Millions in Nigeria face hardship as cost of living crisis deepens
Millions are grappling with the worst cost of living crisis in decades amid high unemployment, slumping currency and soaring food prices as labor unions demand a hike in the minimum wage and revitalization of key sectors
BLESSING Joseph has been weaving purses, sandals and jewelry to make enough money to feed her son and pay for his education. But since November, she and her kid have been going to bed hungry every night because her customers have stopped visiting.
She is among millions in Africa’s largest economy grappling with the worst cost-of-living crisis in decades. This crisis has deepened since President Bola Tinubu introduced bold but unpopular economic reforms after he assumed office last May.
Last year, Joseph could easily make 30,000 naira ($18.83) a week, but now she will be lucky to have 5,000 naira, she said.
“People used to place orders. I’ll design for them, sometimes even (for) weddings, I’ll make souvenirs for them, but now those orders are not coming,” said the 29-year-old Abuja resident.
“It has been very, very difficult, especially that I have a son and he needs to go to school, he needs to eat.”
Tinubu inherited an economy already struggling with record debt, high unemployment, low oil output, subsidies draining government finances and power shortages crimping growth.
Nigeria imports food and fuel and was buffeted by high global prices due to the Russia-Ukraine war, just as it had exited a COVID-19-induced recession in 2020.
Tinubu campaigned on a “Renewed Hope” slogan and removed a costly petrol subsidy and foreign currency controls to improve government finances, restore credibility with investors and kick-start the economy.
But inflation has soared to its highest in three decades and the naira currency is slumping to record lows, pressured by acute dollar shortages. Prices of food, cooking gas, medicines, fuel and public transport have shot up, squeezing household budgets.
“With about 8% of Nigerians deemed food insecure, addressing rising food insecurity is the immediate policy priority,” the International Monetary Fund (IMF)
said on March 4 after a staff visit.
Nigeria’s problems have also rippled through company boardrooms.
Foreign companies like Procter & Gamble will stop manufacturing in Nigeria, while drug makers GSK Plc and Bayer AG will contract third parties to distribute their products, in part due to tough operating conditions and the naira slump.
Africa’s biggest telecoms operator, MTN Group, posted a big fall in full-year profit, citing naira devaluation. This also prompted soap maker PZ Cussons Plc to issue a profit warning.
FOOD PRICES SURGE
At Agodo market in Lagos, tomato seller Farouk Dalhatu has just served his first customer in eight hours. The market is tranquil for the time of day when there is often a cacophonous din of traders and customers haggling over prices.
A basket of tomatoes now costs 55,000 naira – about double the national minimum wage – up from 12,000 in December. That has forced many of Dalhatu’s friends to quit the business.
“They are just trying to find what they can eat now and not do the tomatoes business,” he said, pointing to several empty stalls.
Escalating food prices is the major driver of inflation.
Widespread insecurity in food-growing areas – including abduction for ransom by armed gangs and farmer-herder clashes – is adding to the woes by keeping many farmers away from their fields.
“We have an emergency on our hands in terms of the social consequences of this reform, in terms of this food insecurity,” said Muda Yusuf, CEO of business advocacy firm Promotion of Private Enterprise, referring to the currency and fuel subsidy reforms.
Labor unions led some protests last month and have threatened to shut down the country to demand a tenfold rise in the minimum wage.
In response, the government started national consultations on a new monthly minimum wage on Thursday. The current minimum wage has been 30,000 naira since 2019.
A president spokesperson declined to comment, but Tinubu’s administration has announced cash, grains, fertilizer and seed handouts to vulnerable groups.
Unions say this is not enough and that the focus should be on “substantive issues” that have been under discussion with the government since June 2023.
“These include critical matters such as wage increases, social welfare programs, infrastructure development, and the revitalization of key sectors such as education and health care,” the Nigeria Labour Congress said in a statement.
For Joseph in Abuja, a thriving business and providing for her son is all she wants.
“I am just thinking about what he will eat if he comes back (from school),” she said while shuffling through empty pots.