- By Nkechi Ogbonna
- ` News, Lagos
2 hours ago
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Protesters took to the streets in the capital Lagos on Monday, demanding the government reverse its economic policies
Nigeria is currently experiencing its worst economic crisis in a generation, causing widespread distress and anger.
The trade union confederation Nigeria Labor Congress (NLC) organized nationwide protests on Tuesday and demanded more action from the government.
A liter of petrol costs more than three times as much as it did nine months ago, while the price of the staple rice has more than doubled in the past year.
These two figures highlight the difficulties many Nigerians are facing as wages have not kept pace with the rising cost of living.
Like many other countries, Nigeria has experienced economic shocks from beyond its borders in recent years, but there are also country-specific problems, in part due to the reforms introduced by President Bola Tinubu when he took office last May.
How bad is the economy?
Overall, the annual inflation rate, i.e. the average rate at which prices rise, is now almost 30% – the highest value in almost three decades. The cost of food has increased even more – by 35%.
However, the government-set minimum monthly wage that all employers must meet has not changed since 2019, when it was set at 30,000 naira – worth just $19 (£15) at current exchange rates.
Many are starving, rationing their food or looking for cheaper alternatives.
Widely shared social media videos show some reducing portion sizes.
One clip shows a woman cutting a fish into nine pieces, instead of the average four to five. She is heard saying her goal is to make sure her family can eat some fish at least twice a week.
What is causing Nigeria's economic crisis?
Inflation has soared in many countries as fuel and other costs have skyrocketed as a result of the war in Ukraine.
But President Tinubu's efforts to transform the economy have also increased the burden.
On the day he was sworn in nine months ago, the new president announced the end of the long-standing fuel subsidy.
This kept gasoline prices low for citizens of this oil-producing country, but it also placed a huge strain on public finances. In the first half of 2023, it accounted for 15% of the budget – more than the government spent on health or education. Mr Tinubu argued that this could be better utilized elsewhere.
However, the subsequent huge rise in gasoline prices has caused other prices to rise as companies pass on transportation and energy costs to the consumer.
Another factor driving up inflation, according to financial analyst Tilewa Adebajo, is a problem Mr Tinubu inherited from his predecessor Muhammadu Buhari.
He told the `'s Newsday program that the previous government had asked the country's central bank for short-term loans to cover $19 billion in expenses.
The bank printed the money, which helped fuel inflation, Mr. Adebajo said.
What happened to the Naira?
Mr Tinubu also ended the policy of pegging the price of the Naira currency to the US dollar instead of leaving it to the market based on supply and demand. The central bank spent a lot of money to maintain the level.
But the removal of the peg has caused the naira's value to plunge by more than two-thirds, briefly hitting an all-time low last week.
Last May, 10,000 naira cost $22, now it is only around $6.40.
As the Naira is worth less, the price of all imported products has increased.
When will it get better?
While the president is unlikely to reverse his fuel subsidy and naira decisions, which he says will pay off in the long run by strengthening Nigeria's economy, the government has taken some measures to ease the suffering.
Nigeria's Vice President Kashim Shettima announced the establishment of a body tasked with controlling and regulating food prices. The government also directed the National Grain Reserve to distribute 42,000 tons of grain, including corn and millet.
This is not the first time the government has said it is distributing aid to poor and vulnerable Nigerians, but unions have often criticized the government's method of food distribution, saying much of it does not reach poor families.
The government has also said it is working with rice producers to get more of it to markets, and customs officials have been ordered to sell bags of the seized grain cheaply. In a sign of how dire the situation is, this led to a crush in the largest city of Lagos on Friday that left seven people dead, local media reported. These alms have now been stopped.
The rice was confiscated under the previous government, which banned rice imports to encourage local farmers to grow more rice. This ban was lifted last year to reduce costs, but due to the depreciation in the value of the naira, that did not work.
About 15 million poorer households also receive a cash transfer of 25,000 naira ($16; £13) a month, but these days that doesn't go very far.
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