…As cost-of-living crisis persists despite improving macro indicators
…Deepening rural poverty casts doubt on reform gains
From the corridors of power in Abuja to the floors of international rating agencies, Nigeria’s economic outlook is starting to sound hopeful. Reforms appear to be working. Growth projections for 2025 are positive. Inflation is cooling. Foreign investors are slowly returning. The naira is stabilising.
But on the streets of Kaduna, in the markets of Benin, and in the farms of Zamfara, this recovery feels like a rumour, one that hasn’t reached the homes of millions who continue to struggle with high prices, stagnant incomes, and the crushing burden of daily survival.
Hope on the charts, hurt on the ground
After two years of painful economic reforms, led by the removal of fuel subsidy and the unification of exchange rates, the Nigerian economy is showing signs of a rebound. Headline inflation dropped to 22.22 percent in June 2025 from a peak of 34.80 percent in December 2024, according to the National Bureau of Statistics (NBS).
The gross domestic product (GDP) is projected to grow by 3.6 percent this year. Foreign reserves are growing. The naira has steadied between N1,500 and N1,600 to the dollar in recent weeks. These gains have not gone unnoticed, Fitch Ratings upgraded Nigeria’s credit outlook from ‘B-’ to ‘B’ in April, and Moody’s followed suit, moving the country up from Caa1 to B3, citing improvements in fiscal and external positions.
“From a responsiveness standpoint, data suggest early signs of recovery. Economic growth is trending upward; trade balances have improved; foreign exchange rates are stabilising, and access to forex has become more consistent,” Tola Adeyemi, senior partner at KPMG Nigeria, said, at BusinessDay’s 13th CEO forum recently held in Lagos.
“If you ask whether the reforms are yielding the right results, the honest answer is both yes and no, it really depends on who you’re speaking to. For the investor and business communities, there are signs of progress. But for the general population, the overwhelming response is still no,” he added.
Simon Samson, an economics lecturer at Baze University, Abuja, agrees. “The macroeconomic indicators improving like easing inflation should help with the cost-of-living crisis. However, over 22% is still very high. Global best practice for inflation says ideal numbers should be around 2%. Hence, the largely ineffectiveness of easing inflation.”
“GDP growth numbers might be better than before. Nonetheless, when you juxtapose them with population growth, you realise they are not good enough. These improvements are too little to actually move the needle for Nigerians in dire straits.”
The reality behind the numbers
Indeed, despite improved indicators, the prices of food, fuel, drugs, and transport remain stubbornly high. In some rural communities, prices have doubled or tripled in the past year, while incomes have remained largely unchanged.
A 50kg bag of foreign rice now sells for as much as N90,000 in urban centres, while sachet water, once a stable commodity, has risen to N50 in many parts of the country. Petrol hovers around N900 per litre, and public transportation costs have surged.
According to the World Bank’s Poverty and Equity Brief released in April 2025, rural poverty in Nigeria has soared to 76 percent, meaning three out of every four rural dwellers now live below the poverty line. Nationwide, poverty increased from 40 percent in 2018 to 46 percent in 2023.
“Any form of recovery is a welcome development,” said Samson, who is also the chief economist at ARKK Economics and Data Limited. “A lot of the metrics are looking up like growth, inflation, capital market and portfolio investment. Despite that, there are still not good numbers around problems like food security, hunger index, FDI, and poverty.”
“And even for the improved numbers, they may not be good enough as the mess has overwhelmed them. The economic recovery around the capital market, for example, largely favours the wealthy. The poorest of the poor Nigerians, up to the middle class, might still be struggling to make ends meet in spite of improved numbers,” he added.
Two economies, one country
What’s emerging is a dual economy: one where government officials tout stability and improved ratings, and another where citizens face escalating hunger and despair.
Nigeria’s informal economy, which employs more than 80 percent of the workforce, remains fragile. Job opportunities are scarce, and purchasing power is weak. The minimum wage remains at N70,000, yet basic monthly food costs for a family of four now average over N200,000 in most urban areas.
“I earn N250,000 monthly but the bulk of it is spent on food and transportation,” said Adewole Ajayi, a Lagos-based worker and father of two. “The N150,000 I earned three years ago has more value than my current salary. I struggle to save N20,000 monthly now.”
For millions, this is not a recovery, it’s a recalibration of how to survive with less.
The federal government has repeatedly insisted that the reforms are long overdue and crucial for long-term prosperity. Social investment programmes, cash transfers, and small business grants are part of the plan to cushion the shocks, but critics say implementation has been sluggish and insufficient.
According to Samson, economic recovery must be judged by more than GDP. “The best way of measuring economic success is by its impact. It should be inclusive, sustainable, and effectively improve the lives of the majority of the population.”
Looking ahead, he said, the key lies in ensuring growth is not only upward, but also outward. “The authorities must pursue policies that guarantee economic successes trickle down or middle out. Such successes must be impactful to virtually everyone and not some select few.
“Hence, sectors like agriculture and other parts of the real sector must be given all the importance they deserve with tangible results to show. Technology, more transparency and all forms of efficiency must be pursued for an impactful economy for all and sundry.”
(BusinessDay)
