Nigeria’s economic downturn characterized by soaring inflation rates and escalating living costs, has significantly eroded the spending power of ordinary Nigerians, rendering basic necessities increasingly unattainable for many.
The removal of fuel subsidy by the Federal Government in May 2023, intended to address fiscal challenges, has inadvertently exacerbated the financial burden on citizens. The situation was compounded by the floating of Nigeria’s forex market in June, which has seen the naira plummet helplessly to N1625 per dollar, stoking inflation to 29.90% as of January.
Despite initial palliatives offered by the government, the relentless rise in the cost of goods and services has negated any temporary relief.
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The consequence of this economic turmoil is palpable across all strata of society. From the urban centers to the rural hinterlands, individuals and families alike are grappling with the harsh reality of diminished purchasing power. What was once considered affordable has now become a luxury beyond reach for many.
The inflationary pressures have had a domino effect on essential commodities such as food, transportation, housing, healthcare, and education. Basic staples that were once accessible have now become prohibitively expensive, forcing families to make difficult choices between essentials.
For instance, the cost of rice, the most common Nigerian staple, has risen from its pre-2015 price of N8,000 per a 50KG bag to N75,000. This means that to afford a bag of rice, a minimum wage earner will need to spend nearly his three-month earnings.
For Nigerian workers, whose wages have remained stagnant or inadequately adjusted to keep pace with inflation, the situation is particularly dire. A monthly salary below N100,000 is deemed insufficient to cover even the most basic needs, let alone provide for the well-being and education of their families.
As prices continue to spiral upward, the purchasing power of the average Nigerian has dwindled, eroding their ability to afford a decent standard of living. This has led to a cycle of financial strain, where individuals are forced to cut back on spending, further dampening economic activity and exacerbating the downturn.
The impact of the economic crisis is felt not only in the present but also in the prospects of the nation. With households struggling to make ends meet, investment in education, healthcare, and other critical sectors is compromised, hindering long-term development and prosperity.
In the face of these challenges, calls for urgent action to address the root causes of the economic downturn and restore confidence in the economy have been on high. The International Monetary Fund (IMF) has called for a comprehensive approach that combines fiscal discipline, prudent monetary policies, and targeted interventions to support vulnerable segments of society is essential to rebuilding the resilience of Nigeria’s economy and safeguarding the welfare of its citizens.
While the government is dragging its feet to enact and implement policies that will mitigate the soaring cost of living, stakeholders and economists are advocating a significant increase in the minimum wage to boost Nigerians’ spending power to commensurate with the dire economic realities. Labor unions have demanded N200,000 and above.
On Wednesday, the House Representatives acknowledged that minimum wage below N100,000 is not sustainable given the current harsh economic realities, setting up a 37-member tripartite committee on national minimum wage, tasked with recommending a new minimum wage for Nigerian workers.
There is hope that despite the government’s initial lax attitude toward calls for a living wage, the minimum wage will be reviewed this time to sustain a dignified livelihood.