Nigeria is becoming too expensive for a poor country
Nigeria, Africa’s biggest economy with a population of over 207 million people with the tag of “poverty capital of the world” since 2016, continues to witness an unprecedented surge in the prices of goods and services. It poses a serious concern, especially when certain public goods and basic needs of life become unreasonably expensive for the average Nigerian. There is a highly significant increase in the cost of food, housing, clothing, quality education, electricity, and even health care supposedly meant to be affordable.
A nation with over 42 percent of its population (91 million) is already below the poverty benchmark of $1.9 a day, significantly when other development indicators like unemployment and income inequality worsened. Education at the tertiary level is under serious threat from the Academic Staff Union of Universities (ASUU) strike action; in secondary and primary grades, they struggle with kidnapping school children in different parts of the country.
The health care sector remains under the siege of unending brain drain, poor funding, and welfare for her professionals. Inflation and naira instability in the international market, fuel subsidy debacle, and hike in electricity tariffs are other pressing challenges needing immediate solutions. Experts are worried over the unexplainable and absurd rise of goods and services in all sectors of the economy, even though the minimum wage for workers remains unchanged.
There are few justifications for the rise in goods and services globally, which is not only peculiar to Nigeria, mainly as a result of the COVID-19 pandemic, which resulted in global economic contraction and supply chain disruption. However, it still does not justify the level of the significant increase in the general cost of living in Nigeria. The economy is now unsustainable with increased starvation, disease, and squalor.
The surge in oil prices on the international market is eluding Nigeria of the potential economic revenue due to a drop in a quota system by OPEC member countries and the Ukraine-Russia war, contributing to the financial misfortune for an import-dependent economy. All these challenges seem to compress the economic woe of an average Nigerian as no end appears to be in sight. People commit some part of their already depleting disposable income to private-sourced security, education, and health care service provision. The economic life of an average Nigerian is in jeopardy with no clear direction for the future.
There are empty real estate properties available for sale with very few buyers due to the high cost of these properties, considering that the federal mortgage and housing schemes are nearly not in existence or are not working efficiently. Long queues in fuel stations at unregulated prices and adjusted meters executed by greedy marketers have made businesses that depend primarily on fuel for survival close temporarily. The hundred percent hike in airfare up to N50,000 in the aviation industry due to a 300 percent increase in aviation fuel from N170 to N550 is another colossal disaster where the price of a 1-hour domestic air ticket fare is almost twice the minimum wage (N30,000) for a vast majority of Nigerians.
The reasons for these outrageous hikes in the price of goods and services are sometimes baseless, frivolous, and lack the rationale to warrant such a high increase. Starvation, malnutrition and the crime rate will worsen due to the rising cost of living in Nigeria. The population grows at the rate of 2.5 percent annually, signifying a high level but unsustainable growth rate for a struggling economy.
The Nigerian economy defies specific laws of economics. The prices of goods and services never reduce regardless of the interplay between the forces of demand and supply. There is nearly no price control board to protect consumers, monitor, and check the arbitrary increase in the economy’s price of goods and services. Inflation is projected to surge further due to exchange rate fluctuation, post COVID-19 recovery efforts, the Ukraine-Russia war, insecurity, and the rising cost of transportation in Nigeria. A nation with the highest number of poor people globally has become too expensive for economic sustenance. It will rather drive more Nigerians into misery and poverty if the government and policymakers fail to address the pressing needs of a vast majority of Nigerians.
Alikor Victor is a development economist & policy analyst at The Nextier Group