• Monday, July 22, 2024
businessday logo


Cost of living crisis: Nigeria ranked 5th hardest hit African country


Nigeria has been ranked as the fifth African country hit hardest by the global cost-of-living crisis as pressure continues to pile on households, a new report has shown.

According to the mid-way into 2024 cost-of-living index released by Numbeo, a data and research platform, Africa’s largest economy ranks fifth with 31.4 while Cameroon with 37.3 score stands as the country with the highest cost-of-living crisis in Africa.

Zimbabwe, Mauritius and South Africa are ahead of Nigeria with 37.2, 37.1 and 34.5 scores respectively.

Others in the top ten category include Ghana (30.9), Kenya (30.2), Botswana (30.1), Morocco (29.5) and Uganda (29.1) accordingly.

To collect data, Numbeo relies on user inputs and manually collected data from authoritative sources such as websites of supermarkets, taxi companies, governmental institutions, newspaper articles, other surveys, etc. Manually collected data from established sources are entered twice per year

Nigeria began to witness significant cost-of-living challenges following the end of the subsidy regime in May last year by the federal government which was aimed at reducing government spending and redirecting such resources to other critical sectors of the economy.

Meanwhile, between May 2023 and May 2024, the average premium motor spirit (PMS) price surged by 211 percent as the pump price jumped from N187 to an average of N630 with no clear plans to cater to the vulnerable who were most hit by the reforms.

One month later, the President Bola Tinubu government floated the naira in a bid to kickstart economic growth, however, the naira depreciated by 67.8 percent.

These reforms, which critics said were “hurriedly made”, were initiated to spur the interest of foreign investors in the economy. However, they have stoked inflation, hammered purchasing power and resulted in a renewed cost-of-living crisis.

Nigeria recorded its highest inflation figure so far in May 2024 at 33.95 percent with food prices accelerated to a near three-decade high.

Beyond food and consumables which account for at least 50 percent of Nigeria’s inflation, high energy cost and frequent rental hikes are exacerbating the cost-of-living crisis.

If cost-of-living challenges are not addressed, many may be pushed below the poverty line as high prices will continue to eat away citizens’ disposable income.

According to the World Bank, 87 million Nigerians are living below the poverty line — the world’s second-largest poor population after India.

However, the federal government has assured Nigerians of a massive food importation plan to ease the cost-of-living crisis, especially as it concerns food.

This development follows the ‘State of Emergency’ earlier declared on food security by the president. Though food inflation at 40.66 percent still remains high, the roll out plans by the government might stem its tide.

“Over the past several months, we have all been witnesses to the escalating cost of food items in all parts of the country. There is virtually no food item that has not had its price raised to a level higher than what a good many Nigerians can afford,” Abubakar Kyari, the minister of Agriculture and Food Security said recently.

“The government cannot allow this situation to persist. While there are ongoing agricultural initiatives, programmes and projects under the Federal Ministry of Agriculture and Food Security, and state governments also have theirs, we must respond to the creeping availability crisis.” Kyari added.