The World Bank has said household real disposable incomes in Nigeria are expected to face “exceptional squeeze” this year.
In just two years, Nigerian households have been slammed by three huge economic shocks – the economic recession, COVID-19 pandemic and the Russian-Ukraine war, with a consistent rise in inflationary pressures.
Ohiozei Obaseki, an Abuja-based entrepreneur, told BusinessDay that the pressures that accompanied those years caused a serious dent on his family’s standard of living.
He said, “It seemed like a battle from all fronts, from government sanctions due to the COVID-19 pandemic, to the persistent rise in food prices, to movement restrictions, which affected businesses and so on.
“I just welcomed my last born at the peak of the pandemic and it seemed as though we were not going to make it through that storm because my income was not able to acquire what it could before the pandemic. Not to talk of when a new child has joined my family.
“If no one says this, I will: inflationary pressures since the pandemic have eaten deep into my pockets, and I’m not sure I can boast of recovery in the next 3-5 years. I’m barely hanging on my wits end.”
Shubham Chaudhuri, the World Bank country director for Nigeria, in an interview with BusinessDay, indicated that the COVID-19 crisis in the country, exacerbated pre-existing structural distortions (including trade distortions, such as 2019’s border closure), which were already driving up prices and eroding purchasing power before the pandemic.
“This in turn explains the near stagnation in household real disposable incomes that has preceded the exceptional squeeze expected this year,” Chaudhuri said.
“However, the extent to which the ongoing Russia-Ukraine war would drive the economy further into poverty as well as permanently making it less productive is still unknown,” he added.
The World Bank, in its latest report titled ‘Nigeria Poverty Assessment 2022’, said many primary effects of the pandemic had been more economic-related rather than health-related, partly due to Nigeria’s pre-crisis conditions.
“In the more recent stages of the Covid-19 crisis, even though economic activity began to recover, inflation started to accelerate especially for food items that are crucial for consumption among the poor and vulnerable,” it said.
Aliko Dangote, CEO of Dangote Group, warned in March that the ongoing war between Russia and Ukraine was going to cause intense food scarcity as a result of fertiliser scarcity.
The current diesel price hike in the country is threatening the survival of many businesses.
Chukwuma Okoye, CEO of Hugo’s Shawarma Karu, told BusinessDay that since the surge in diesel price started, his business had been running on losses and payment of workers had become a nightmare.
According to him, the business is still surviving because of the outrageous loan he took out during this period to see how long the crisis lasts.
“If this crisis lingers any longer than it currently is or the price of diesel mistakenly hits the N900 mark, it’s going to be a wrap for me and this business. To make matters worse, I’ll be owing a whole lot of people and I’ll also be a major contributor to the unemployment drivers,” he said.
Tara Vishwanath, lead economist in the Middle East and North Africa Region’s Poverty Reduction and Economic Management Group of the World Bank, told BusinessDay that in 2018/2019, many Nigerians were living just above the poverty line, thus leaving them vulnerable to falling into poverty when shocks like these occurred.
She said, “From our data, the distribution of consumption in Nigeria was relatively flat around the poverty line. This means that in the event that a slightly higher standard of living is set, it drastically increases the percentage of the Nigerian populace that would be living below the poverty standard.
“A useful yardstick to consider alongside the poverty concept is the ‘vulnerability’ concept, which includes those who are non-poor but stand a significant chance of falling into poverty in the near term.”
Read also: What Nigeria can do as non-poor risk poverty
Anita was already struggling with the economic fallout from the pandemic when the new year delivered a fresh shock.
The Nigerian tailor, who owns a small shop in Abuja’s socially mixed neighbourhood in Wuse, saw her monthly electricity bill more than double from about N13,250 to about N27,400 after recent price rises.
A long-time supporter of the current regime, she found herself doubting whether she would ever vote for the current ruling party again as crushing inflation that reached almost 16 per cent last month and a decade high of 18 percent last year has hit her business and her family life.
“I’m undecided; like a lot of people,” said Anita, 43, who asked to be identified by a pseudonym because her husband has a government job. “The main reason is this government. In the early days (the ruling party), things were amazing. But in recent times, the problems have just been piling up.”
Electricity prices rose between 25 and 75 per cent in January as the plunge in the value of the currency from last year, combined with removal of electricity subsidy and soaring global energy prices, produced increases in the cost of power.
Angry social media users posted their bills online while shopkeepers displayed theirs on their windows.
On the streets of Abuja, however, spiralling living costs are a source of mounting anxiety and hardship.
Fatima, a 70-year-old retiree, said she had resorted to collecting plastic bags and selling them to the city’s roaming waste collectors to top up her partial state pension. She cannot afford to buy basic necessities with her ‘almost insignificant’ pension.
“At home we eat pasta, pasta, pasta,” she said. “We are fed up with pasta. To make matters worse, pasta is even becoming unaffordable as the days go by.”
Abbey, a motorcycle courier for a restaurant along Apo central district, complained that close to half of his daily earnings of about N4,270 was eaten up by the cost of petrol.
The 23-year-old, who lives with his parents, said his family had started watching less television to try to reduce their electricity bill.
“Maybe it will take 20 years before Nigeria might return to the early 2000 era,” said Amuche Okorie, 45, as she helped her husband run their small shop selling lightbulbs, vacuum parts and remote controls.
All Amuche is focused on right now is seeking to shelter her three children from the worst of the impact of the ongoing economic turmoil.
“When my daughter sees that the price of chocolate has increased three times, she tells me not to buy it. Which 10-year-old thinks like that?” Amuche said.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
