As Nigeria approaches 18 months under President Bola Tinubu’s administration, the state of the economy remains a significant cause for concern.
Though the policies implemented during this period were intended to stabilize the economy, they have brought unprecedented hardships to the average Nigerian, with its ripple effect across sectors and households.
One of the most controversial moves by the Tinubu administration has been the removal of fuel subsidy. This decision, alongside the unification of exchange rates, has resulted in a dramatic rise in the cost of goods and services, further pushing inflation to alarming levels.
As at September 2024, headline inflation stood at a staggering 32.7 percent, according to National Bureau of Statistics data. Petrol prices have been on a steady increase since May 2023, as the product now sells at an average price of N1,030 per liter, placing immense pressure on the already strained finances of households across the country.
The exchange rate situation has not fared any better. The naira continues its free fall against the dollar, with the exchange rate surpassing N1,650 to $1 as of mid-October. This decline in the value of the naira has exacerbated the country’s import costs, further inflating prices for essential commodities.
Nigerians have been forced to grapple with a cost-of-living crisis that is deepening by the day, with 56 percent of the population now living below the poverty line (a stark increase from 40.1 percent in 2018).
According to the World Bank’s recent Nigeria Development Update, over 129 million Nigerians are now classified as living below the national poverty threshold, a situation that highlights the severity of the nation’s economic challenges.
Despite the dire circumstances, some states have yet to implement the newly signed minimum wage. In July 2024, President Tinubu signed a bill into law raising the minimum wage from N30,000 to N70,000.
However, many states are yet to enforce this increase, leaving workers in these regions to continue struggling with inadequate wages. This delay further aggravates the financial strain on Nigerian workers, as inflation erodes the purchasing power of their earnings.
The economic policies of this administration—chief among them the fuel subsidy removal, exchange rate unification, and the hike in electricity tariffs—have, instead of fostering growth, triggered a spiral of inflation.
The resulting rise in the cost of living is particularly devastating for the millions of Nigerians who are already on the brink of poverty. Hunger and inflation have intensified, significantly impacting the living standards of citizens across the country.
Beyond the inflationary pressures, the country faces significant social unrest, as widespread discontent grows over the harsh economic realities. The existential hardship brought about by President Tinubu’s economic policies has pushed many to the brink, sparking two major anti-government protests.
While the administration has promised that these measures are necessary to reposition the economy for long-term growth, the short-term pain is unbearable for many, with no clear end in sight.
The absence of an effective social safety net to cushion the effects of these reforms has exacerbated the economic crisis.
The government’s plan to offer conditional cash transfers and other palliatives has been slow to materialize, and where implemented, these programs have proven insufficient to meet the needs of the most vulnerable populations. Many Nigerians feel abandoned by the state, as poverty deepens and access to necessities becomes even more elusive.
Furthermore, Nigeria’s industrial and manufacturing sectors are feeling the squeeze, as high energy costs, driven by the hike in electricity tariffs and the rising cost of diesel, have significantly increased production costs. Many small and medium-sized enterprises, SMEs, are struggling to stay afloat, while larger industries are downsizing or shutting down operations altogether.
The agricultural sector, which employs a large portion of the population, is also reeling from the effects of inflation and currency devaluation.
With the rising cost of inputs such as fertilizers, seeds, and machinery, many farmers are unable to afford basic resources, leading to reduced agricultural output.
Looking ahead, there are growing calls for the government to reconsider some of its economic policies, particularly the removal of the fuel subsidy.
While it is widely recognized that subsidy removal was necessary to stop fiscal bleeding, critics argue that the administration failed to implement adequate palliative mechanisms to soften the blow.
With about a year and a half of the Tinubu administration behind us, the outlook remains bleak for many Nigerians.
The government’s commitment to economic reforms has yet to translate into meaningful relief for the masses. Urgent policy adjustments are therefore necessary to mitigate the growing suffering.
Without a robust safety net or meaningful interventions to ease the burden on citizens, the current trajectory of Nigeria’s economy will only serve to deepen poverty, exacerbate inequality, and fuel public discontent.
Increasing workers’ earnings will go a long way in ameliorating the intense hardships they are currently facing. Such an intervention is crucial to restoring dignity to the lives of many Nigerians and providing some measure of relief from the biting effects of inflation and rising living costs.
