Nigeria faces a mounting economic crisis characterized by stagnant wages, escalating inflation, and a declining standard of living for many citizens, potentially jeopardizing President Bola Tinubu’s economic agenda.
Removing subsidies on Petroleum Motor Spirit and the devaluation of the Naira have exacerbated the inflation crisis.
Despite these challenges, the government has maintained the minimum wage at approximately N30,000 per month, offering a short-term wage increase of N35,000 to civil servants for only six months.
This unadjusted minimum wage and the absence of negotiations with labour unions for a new wage agreement indicate a prolonged period before any substantive wage increase could materialize, potentially extending beyond the first quarter of 2024.
Leadership reports that the adverse effects of stagnant wages have affected Nigerians’ purchasing power.
A lecturer in the Department of Economics, University of Jos, Dr Joshua Reti, while speaking on the impact of stagnant wages on the purchasing power of Nigerians, said inflation is a persistent increase of prices of goods which, if not curtailed, would have a lasting negative impact on the purchasing power of the consumers, particularly when their wages are not increased.
“You’d discover that the purchasing power of the consumers whose wages are not increased is eroded completely. It is eroded in the sense that, what you used to buy at the rate of N10 will be N20. It will definitely have an adverse effect on the purchasing power,” he said.
According to him, the common man on the street, the consumers whose wages are not increased, are at the receiving end, stressing that it would really affect the purchasing power, which will lead to poverty in the land.
“The major thing is the erosion of the purchasing power as long as the wages are not increased in commiseration with the increase of the prices of goods and services,” he declared
The data from the National Bureau of Statistics underscores the impact, indicating a substantial increase in household spending on food and other essentials. The report notes a 27.33% headline inflation rate and a staggering 31.52% food inflation rate in October 2023 compared to the same period in 2022.
This price surge, particularly for food items like bread, cereals, vegetables, and meat, has forced many citizens into rural areas, slums, or makeshift camps due to the inability to afford urban rent.
Building material prices have soared, causing delays and project cancellations, while rents in urban centres like Lagos, Abuja, and Port Harcourt have risen by up to 75%.
With the festive season approaching, the situation worsens as the Central Bank of Nigeria’s adjusted exchange rate from N783.174/$1 to N951.941/$1 is expected to increase the prices of imported goods further, affecting clearing agents and consumers alike.
Economists and industry experts emphasize the urgent need for measures to curb inflation, stimulate growth, and boost employment opportunities.
They stress the importance of addressing the root causes of inflation, such as enhancing domestic production, improving agricultural productivity, stabilizing the exchange rate, and fostering a conducive business environment for investment.
An economist, Mr Tunde Oyediran, stated that “the increasing cost of food in Nigeria has significantly affected the living standards of ordinary citizens. It has become a serious cause for concern.
“The real income of the average income earner has been falling consistently. This implies that people can now afford fewer baskets of commodities for their livelihood and sustenance.”
Director-general of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, stated that “As you would expect, the current inflationary condition in Nigeria is adversely affecting the operation of the manufacturing sector, just like most other sectors of the economy.
“Some of the impacts of the rise in inflation on manufacturing include increase in cost of production, reduced profit margin, supply chain disruptions, uncertainty in planning, and reduction of consumer spending.”
