Nigerians Switch to Survival Mode as Naira Loses Allure
With very steep currency inflation, the middle class economy is fast collapsing, and Nigerians at the near end of the poverty index are on the rise as the naira loses its allure – big time, no joke, analysts told MarketForces Africa at a meeting.
The race to leave the nation is gathering momentum and analysts have started to predict that the next phase of brain drain will be fast and furious. Key economic indices have worsened, thanks to policy failure. The first undoing, according to economists, was the border closure in August 2019 without an alternative.
The fiscal authority thrived on social investment spending than setting a blueprint for government fiscal performance. The carryover has now turned into a hangover that Nigerians have to pay for – dearly as subsidy removal coincides with a devaluation of the local currency.
“It will get worse before it gets better”, analysts told MarketForces Africa that the way to go is to reform the Nigerian economy, a move that was started by President Bola Tinubu. However, critics lament the absence of palliative measures for vulnerable people with near-zero income.
Nigeria’s consumer food inflation has skyrocketed at a time when more naira could only buy fewer items amidst joblessness in the country; a large number of Nigerians have been pressed hard against the wall.
Spending on food, logistics, and shelter are the majority priority of the Nigerian workforce whose remunerations are exposed to fluctuation in the price level, and dwindling naira. Market women also said they are not selling enough, and when the money looks big, they are unable to replace stocks/inventories as prices increase on a daily basis.
Analysts projected that worsening macroeconomic indicators will temper consumer spending in the real term in 2023. This will impact economic growth negatively, Broadstreet analysts said.
Despite a double-digit unemployment rate, the Nigerian naira has been devalued significantly amidst rising inflation rate. Consumer price has worsened following Nigeria’s government’s decision to unify multi-tiered exchange rates.
After President Bola Tinubu announced subsidy removal, prices of goods and services have skyrocketed. In major cities, house rents have been adjusted as families battle with a surge in fast-rising consumer inflation. Social investment has been reduced under the current regime, though critics have maintained that past spending was diverted.
It was also alleged that the previous government focused on the North for its social intervention program without proper accountability for how the humongous amount was disbursed to the less privileged.
The battle to save the economy started with subsidy removal, and Naira devaluation amidst high inflation, yet the government has not announced how it will cushion the effects on Nigerians in a country where 33.3% of the workforce are jobless.
Federal Government reported that about 133 million Nigerians are multi-dimensionally poor. The Multidimensional Poverty Index offers a multivariate form of poverty assessment, identifying deprivations across health, education, living standards, work, and shocks.
In terms of the geographical distribution of the multi-dimensionally poor population, 65% (86 million people) live in the North, while the balance, 35.0 per cent (47 million people) are from the South.
Of the 15 indicator measures, deprivations in the time to healthcare (12.6%), food insecurity (12.5%), and school attendance (9.6
5) combined contributed the largest share, 34.7%, to the dismal national MPI reading of 0.257 (2016: 0.225).
“These issues are still there unresolved despite previous social intervention programmes – and then comes a reformist that forgets that about 65% of the populace are already in an economic mess”, LSintelligence Associates told MarketForces Africa.
After the pandemic outbreak, Nigerians have been facing economic-related pressures.
High inflation and unemployment rates have raised the misery index in the last decade. As though the pressure from joblessness garnished with high inflation is not enough, economic shock from wobbling local currency and higher interest rates have worsened the outlook for the year.
Analysts said families will face higher market-related pressures as the government added diesel to the list of value-added tax-paying commodities, which is expected to worsen average production costs across the industry.
Already, the removal of fuel subsidies has shifted the nation’s costs of living upward, reducing the consumption economy – most companies in the production sector are selling less at higher prices to remain in business, consultants at LSintelligence Associates said.
“It will get tough before it gets better”, a number of economists assure MarketForces Africa following double whamming of economic pressures that greeted fuel subsidy removal and the decision to float the naira”.
President Bola Tinubu’s agenda to fix flagging economic growth and reform the exchange rate system will worsen households’ costs of living in the immediate, and the standard of living is expected to nosedive. Analysts said savings from petrol subsidy removal will be used to support government finances, possibly cutting back budget deficits and borrowings.
In 7 years, the naira has lost 233% of its purchasing power in a country where wage increase is often subjected to months of back-and-forth discussion. As a result of weak macroeconomic indicators and growth rate, Nigerian households in the lower group have been pressed to the wall.
It’s survival of the fittest
Emmanuel Ayomide, a small-scale businessman based in Lagos, was ejected from his mini-bedroom flat in a Lagos suburb for inability to pay an annual rent of N250,000. According to him, his landlord increased renting fee by 25%, citing the inflation rate.
Unfortunately, I am not making enough like in the past, Ayomide said, saying that while looking for another apartment, he realised he was in big trouble.
“To get a two-bedroom apartment in Lagos now, you must budget N500,000 for basic rent. Then, real estate agency and agreement will consume about N300,000. For now, I am lost – I don’t know my next plan really and truly”.
Sandra Ebun has a similar case with her tenancy agreement. Ebun’s landlord raised the house rent by 30% and allow tenants that wanted to leave to use three months free. She said it has been difficult getting something sizeable for her income.
“The thing is, the steep rise in costs of foods have impacted my finance negatively. I really don’t understand how a country will be putting pressure on its citizen with failed policies. I observed that since August 2019 when Nigeria closed the border, things have not been the same”.
Shops owners across major food markets lodged their own complaints. A number of women at Bodija market Ibadan to MarketForces Africa that life was better under military government. According to food vendor, Bola Akeju, prices of food items in major market has skyrocketed and less volume are being sold daily.
Akeju said those that buy food items in retail are paying much more. Basic foods price for human survival have become so expensive that a lot of families are seeking alternatives, she said.
In some major markets, MarketForces Africa reports that a bag of foreign rice (the most preferred) is selling at N35,000 per bag, while local ones are selling at N28,000- to N30,000 for 50 kg. Reclaims Value as Nigeria Mulls Eurobond Raise
Gaari, which used to be poor man’s food is selling at N22,000 per bag – with various measures and grades. Tubers of yam are obviously scarce and bags of tomatoes have skyrocketed. #Nigerians Switch to Survival Mode as Naira Loses Allure