Eight ways inflation has made Nigerians poorer within 10yrs
Declining incomes and a continuous spike in prices are reducing the ability of Nigerians to afford some of the basic necessities of life such as food, water, shelter, and clothing.
In almost a decade, the cost of items has more than doubled, worsening the living conditions of people. According to the National Bureau of Statistics (NBS), inflation, which serves as a measure of consumer prices, was at a single digit of 9 percent in January 2013. By February 2016, it had become double digit at 11.38 percent and since then, remained in double-digit territory with June 2021 at 17.75 percent.
Also, incomes have declined to $2,273.2 in 2020 from $2,443.4 in 2016, a data from the World Bank show, limiting the purchasing power of people and the country has slumped into two recessions in the last five years.
All these have contributed to an increase in poor people to 90 million from 70 million in 2016.
“The Nigeria economy has not really grown and people are paying more for things. Our policy makers are yet to understand how high inflation is,” says Joachim MacEbong, a senior analyst at SBM Intelligence, noting, “You cannot have any economic advancement for most people, if prices are increasing this fast.”
Here are the eight things that has made people poorer:
Food is the most important necessity for people and has to be accessible and affordable for them. However, in Africa’s biggest economy, it is the opposite as food inflation (prices) has more than doubled from 10.1 percent in January 2013 to 21.8 percent in June 2021, making it among the highest in the world.
For example, a bag of imported rice now costs N30,000 from N5,000-N6,000 as far back 2012, a tuber of yam that sold for N150-N200 now costs N1,000-N1,500, a paint-bucket-measure of beans was N400-N500, now it is around N2,500-N3,000, and a loaf of bread that cost N100 is now N500. With every price increment, these everyday consumables are getting out of reach for average Nigerians.
“I won’t buy egg, yam or plantain again, I can’t afford them, they are too expensive now,” Biola, a cleaner, states.
House rent, mostly in the Mainland areas of Lagos where the middle- and low-income earners reside, has gone up by more than 300 percent in almost a decade. For example, a two-bedroom apartment in Surulere used to cost as low as N150,000-N200,000 but now it is roughly within N500,000-N600,000 a year, and a three-bedroom apartment now costs around N800,000 from N350,000-N450,000 a year.
The high cost in rent has also led to people relocating to mostly undeveloped neighbourhoods.
The high cost of foreign exchange, which was N192/$ in 2015 to N412.5/$ at current official rate, has reduced the ability of most middle-class Nigerians to buy brand new cars, making them go for used ones (often called Tokunbo) considered cheaper. But even at that, the prices of used cars have increased significantly due to scarcity of salvaged cars and the increased cost of shipping due to the COVID-19 disruptions.
For example, a used 2012 Toyota Corolla model sold around N2.6-N3 million in 2016, but now it costs over N3.5 million for same car that is almost 10 years old.
The same situation with cars is also affecting clothes, as second-hand clothes, which are cheaper than new ones, are now becoming expensive. Nigerians who patronise the second-hand market are finding it increasingly difficult to afford them.
“Who will give you trousers for N1,500,” Ejima asks, saying, “That was the price like two years ago, now it is N3,000,” indicating a 100-percent increase.
Education, considered a human right and meant to be affordable, is fast getting out of reach for people due to the increase in school fees. It was cheaper to pay school fees then than now. Then in 2011, the cost of school fees in a public university was around N15,000-N20,000, but today, it has double to around N40,000-N50,000.
For private universities, the cost is on average, more than 10 times what it would cost in public schools. For primary and secondary schools, most charge more tuition than would be paid for university education.
Food and transportation take about 65 percent of a person’s income. But with petrol prices up to N165.6 per litre from N65, transport cost has eaten deeper into the pockets of people. According to the NBS, Nigeria’s total transport expenditure had increased by 214 percent to N2.59 trillion in 2019/2020 from N823.24 billion in 2009.
With consumer prices rising and incomes stagnating, many people have adapted negative strategies like using their savings for consumption purposes, which is bad for them as saving money provides a safety net for people in case of emergencies.
Now, Nigeria has one of the lowest savings rates globally. According to the International Monetary Fund, the gross savings rate in Nigeria stood at 13.9 percent in 2019, far behind China at 45 percent, and even below Tanzania (24.8%), South Africa (15.8%) and Togo (21.2%).
Health services and drugs:
Most of the equipment and drugs used in Nigerian hospitals are imported, making the cost of providing healthcare services expensive. For example, Panadol used to sell for as low as N60 but now costs N150.
“With the rate our population is growing, it then means that people will have more responsibilities. So, when people cannot meet basic necessities of life, they will resort to social vices such as kidnapping, which is now a new business in Nigeria,” Damilare Asimiyu, an analyst at Afrinvest Securities Limited, says.