Shortly after he was sworn in for a second term in office in 2019, Nigeria’s President Muhammadu Buhari promised to create jobs that would lift 100 million Nigerians out of poverty in 10 years.
“This administration has laid a foundation of taking bold steps in transforming our country and delivering our people from the shackles of poverty,” Buhari said at the inaugural June 12 Democracy Day celebration in Abuja.
Barely two years after, the promise of empowering millions of Nigerians is fading, with the pandemic further worsening the livelihood of the country’s already poor citizens.
According to a recent survey by the National Bureau of Statistics (NBS) on the impact of the pandemic, more than 8 out of every 10 Nigerian households are raising an alarm over rising food prices.
58 percent of the households surveyed reduced their food consumption between July and December last year in response to the pandemic.
The numbers could appear more frightening when the NBS publishes data capturing the months in the New Year (January and February), especially in the light of the prolonged insecurity situation that is further pushing up food prices and taking the president’s promise away from reality.
The NBS data on Nigerians who are unable to afford basic items like food is a reflection of the story of Emmanuel Ikenna, who, five years ago could make do with the N70,000 he earned from the food-producing company he worked as a supervisor.
Today, Ikenna is married with two children but struggles to feed, pay the school fees of the children or meet up with the N5000 monthly allowance he sends home for his mother’s upkeep. His inability to cope with accelerating inflation is made worse by his stagnant income.
In Africa’s largest economy, prices of goods and services are skyrocketing without a corresponding increase in income, making life miserable for Nigerians.
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Headline inflation has quickened for 17 consecutive months and hit 16.47 percent in January, driven by food prices. Today, Nigerians now spend double the amount they spent five years ago on food.
The rise in price of goods and services has continued at a time when incomes of Nigerians have been badly affected by the economic impact of the pandemic.
“If incomes remain stagnant and prices continue to go up, people can’t buy as much as they used to, and ultimately, it means the amount you have to live a certain standard of life decreases,” Ayorinde Akinloye, a consumer analyst at United Capital plc, said.
“You can imagine people who were earning incomes before the pandemic and then people lost their jobs, or had pay cuts. So, it means they cannot afford to buy the things they used to buy before in terms of food, the standard of education, housing, etc, and that is what contributes to the poverty problem,” Akinloye said.
Before the pandemic struck last year, Nigeria was wallowing in multi-dimensional poverty. Data from the World Poverty Clock revealed that six people fall into extreme poverty in Nigeria every minute. More so, a 2018 report by the Brookings Institution situated the country as the poverty capital of the world with 87 million people or roughly 40 percent of Nigeria’s 200 million populations living below $1.9 a day.
To put in perspective, this total number of poor people in Nigeria exceeds the entire German population. The United Nations (UN) expects Nigeria’s population to double to 410 million by 2050, potentially swelling the ranks of the poor.
When the last inflation report was released in February, Nigeria’s misery index, an index that helps to determine how the average citizen is doing economically, worsened to 44 percent, when compared with Nigeria’s unemployment rate, currently at an all-time high of 27 percent.
With the pandemic forcing more Nigerians out of work, the index would probably widen further, signalling that more Nigerians are becoming increasingly worse-off.
The government has embarked on various social intervention programmes like the N-power, Trader-moni, and a N75 billion National Youth Investment Fund (NYIF), among others, all of which are expected to alleviate poverty.
However, these programmes are yet to achieve the needed objectives due to a lack of data to enable the said funds to be channelled properly to the vulnerable in the society who need them more.
As a show of how the pandemic affected the income of Nigerians in the wake of rising commodity prices, the NBS survey noted that while more Nigerians had to move in with parents or other relatives, potentially to pool incomes and manage the risks faced through the COVID-19 crisis, others reported returning from work migration or education. In this way, they have had to restructure to find ways to cope with the crisis.
Moses Ojo, who is the chief economist/head of investment research at PanAfrican Capital Holdings Limited, noted that with rising commodity prices (particularly food prices) and stagnant income, a large proportion of income that was being spent on food items would increase, therefore hurting savings and consequently resulting in increased poverty level.
“As long as Nigeria relies mostly on imported food items and imported inputs in the production of food items, the instability in the exchange rate will continue to hurt the prices in the domestic market. Moreover, the farmer-herder crisis around the country is also contributing to the food price shock that we are currently experiencing,” Ojo said.
Ayodele Akinwunmi, a relationship manager at the corporate banking division of Lagos-based FSDH Merchant Bank, explained that with prices skyrocketing, a greater proportion of consumers’ income is going to be channelled towards food.
“Once that happens, there will be little or no amount remaining for savings, investments and other things that can also enhance the better quality of life e.g. education, which is going to delay the rate at which the country develops across boards,” Akinwunmi said.
On solutions, Akinwunmi explained that the present situation presents an opportunity to government at all levels to stimulate investments in agriculture, and ensuring they provide some palliatives for people to alleviate some of the underlying challenges so that they can be able to afford basic feeding without having to trade-off other important things they need to live a good life.
To keep the promise of lifting 100 million Nigerians out of poverty would require creating enough jobs and attracting foreign investments into the country. However, the industries that are supposed to create employment are battling with an increased cost of production owing to the country’s poor power infrastructure, while investment inflows fell to a four-year low in 2020.
Although the economy managed to exit its worst recession since the 1980s, it closed the year contracting 1.92 percent.
The average income of Nigerians contracted for the sixth year, pointing to how many Nigerians have gotten poorer.
Gloria Fadipe, head of research at CSL Stockbrokers said though the removal of subsidy was imperative, the timing was wrong as Nigerians and businesses were still reeling from the impact of the pandemic.
According to her, with income largely stagnant amid accelerating inflation and multiple devaluation, the average Nigerian consumer is highly impoverished hence they can’t save, invest or go for branded or luxury products rather they will be occupied with what to eat to survive.
On recommendations to the government in solving the rising food and commodity prices, she noted that palliatives must be directed to the vulnerable in the society.
“The government must also fix the insecurity situation which has been one of the major drivers pushing up food prices, and within its ambit. Management of FX has to also be looked into critically, especially those impacting on food,” she explained.
