Nigeria is currently facing its worst economic crisis in a long time, causing hardship and frustration for many people.
The Nigeria Labour Congress (NLC) has organized protests across the country, demanding more action from the government.
“A liter of petrol now costs over three times what it did just nine months ago, and the price of rice, a staple food, has more than doubled in the past year.”
These numbers show the struggles that Nigerians are dealing with as their wages haven’t kept up with the increasing cost of living.
Similar to many countries, Nigeria has experienced economic challenges from global factors, but there are also internal issues, partly due to reforms introduced by President Bola Tinubu since taking office.
How severe is the economic situation?
Annual inflation, the average rate of price increases, is now close to 30%, the highest in nearly three decades. Food prices have risen even more, by 35%.
Despite this, the monthly minimum wage set by the government has remained unchanged since 2019, at 30,000 naira, equivalent to just $19 at current exchange rates.
Many people are going hungry, having to ration their food or find cheaper alternatives.
“In some areas, people are resorting to eating rice that would typically be discarded during processing, which is usually used for fish food.”
Social media videos show individuals reducing portion sizes to cope with the situation.
For example, one video depicts a woman dividing a fish into nine pieces instead of the usual four to five, aiming to ensure her family can have fish at least twice a week.
What’s causing Nigeria’s economic crisis?
Inflation has surged globally due to factors like the war in Ukraine, leading to increased costs for fuel and other goods.
President Tinubu’s economic reforms have also contributed to the challenges.
Upon taking office, Tinubu announced the end of the long-standing fuel subsidy, which had kept petrol prices low but strained public finances.
This move, aimed at reallocating funds to other sectors, resulted in a significant increase in petrol prices, causing a ripple effect on other prices as transportation and energy costs rose.
Another contributing factor inherited from the previous administration is the printing of money by the central bank to cover government spending, fueling inflation.
What’s happening with the currency?
Tinubu also abandoned the policy of fixing the naira’s value to the US dollar, allowing it to fluctuate based on market forces.
However, this led to a sharp decline in the naira’s value, making imported products more expensive.
“When will the situation improve?”
While reversing the decisions on fuel subsidy and currency policy is unlikely, the government has implemented some measures to alleviate the crisis.
These include the establishment of a board to regulate food prices and the distribution of grains from the national reserve.
However, there have been criticisms regarding the effectiveness of government aid distribution, with concerns that much of it doesn’t reach those in need.
Efforts are also being made to increase rice supply in markets and sell seized bags of rice at lower prices, although these measures have their challenges.
Additionally, cash transfers are being provided to around 15 million low-income households, but the amount is insufficient given the current economic conditions.
