Aisha Mohammed, a once-thriving market trader in Lagos’s bustling Alaba international market, now struggles to feed her family. Skyrocketing inflation has eroded her profits and the value of her savings.
“The prices of everything—rice, beans, oil, tomatoes—have doubled, even tripled,” she laments. “Customers complain they don’t have money, and I barely make enough to restock my stall, let alone pay my children’s school fees.”
Aisha’s plight is not unique. Across Nigeria, businesses and individuals alike are reeling under the weight of a deepening economic crisis caused by unclear government policies in Nigeria. “The government says things will improve, but we don’t see it,” says Mohammed. “Every day is a struggle for survival.”
The Human Cost:
Maryam Abubakar, a single mother of three, has been a staple trader at her local market in Lagos for over a decade. She built a comfortable life for herself and her children by selling tomatoes, peppers, and other ingredients. Today, Maryam’s stall is half-empty.
“The same amount of money buys half the produce,” she laments. “Customers complain about prices, but how else can I survive when everything I buy costs me double?” She explains that transportation and fuel prices have forced her to drastically increase her prices just to pay for restocking her stall.
Woman selling stable food/Photo Credit: Punch Newspapers
Segun Adebayo is a trained mechanic and operates his workshop in Ondo state. He laments that his once-thriving business has fallen on hard times, adding that many of his clients can no longer “afford basic maintenance”.
“Clients can no longer afford basic maintenance,” he says. “They drive their cars until the vehicles break down completely.” In addition, incessant power cuts force him to rely on a generator to keep his tools working. Segun has had to lay off staff and fears closure is imminent.
Emeka Okafor, who runs a small electronics shop in Kano, laments that he used to employ three people, but now he can barely afford to keep himself in business amid economic uncertainties.
“I used to employ three people. Now, I can barely afford to keep myself in the business,” says Emeka Okafor.
“The cost of importing goods has become too high, and customers are disappearing.”
The ripple effects extend far beyond shopkeepers and market sellers. Rising transport costs make it harder for workers to commute, and unpredictable electricity has forced businesses to rely on expensive generators, squeezing profit margins and jeopardizing jobs.
“We need solutions, not just promises,” insists Emeka Okafor. “Businesses are dying, and people are losing hope.”
Food Prices Soar/Cost of Living Skyrockets
Rising inflation of 31.70 per cent has driven food prices in Nigeria to unsustainable levels. This has resulted in nationwide protests in cities like Niger, Kano, Osun, Ibadan, and Lagos, where citizens demand the less than a year old government’s action to ease their hardship. Desperation has also led to incidents of looting, including a raid on a government warehouse in Abuja and the interception and looting of food trucks in Suleja and Zaria.
The situation is so dire that Ukraine, a country itself facing the hardships of war, recently had to provide25,000 tonnes of wheat to Nigeria as humanitarian aid. This decision was criticised by Peter Obi, the Labour Party presidential candidate, who questioned the reliance on international assistance in light of the country’s internal struggles.
Mr Obi urged that Nigeria “must aggressively reorder our priorities by investing resources in productive sectors like agriculture.”
The former Anambra governor said, “Addressing insecurity is crucial for farmers to return to their fields, enabling a productive manufacturing sector and supporting small businesses.”
Although the cost of living was already a problem in Nigeria, it worsened after President Tinubu took office last May. He took two drastic economic decisions: removing fuel subsidies and letting the value of the naira change freely. This caused gas prices to skyrocket, making it much more expensive to transport goods, including food. While the administration had hoped it would save money and reduce corruption by ending fuel subsidies, it has made life harder for ordinary Nigerians.
Since President Bola Ahmed Tinubu’s administration took power, inflation has reached record highs of 29.9 per cent, the naira has depreciated more than 31 per cent significantly, and the cost of living has become unbearable for many. In 2022, the Nigeria Bureau of Statistics (NBS) reported that about 160 million Nigerians, representing 63 per cent of the total population, have slid into multidimensional poverty. The Western African nation’s unemployment figures, which currently stand at 33.3, according to the World Bank, also paint an equally bleak picture.
Photo Credit: NBS
These economic situations are further aggravated by Nigeria’s fall in oil revenues due to inconsistent production and oil theft. Despite OPEC’s production quota of 1.5 million barrels per day (bpd), Nigeria’s crude output averages only 1.25 million bpd. In 2022, oil theft caused substantial losses – estimated at $2 billion between January and August alone – further hindering production and shrinking oil-based revenue. Consequently, non-oil revenue sources outperformed oil income by 1.5 trillion Nigerian naira ($1.9 billion) that year. More than 90 per cent of the revenue generated from oil is used to service the country’s mounting domestic and external debts, which currently stand at N87.38 trillion, according to the Debt Management Office (DMO). The figures, according to the DMO, represented an increase of 75.29 per cent or N37.53tn compared to N49.85tn recorded at the end of March 2023.
Experts Analyse Situation
Experts have attributed the deteriorating economic situation in the country to the lack of a clear economic vision and policies under the leadership of Tinubu.
Former Central Bank of Nigeria Deputy Governor, Professor Kingsley Moghalu, has criticised President Tinubu’s handling of the nation’s worsening economic crisis. The economic technocrat, who expressed worries over the devastating combination of diminished purchasing power among Nigerians, skyrocketing inflation, a weakened naira, and food supply disruptions across the country, attributed the nation’s troubles to years of mismanagement and corruption under previous administrations.
He described the past ten years, dominated by the All Progressives Congress (APC), as “years of the locust” marked by fiscal mismanagement, excessive borrowing, and unprecedented corruption.
“These were the years of the locust, marked by unprecedented mismanagement of fiscal policy, unproductive external borrowing, unnecessary budget deficits, illegal Ways & Means lending by the Central Bank of Nigeria (CBN) to the federal government to the tune of N30 trillion, and unprecedented corruption,” Moghalu stated at a conference in Abuja earlier this month.
Professor Kingsley Moghalu/Photo Credit: theCable
He added that the current Tinubu administration has compounded the crisis with a series of strategic blunders, including poorly planned subsidy removals and flawed foreign exchange reforms. Moghalu believed the government failed to adequately educate Nigerians about the reasoning behind these policies or put safeguards in place to lessen the impact on citizens.
“The exchange rate unification and a further effort to float the naira in an environment awash with naira liquidity (a loose monetary environment) was a mistake,” Professor Moghalu stated, claiming it only worsened the situation.
To regain control, Moghalu advocates for a prolonged period of tighter monetary policy to curb inflation, prioritising stability over growth and ending illegal lending practices between the CBN and the federal government. He also decries the slow formation of President Tinubu’s cabinet and its focus on political figures instead of economic technocrats.
Government’s Reaction
However, the Tinubu’s administration rejected and dismissed Professor Moghalu’s worries about the economy. The Minister of Information and National Orientation, Mohammed Idris, who represented Tinubu at the event, defended the removal of fuel subsidies as a key reform that has boosted revenues and announced new economic initiatives aimed at supporting small and medium-scale enterprises, improving food security, and attracting foreign investment.
Similarly, the administration’s Finance Minister and Coordinating Minister of the Economy, Wale Edun cited the policies of former President Muhammadu Buhari as being the root cause of the current economic crisis. Edun, who recently spoke before the Senate Committee on Finance, pointed to the unchecked printing of money over an eight-year period during Buhari’s tenure as the primary driver of inflation in the country.
He emphasised that the printed money predominantly benefited a select few within the nation. He highlighted the disconnect between this monetary expansion and actual productivity, stressing that the excessive printing of money occurred without corresponding increases in output. According to Edun, this allowed a privileged minority to benefit disproportionately, leaving the majority of the population economically vulnerable.
“We talked about inflation; where has it come from? It’s come from eight years of just printing money. And the issue is that that money was not matched by productivity”, the minister said.
”It’s not like when you earn dollars, and you free the naira alongside it, although there’s even a better way than that. But that’s still not as bad. It’s not as if the money is matched by productivity and increase in output. It is not. And what happened was that for eight years, the weak were left to their own devices. It is the privileged few that took everything,” Edun asserted.
Edun reiterated the federal government’s resolve to audit the 22.7 trillion ways and means of advance under Former President Buhari’s regime.
Experts Blame Government, Proffer Solutions
Economic experts have continued to call for bold and strategic economic reforms in the country’s fiscal policy framework to boost the economy’s confidence.
Mr Bismarck Rewane, the CEO of Financial Derivatives Company, called for institutional reforms to support and ensure effective policies. At an economic webinar hosted by Proshare LLC last month, Rewane advocated for a fiscal policy direction that aligns with an investment-led economic strategy.
“Structural inefficiencies within our institutions are hampering our ability to implement sound policies. We cannot hope for positive economic outcomes without first addressing these underlying weaknesses,” he said.
“The time for piecemeal change is over. What we need is a comprehensive overhaul of our institutional landscape. This includes strengthening regulatory bodies, promoting transparency, and building trust between government and the private sector.
“Our fiscal policies must cease to be reactive. They need to be purposefully aligned to foster an environment where investment thrives. That is the true path to sustainable economic growth.”
He added that tax incentives should be targeted squarely at boosting productive capacity, promoting research and development within vital sectors, and facilitating the creation of high-quality jobs.
While blaming the current economic crisis on several factors, including the poor implementation of the naira redesign policy of the previous administration and the mismanagement of the fuel subsidy removal, Dr Patience Adewale, a Professor of Economics at the University of Lagos, Nigeria, also called on the country to boost production to end its over-reliance on imports to foreign reserves and the naira.
“The currency redesign was poorly timed and executed. The resultant cash crunch has paralyzed informal sectors vital to the economy. The government should prioritize restoring liquidity and ensuring smooth cash flow,” she told this reporter during a telephone interview last week.
“The removal of fuel subsidies, while necessary in the long-term, needs a phased approach and stronger social safety nets to cushion the impact on the poor. The government must invest in alternative energy sources and improve public transportation to offset rising costs.”
She added, “Nigeria desperately needs to boost domestic production to reduce its import reliance. The government should offer targeted incentives and invest in infrastructure that supports manufacturing and agriculture.
Kalu Aja, a certified financial education instructor, advises Nigeria to avoid debt trap shoes by creating long-term plans for financial responsibility. He advised the government to tackle insecurity to boost oil production for imports to earn more foreign exchange.
“We must stop kicking the can down the road regarding our debt situation. A long-term financial plan is essential to ensure sustainability and avoid falling into a debt trap that suffocates future growth,” he told this reporter during a phone interview on March 20, 2024.
“Borrowing isn’t inherently a bad thing, but it must be strategic and tied to investments that can generate returns. It’s time to move beyond borrowing for consumption and focus on borrowing for long-term development.
“Security and economic growth are inextricably linked. Tackling insecurity and theft—especially in oil-producing regions— is a must to boost production and unlock vital foreign exchange earnings.
“We cannot rely solely on oil exports, but it remains a key source of our foreign reserves for the foreseeable future. Addressing insecurity and restoring production levels must be an immediate priority.”
Kalu also called on Tinubu’s administration to take practical steps to cut down the cost of governance by trimming the number of ministers and other government officials in his cabinet.
“Bloated bureaucracy isn’t just inefficient; it’s a drain on resources that could be better invested in healthcare, education, and infrastructure. Trimming the number of ministers and officials is necessary to rightsize our government.
“Cutting the cost of governance isn’t just about salaries; it’s about streamlining processes, eliminating duplication, and rooting out wasteful spending. These reforms are vital in signaling a commitment to fiscal responsibility,” he added.
