Nigeria’s economic recovery yet to reach households

Nigeria’s economy is showing signs of recovery, but the improvement is yet to translate into meaningful relief for households as rising food, transport, housing and electricity costs continue to erode incomes and purchasing power.

While investors are increasingly optimistic about President Bola Tinubu’s economic reforms, millions of Nigerians remain trapped in a cost-of-living crisis, cutting consumption, moving to cheaper accommodation and relying on borrowing to meet basic expenses.

Grace Adama, a health NGO worker in Abuja earning N135,000 monthly, said her salary, although nearly twice the country’s minimum wage, is exhausted within days.

“If I’m paid today, my salary stays with me for just one week,” Adama told Reuters. “If you see the cost of living, house, electricity, everything has gone up.”

Her experience highlights the widening gap between Nigeria’s improving macroeconomic indicators and household welfare.

The reforms introduced by Tinubu since 2023, including the removal of petrol subsidies, naira reforms and electricity subsidy adjustments, have been defended by the government as necessary to correct years of fiscal and foreign-exchange distortions.

Tinubu has acknowledged the pain caused by the reforms, saying his administration is aware they have brought “economic hardship to Nigerian families, businesses” and placed “enormous pressure” on households and workers.

The government, however, argues that the reforms are laying the foundation for stronger and more sustainable growth.

Investor sentiment has improved significantly. Capital inflows reached a six-year high of $23 billion last year, according to the National Bureau of Statistics, while the Nigerian stock market has gained close to 60 percent this year.

The 650,000-barrel-per-day Dangote refinery and greater participation of local companies in the oil sector have also raised expectations that Nigeria can reduce its dependence on imported petroleum products.

Yet these gains have not been matched by broad improvements in household welfare.

The cost of preparing jollof rice has more than doubled since Tinubu assumed office, according to Lagos-based SBM Intelligence. Petrol prices have also risen sharply following subsidy removal.

The World Bank estimates that more than half of Nigeria’s population lived in poverty last year, highlighting the scale of the challenge facing policymakers.

High interest rates are adding to the pressure. With the Central Bank of Nigeria’s benchmark rate at 26.5 percent and inflation close to 16 percent, households and businesses continue to face expensive credit.

Finance Minister Taiwo Oyedele has acknowledged the need to ensure “prosperity for all Nigerians,” warning that persistent inequality is dangerous.

For the Tinubu administration, the next test is therefore not only whether Nigeria can achieve macroeconomic stability, but whether that stability translates into higher real incomes, affordable food, stronger employment and improved living standards.

Until then, Nigeria’s recovery risks remaining more visible in financial markets than in the daily lives of ordinary households. (BusinessDay)