BusinessDay

Nigerians groan under weight of two economic recessions

Jide Olaoluwa and his young family lived in a three-bedroom apartment in the affluent neighbourhood of Victoria Island at the heart of Nigeria’s bustling commercial capital, Lagos. That was five years ago, but the time seems even more distant to Jide whose life has taken a dramatic turnaround since then.

The 45-year-old worked with one of the biggest banks in the country for seven years before he found himself on the receiving end of a raft of cost-cutting measures by his bank, which included staff lay-offs in 2016.

Some 4,310 people were laid off in the banking industry that year, according to data published by the National Bureau of Statistics (NBS), as lenders culled jobs in response to a bruising economic recession.

After suffering a job loss, Jide moved out of his lush apartment to a smaller one in Surulere in 2017, as he could no longer afford to pay the rent.

His three children, all below 10 years of age, also had to bear the brunt of their father’s shrinking pocket, having changed schools three times already within five years as he could no longer afford to pay their fees.

Jide’s story is just one of many Nigerians whose lives have changed since 2015. The economy, which is now in a second recession in five years and has contracted in per capita terms since 2015, has bled jobs and that has taken a toll on Nigerians and their living standards.

Months turned to years

Chima Arinze is another Nigerian who is reeling from the pain of Nigeria’s economic slump, which has led to scarce jobs. Chima, 26, a graduate of Banking and Finance from one of the top private universities in Nigeria, was sure of a bright future.

Sadly, his second-class upper degree has not landed him his dream job, so he has had to settle for something less. He is an Uber driver. His cousin let him have his old car, which Chima now relies on to get by.

“I was excited about the future after I completed by undergraduate degree and was confident of pinning a good job within months, but surprisingly months turned into years and I have had to settle for less,” Chima said.

“I want to move to Canada, there are no jobs in Nigeria, they have better opportunities,” he said.

Chima’s situation is a clear case of underemployment. One in two Nigerians in the country’s labour force is either unemployed or underemployed.

The grim statistics are one of the highlights of the last unemployment report released by the National Bureau of Statistics (NBS).

Nigeria’s unemployment rate has climbed to 27.1 percent in the Q2 2020, up from 23.1 percent in the third quarter of 2018.

The report also shows that underemployment rate, which reflects those working less than 40 hours a week or in jobs that underutilise a person’s skill, has increased to 28.6 percent from 20.1 percent in 2018.

Read Also: How Nigerian economy can exit present economic recession – Financial Expert

They are girls

While many can explain what has happened to the economy since 2015, a Nigerian popularly called “Mama Debby” might not be able to connect the dots.

She only had primary school education but the pain of the changing economy is written all over her situation.

She is a hairdresser in Ilorin, Kwara State, with three children who are all out of school, they have been out of school since 2018, the eldest daughter Deborah, has joined the hair making business.

They eat once a day and take Garri (cassava flakes) at night each day except something miraculous happens during the day.

They were never rich but they could eat comfortably three times a day before 2017, when her husband could not continue his business and could not provide any more for the family.

“They are all girls but I cannot afford to buy them clothes and other necessary things,” Mama Debby laments.

Mama Debby is only one story among the numerous people that were pushed into poverty between 2015 and now.

Nigeria overtook India to become the World’s Poverty Capital in 2018 with over 89 million poor people, according to a Brooklings Institution report.

This is 40 percent of the Nigerian population; this implies that four out of 10 Nigerians spend less than $1 a day.

With the economic recession and pandemic, another 11 million people will be added to this list, the World Bank estimates.

Buying a car just got more expensive

Bassey’s booming car importation business has not been the same since 2016, as inflation quickened and the naira depreciated against the dollar.

Bassey imports European cars and brings them to Nigeria to sell, a business he started since 2010, and which has been awesomely rewarding until a sharp naira devaluation and economic recession toppled the business.

The naira has lost 138 percent of its value against the dollar since 2015, moving from N160/$ to N381/$ this year.

These figures have changed the course of Bassey’s business because as the naira weakened against the dollar, the cost of importation increased as well.

“I could import 12-13 used cars for N20 million in 2015, but as at now that same amount can only get me 6-10 cars,” Bassey said.

For Bassey, business has also been slower than in 2015 as it takes him longer to sell off his cars, a sign of the diminishing purchasing power of Nigerians.
It must have been easier to buy a car in 2015, when inflation was in single digit.

To cut costs, many people seem to prefer going for “accidented cars” and Dozie Ifebi is one of them.

Dozie intentionally bought an accidented car after discovering damaged vehicles were much cheaper.

“I needed a car but I didn’t have enough money to go for the type of ‘Tokunbo’ (the popular name for used cars) I wanted,” he said.

Even manufacturing businesses that depend on imported raw material have not remained the same since 2015.

To survive, businesses have had to increase prices to cover their production cost, adding more to inflationary pressures.

Nigeria had a single digit inflation rate of 7.9 percent and 9.55 percent in 2014 and 2015, respectively, but inflation has accelerated since then.

Inflation soared to a record 18 percent in 2016 before moderating to 15.75 percent as at December 2020. The impact of this is reflected in consumers’ shrinking wallets.

The prices of major staple food items have also risen with food inflation at 19.80 percent; this means Nigerians have to pay more for food in a country plagued with a high poverty rate.

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