As the Russia-Ukraine war continues to upend global markets, the impact is being felt in Nigeria where the cost of living is rapidly rising and pushing many people deeper into poverty.
Many are writhing under the weight of costs that is forcing tough choices on them in order to survive. Here are the three things that have impacted the cost of living of people.
An impact of the ongoing war has been a steady rise in the price of staple foods such as bread and noodles.
Ukraine and Russia are large exporters of sunflower oil, and the crisis in the region has pushed all vegetable oil prices significantly higher.
Some Nigerians say they have to revise their shopping lists on the fly as food prices keep rising.
“We had to eventually revise nearly everything we had in our market list- quantity and quality,” one student told BusinessDay during a market survey.
The COVID-19 pandemic and its economic consequences have already contributed to the number of moderately or severely food insecure people in Nigeria, putting the number at 116 million people, a 75 percent increase from 66.1 million between 2014 and 2016 according to a 2021 report by the Food and Agriculture Organisation (FAO).
The 2021 Global Hunger Index (GHI) ranks Nigeria as a hunger hotspot, the 103rd out of 116 countries with available data, with an index of 28.3.
As bread, noodles, pasta, and almost every other food item that readily comes to mind become a near-luxury item, the cost of living in Nigeria has become more concerning.
“Underestimating the high cost of living in Nigeria is one of the worst relocation mistakes an expatriate can make,” an online report titled ‘Cost Of Living in Nigeria’ says.
Russia is one of the world’s biggest exporters of key raw materials such as crude oil and gas and oil-importing fragile states are hit the hardest by the ongoing war.
BusinessDay’s findings show that diesel pump prices rose to N720 from N650 per litre in previous weeks. This is currently making it difficult for businesses and households to smoothly carry on their daily activities.
Experts say the situation would lead consumers to keep rationing income to prioritise necessities and worsen the rate of emigration and crime.
Many have also said the Nigerian environment is increasingly becoming conducive to grooming fraudsters. Youths are left with slimmer options to make decisions.
Rising Food Insecurity
Carolyn Afolami, a professor of Agricultural Economics at the Federal University of Agriculture, Abeokuta in an interview with Businessday said that if she, being a professor with a steady income source, now eats just about what she can afford, how would the average or the poor be faring?
The FAO defines food insecurity as a condition that forces people to reduce the quality or quantity of food they consume due to a lack of money or other resources.
“It is hard to care too much now for the quality of anything, everyone is looking to make ends meet anyhow,” these are the words of a small-scale businessman, who is also a family man.
In sub-Saharan Africa, projections were already made around the region’s recovery from the hit of the pandemic, and some progress was recorded.
There was an upward revision in 2021’s estimated growth from 3.7 to 4.5 percent. However, this progress is now being jeopardized by the Russian invasion of Ukraine.
Surging oil and food prices are straining external and fiscal balances of commodity-importing countries and have increased food security concerns in the region, and Nigeria particularly.
Russia’s recent and continuous onslaught on Ukraine has moved her contemporaries like the United States and the United Kingdom to place strict economic sanctions on the country and her citizen’s investments outside the shores of Russia, having a ripple effect on the economies of Nigeria and Africa.
The International Monetary Fund (IMF) in reports it released in April says this development which it describes as a “shocking one” has this much impact because it meets every country’s economy still recovering from the pandemic.
The narrative is more tragic in sub-Saharan African countries as the IMF describes countries in this region as “commodity-importing countries”.
In the report titled ‘Africa Faces New Shock as War Raises Food and Fuel Costs’, the IMF makes a real GDP growth projection for countries in sub-Saharan Africa.
With Nigeria’s GDP rate for 2021 at 3.6 percent, the international financial institution projects a rate of 3.4 and 3.1 percent respectively. This is an indication that the country’s economy is receding and whatever growth in view will be snail-paced.
“Looking beyond the pandemic and current geopolitical tensions, job creation and meeting the Sustainable Development Goals will require strong, inclusive, and sustainable growth in the region.
“To this end, decisive policy action is needed to enhance economic diversification, unleash the private sector’s potential, and address the challenges posed by climate change,” the report says.