cold emails to different companies’ CEOs. So I’m a big dreamer and intentional about creating generational wealth.
I’m curious, how much do you imagine you’ll be earning in 5 years?
With plan A or B?
Run me through both
This is very optimistic, but I want billions in annual revenue if I become an entrepreneur.
But following my career trajectory, I might be up for up to $250000 per year.
I’m going to leave that entrepreneurship part. $250k per annum? That is wild.
Yes. In my heart of hearts, this is it. The trick to earning well is to ensure you add enough value to account for your high salary. The higher ranked you’re, the easier it is to directly link your performance and remuneration.
Let’s create a scenario of a road to 250k. And what it looks like.
Go for Master’s next year – that should take a year. Start as an investment professional at one of the top Development Finance Institutions – $120k to 150k per year. Work my way through promotion to get to $250k per year.
Do you know what makes it more interesting? Earning that and living in Naij. Your house and utility bills won’t be alarming.
Multinationals also have a way around taxes which makes it less painful. Life is sweet.
What way?
A segue, but there seems to be a history of black tax with you.
It’s suffocating and needs to be handled with a brave heart if not, it’d leave the taxee frustrated and broke.
It is very dicey because I mean, who doesn’t want to help the family? I find myself struggling with it because I’d give an arm and leg for my nuclear family before I remember that I can’t walk.
But for young black professionals to be able to grow sustainable wealth, they must learn not to be guilt-tripped into giving all their money away. This would also prevent them from depending on their children when they grow old – they’d have an attractive retirement fund and viable investments to fall back on.
Word. Black Tax is a short term inconvenience for long term financial freedom. Discuss (20 marks)
I think it all depends on how you handle it. Paying black taxes on things like education of younger ones or buying a property for your old ones (which can serve as rental income) and all that can lead to a long term financial freedom because you’re empowering them.
However, if you use a chunk of your earnings to cover recurrent income (paying the food bills and electricity bills of many families), then there’s no long term freedom.
I always feel broke after I pay for all the important stuff and my account balance starts to dwindle. I literally panic.
Sorry.
What’s the last thing you paid for that required serious planning?
Everything. I plan for everything.
Do you have a safety net of sorts, in case anything goes south?
I know this is irresponsible but I’m trusting on my good genes not to fail me. I haven’t been sick almost all my life. I just need to make it to the middle of the year. No school fees to pay. Would have raised enough for rent.
On a scale of 1-10, how would you rate your financial happiness?
3. I need more money. I need a very nice apartment and to uber my way through life – I don’t want to drive in this traffic. I need money to start investing.
It’s like you didn’t come to this life to suffer at all.
I want it, and I’m going to get it. Many times, people don’t believe me, so I’ve started talking less. Sometimes, I’m scared about how passionate I am of these things.
I never got to ask, was it one of the cold emails that landed you the current job?
Let me tell you. I made a list of 12 companies – I was picky about where I wanted to work – and sent cold emails, LinkedIn requests and all that job stalking stuff.
And that’s how I landed this job.
Funny thing is, I still get interview requests from them but guess who now sends rejection emails to companies?
Energy.
Check back every Monday at 9 am (WAT) for a peek into the Naira Life of everyday people. But, if you want to get the next story before everyone else, with extra sauce and ‘deleted scenes’, subscribe below. It only takes a minute.
