A familiar story: Currency devaluation, subsidy cuts worsen Nigeria cost of living crisis
Business
A basket of tomatoes now costs 55,000 naira – about double the national minimum wage
ABUJA (Reuters/Web Desk) – Blessing Joseph has been weaving bags, sandals and jewellery earning enough money to feed her son and send him to school. But since November, she has fallen on hard times as customers have stopped coming and she and her son routinely go to bed hungry.
She is among millions in Africa's largest economy, grappling with the worst cost of living crisis in decades that has deepened since President Bola Tinubu introduced unpopular economic reforms after he assumed office last May.
Last year, Joseph could easily make 30,000 naira ($18.83) a week but now she will be lucky to get 5,000 naira, she said.
"People used to place orders. I'll design for them, sometimes even (for) weddings I'll make souvenirs for them, but now those orders are not coming," said the 29-year-old Abuja resident.
"It has been very, very difficult, especially that I have a son and he needs to go to school, he needs to eat."
Tinubu inherited an economy that was already struggling with record debt, high unemployment, low oil output, subsidies that drained government finances and power shortages that have crimped growth.
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Nigeria imports food and fuel and was buffeted by high global prices due to the Russia-Ukraine war, just as it had exited a COVID-19 induced recession in 2020.
Tinubu, who campaigned on a "Renewed Hope" slogan, removed a costly petrol subsidy and foreign currency controls, in an effort to improve government finances, restore credibility with investors and kick-start the economy – a story that people in Pakistan have now learnt by heart.
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But inflation has soared to its highest in three decades and the naira currency is slumping to record lows, pressured by acute dollar shortages. Prices of food, cooking gas, medicines, fuel, and public transport have shot up, squeezing household budgets.
"With about 8 per cent of Nigerians deemed food insecure, addressing rising food insecurity is the immediate policy priority," the International Monetary Fund (IMF) said on March 4 after a staff visit.
Nigeria's problems have also rippled through company boardrooms.
Foreign companies like Procter & Gamble will stop manufacturing in Nigeria, while drugmakers GSK Plc and Bayer AG will contract third parties to distribute their products, in part due to tough operating conditions and the naira slump.
Africa's biggest telecoms operator MTN Group posted a big fall in full-year profit citing naira devaluation, which also prompted soap maker PZ Cussons Plc o issue a profit warning.
RISING FOOD INFLATION
At Agodo market in Lagos, tomato seller Farouk Dalhatu has just served his first customer in eight hours. The market is unusually quiet for the time of day when there is often a cacophonous din of traders and customers haggling over prices.
A basket of tomatoes now costs 55,000 naira – about double the national minimum wage – up from 12,000 naira in December. That has forced many of Dalhatu's friends to quit the business.
"They are just trying to find what they can eat now and not do the tomatoes business," he said, pointing to several empty stalls.
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Escalating food prices are the major driver of inflation.
Widespread insecurity in food growing areas – including abduction for ransom by armed gangs, a long-running Islamist insurgency and farmer-herder clashes – is adding to the woes by keeping many farmers away from their fields.
"We have an emergency on our hands in terms of the social consequences of this reform, in terms of this food insecurity," said Muda Yusuf, CEO at business advocacy firm Promotion of Private Enterprise, referring to the currency and fuel subsidy reforms.
Labour unions led some protests last month and have threatened to shut down the country to demand a tenfold rise in the minimum wage.
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In response, the government on Thursday started national consultations on a new monthly minimum wage, which has been pegged at 30,000 naira since 2019.
A presidency spokesman declined to comment, but Tinubu's administration has announced handouts of cash, grains, fertiliser and seed to vulnerable groups.
Unions say this is not enough and that focus should be on "substantive issues" that have been under discussion with the government since June 2023.
"These include critical matters such as wage hikes, social welfare programmes, infrastructure development, and the revitalisation of key sectors such as education and healthcare," the Nigeria Labour Congress said in a statement.
For Joseph in Abuja, a thriving business and providing for her son is all she wants.
"I am just thinking about what he will eat if he comes back (from school)," she said while shuffling through empty pots.
