Nigeria’s cost-of-living crisis, a bankruptcy of political-will, unstable macroeconomy

The predicament of Nigerians is tortuous and deeply rooted in socioeconomic and security challenges. Despite Nigeria being one of the largest economies in Africa, it still grapples with significant issues that affect the daily lives of its citizens.

Today, many are living in the multidimensional poverty web, unemployment, and underemployment. According to the 2022 MPI survey, “63 percent of people in Nigeria are multidimensionally poor, which is about 133 million people.”

Nigerians are battling with momentous security concerns, including insurgency, banditry, communal violence, and ethnic/religious conflicts. Almost in every part of the country, criminal activities such as kidnapping and armed robbery are common.

Moreover, basic services such as reliable electricity, clean water, healthcare, and education remain scarce in many areas. Power outages are frequent, and many Nigerians rely on expensive and polluting generators for electricity.

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The healthcare system is underfunded and often overwhelmed, while access to quality education is hindered by poor infrastructure and inadequate funding.

In spite of these challenges, Nigerians are known for their resilience, entrepreneurial spirit, and strong community networks.

Many Nigerians are thriving abroad and also working to improve the country’s situation through entrepreneurship and participation in local governance.

However, the comprehensive structural issues and systemic inequalities continue to pose significant barriers to improving the lives of millions of Nigerians.

Earlier this year, Nigerians took to the streets in what was called the “End Bad Governance” protests, but this got the government’s blackmail and violence response.

Teenagers were arrested for protesting and remanded in prison for three months, instead of addressing the issues raised. It took the outrage that followed the images of them looking visibly malnourished and anguished in court for their release.

 “According to the globally comparable index, the costs of food in Nigeria are more than twice the global average and significantly higher than those of many of its neighbouring countries.”

Despite the scale of the hardship caused by high food costs, the government did not consider it necessary to address the issues.

According to the globally comparable index, the costs of food in Nigeria are more than twice the global average and significantly higher than those of many of its neighbouring countries.

Research has shown that this is driven by the high costs of staple foods that supply most of the energy, such as yams, maize, and rice.

Obviously, the relatively high prices of staple foods, combined with current poverty rates, present serious affordability and hunger challenges for many people in Nigeria.

In July, the president announced that import tariffs on some important food items would be suspended to ease the rising costs. But Bloomberg reported earlier this month that the government itself did not follow through on the plan.

“Nigeria has not taken advantage of a six-month window to import key food duty-free, even as the West African nation confronts a cost-of-living crisis that a recent report warned was set to worsen.

Two senior officials involved with the tariff moratorium on wheat, corn, rice, and other crops said it had not been embraced because the authorities wanted to avoid hurting local producers. They asked not to be identified because deliberations about the matter are private.

The officials said the duty-free window would not be renewed after price pressures eased slightly in September and because of optimism about the domestic harvest.”

Unfortunately, Wale Edun, the finance minister, and Abubakar Kyari, the minister of agriculture, did not respond to requests for comment. This no doubt reflects either insensitivity or ignorance of the situation, even as the condition remains a challenge.

A recent report warned that Nigeria faces unprecedented food price growth in 2025 as the country grapples with long-standing issues, including insecurity in vital farming regions.

Inflationary fallout from reforms in 2023 by President Bola Tinubu has also played a role after he loosened currency restrictions and began rolling back costly fuel subsidies.

These caused the naira to slump and transportation costs to surge, directly impacting the cost of living. African Commodities Exchange Ltd., which surveyed more than 40,000 Nigerian farmers, projected corn prices will jump 48 percent to about N910,000 ($542) per tonne, while rice, a staple consumed by millions of Nigerians, will increase by 55 percent.

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“If swift action is not taken, the already high levels of food insecurity in the country are likely to worsen,” Afex said, recommending social protection measures for the poor and access to farm inputs and fertilisers.

The government said it implemented some of those recommendations to ease the economic hardship, such as cash handouts of N25,000 to N5 million households and distribution of grains and improved seedlings to farmers.

Probably, this addresses the issue of whether the government is insensitive. The government, however, worries that measures to ease food costs through imports will negatively affect local production.

Regardless of whether the government is beholden to a faceless food production cabal, this has never been a debate. The instinctive policy reaction to imports in Nigeria is always adverse.

What is baffling, however, is why rising hunger and poverty are not enough to suspend this instinct, even in the short term.

There is a bias problem here, borne out of decades of economic illiteracy at the highest level of policymaking. Even if we accept the naive premise that Nigeria can become completely self-sufficient in food, it will take decades to achieve.

Exploring every option to reduce the cost of food in the short term for a poor population is certainly worthwhile for any long-term objectives. As the economist Thomas Sowell said, “There are no solutions. There are only trade-offs”.

There is also an incentive problem. Trade policy in Nigeria is about expropriating rent and not facilitating trade for long-term development objectives. This dates back to colonial governance; everything seems to have stayed the same.

The Nigerian Customs Service has been announcing revenues throughout the worsening food cost crisis. The reliance on customs duties and tariffs creates the incentive to always tax trade without regard for the distortionary effects on the overall economy.

Customs is also one of the super agencies of the federal government that benefits from the civil service rule of keeping a portion of their revenues as operating costs, which means the agency will always rationalise its functions mainly in terms of rent.

The criminalisation of food importation has also created an underground smuggling economy, which also benefits Customs and other law enforcement agencies by empowering them to be extortionists.

Besides, there is the obsession of policymakers and politicians with control. In the eyes of the Nigerian government, citizens, especially those with low incomes, who work, earn, and sustain the economy through their skills and productivity are not free.

These free citizens will be further enriched when they do not spend a significant portion of their earnings on food and other necessities of life. This way, they have more to save, invest, and even create new industries in the economy through their consumption.

Instead, the typical attitude of the government is that citizens are children, and their dissatisfaction with bad policies can only be met by giving them things and telling them what to do.

In this view, citizens have no agency, and the government knows what is best for them. This assertion might sound exaggerated or even libertarian, but it has profound implications for Nigeria’s political economy.

Unless when functioning under external pressures from multilateral commitments, the government does not see macroeconomic stability as a meaningful policy objective.

Economic policy is not seen as a way of solving collective action problems or promoting national development but rather as a means of sociopolitical control. The control of the economy is a constitutionally backed mandate of the federal government.

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It never wants to relinquish this control, even when it creates negative economic distortions that cause hardship. Bringing down the cost of food and inflation is not as paternalistic and controlling as giving people rice and cash to manage their poverty.

Reframing the debate on food and everything else downstream of it is important. It is important to understand that having a population that is not starving, constantly worrying about where the next meal will come from, or spending a lot of their income on food is not a humanitarian policy of mercy from the government to the people.

It is time for economic and development policy to embrace a view of the world that sees people as brains, and not stomachs to be fed.

When people are unburdened from constant worry about the scarcity of basic necessities like food, then they are free to be creative, acquire skills, start businesses, innovate, and be productive citizens who pay taxes.

This will only happen with policies that promote economic growth and development, like export-focused industrialisation, structural transformation, macroeconomic stability (low inflation, debt sustainability, stable exchange rates), and investment in the country’s human capital—which includes health, education, and food.