Nigerians are spending three times more on what they buy today than the usual consumption basket they could afford three years ago, thanks to inflation and record-high unemployment.
The misery index, which is an indicator used to determine how economically well off the citizens of a country are, hit 55.2 percent in February 2023, according to data from the National Bureau of Statistics (NBS).
The index is calculated by adding the seasonally adjusted unemployment rate to the country’s February inflation rate.
According to Investopedia, the misery index is a measure of economic distress felt daily by people, due to the risk of (or actual) joblessness combined with an increasing cost of living.
Nigeria’s inflation rate quickened to a 17-year high at 21.9 percent in February, a level that shows it is more expensive to live in Africa’s most populous nation today than it was in 2019, according to the most recent inflation data from NBS.
With food inflation hitting 24.35 percent, the key driver of Nigeria’s core inflation as over 90 percent of Nigeria’s working population spends 60 percent of their income on food and related food-related expenses, analysts say.
But the situation is worse in Imo, Adamawa, Akwa Ibom, Cross River, and Yobe as their citizens are hardest hit by the impact of rising prices than most of their counterparts across the country, recording the highest misery index rankings.
The misery index hit 78.75, 75.83, 74.16, 73.27, and 73.1 percent in Imo, Adamawa, Akwa Ibom, Cross River, and Yobe respectively, according to data from NBS.
“We have more poor people now than at any other time despite rising FAAC allocations. Poor Nigerians are the majority, from big cities to rural neighbourhoods,” Luqman Agboola, head of research at Sofidam Capital, said.
“The state governments have been irresponsible in project and programme initiation and execution as there is often no linkage to the human development index.”
The country has an unemployment rate of 33.1 percent, with Nigerians getting poorer in real terms, and the middle class shrinking.
The situation has accelerated poverty in Africa’s most populous country with 63 percent of Nigerians (133 million) suffering from multidimensional poverty – meaning that two in three people are poor and experience just over one-quarter of deprivation such as health, the standard of living, and work, according to a recent report by the National Bureau of Statistics.
While it would appear that the economy has improved, culminating in a 3.10 percent growth in 2022, most of it is elusive. It is eluding a vast majority of Nigerians and has not been able to reduce poverty or lead to the creation of sufficient jobs.
With these realities, many of the country’s citizens are now more mired in poverty than most of their counterparts in other emerging economies.
The situation has been worsened by the persistent naira scarcity induced by the currency swap policy of the Central Bank of Nigeria, as well as the surge in energy costs that has further reduced consumers’ disposable income.
“It has been a very difficult year with the persistent naira and fuel scarcity. We have to pay to get the naira we need for transactions,” Rosemary Adewumi, a mother of three who was at Mile 12 market to make purchases, told BusinessDay.
“This has continued to reduce consumers’ purchasing power,” she said.
The policy has reduced the demand for goods and services as cost-conscious consumers are finding it difficult to meet their daily cash needs for transactions, forcing many to cut down on purchases as most businesses, especially in the food sector, are informal and heavily cash reliant.
“The business from which I have earned my income is almost collapsing,” said Abdulsalam Mohammed, a vegetable farmer in Karu Local Government in Kano.
“I had to sell each basket of tomatoes half the production cost as people were not willing to buy owing to naira scarcity,” he said.