Due to monetary policies that have caused the local currency to fall to an all-time low against the US dollar, inciting protests and fury across the nation, Nigerians are currently experiencing one of the biggest economic crises in West Africa in years.
According to the most recent official data, which was made public on Thursday, food and non-alcoholic beverages were the main drivers of the inflation rate in January, which reached 29.9%, the highest level since 1996.
The value of the naira itself fell even lower on Friday, hitting 1,524/1$, signifying a 230% decline over the previous year.
It exacerbates an already dire situation by further depleting savings and incomes and pressuring millions already experiencing hardship as a result of government measures that removed gas subsidies, doubling petrol prices and driving up transportation costs.
Nigeria, home to over 210 million people, holds the title of both most populous nation in Africa and largest economy on the continent.
The service sector—which includes banking and information technology—drives the majority of the country’s GDP, with the manufacturing and processing industries coming in second and agricultural coming in third.
Obiajulu Blessing, a mother of three from Lagos, the commercial hub of Nigeria, came to the market to buy some food for her family, saying, “Everything is too expensive; they should help us.”
Nigeria’s economy is inadequate to support its rapidly expanding population, and the country primarily depends on imports to supply basic necessities like vehicles and cutlery.
As a result, exogenous shocks like the parallel foreign exchange market that sets the price of products and services can readily alter it.
Because of the economy’s heavy reliance on crude, officials continued to employ foreign reserves to support the naira amid fluctuating exchange rates in 2014, even as crude prices plummeted.
Using its limited foreign reserves, the nation kept subsidizing fuel while closing its borders in an effort to become self-sufficient and restricting importers of specific goods’ access to the dollar on the official market.
Food prices thus increased as the US dollar’s parallel market expanded.
Adeniyi Bisola, a trader, believes there is excessive hunger.
“Some people only get to eat at night after they eat in the morning, and others don’t even have access to food,” the speaker stated.
President Bola Tinubu moved quickly to revive the faltering economy and draw in investors after seizing office.
In addition, he declared that the country’s several exchange rates would be consolidated to allow market forces to set the rate of the local naira against the dollar, effectively devaluing the currency. The administration claimed that the costly, decades-long gas subsidies were no longer viable.
Analysts point out that the administration appears unsure of what to do and that insufficient steps were taken to offer citizens choices.
Strategy expert Dipo Oyewole says, “This is quite unfortunate because it seems like the government hasn’t been able to get a handle on it and it has been increasing and it keeps increasing right now.”
In order to lessen the impact of financial hardship, President Tinubu personally has ordered the release of basic products like grains from government reserves in addition to other palliatives.
The government has also declared its intention to establish a commodity board in an effort to control the skyrocketing costs of products and services.
For some, it is much worse in northern Nigerian conflict zones, where farming families are forced to flee violence and can no longer cultivate what they eat.
In recent weeks, there have been isolated protests, but security personnel have moved quickly to put an end to them, sometimes even making arrests.
Because commuters must walk to work, there are more legs on the roads and fewer automobiles in Lagos, the country’s economic center, and other large cities.