The mismanagement of Nigeria’s wealth has been pinpointed as the primary cause of the country’s economic decline over recent years,Daily Trust reports.
Before 2015, Nigeria boasted a significant foreign exchange reserve, with its economy witnessing robust growth, expanding by 12.7% between 2012 and 2013. In 2013, the economy underwent a rebasing, raising its value from $270 billion to $510 billion, securing its position as Africa’s leading economy. This surge, approximately 90%, was attributed to the inclusion of previously unaccounted sectors like telecommunications, entertainment, and retail.
However, a decade-long analysis by Daily Trust on Sunday has uncovered a troubling trend of escalating inflation and essential commodity prices from 2013 to 2023.
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Maintaining a single-digit inflation rate has been a key goal for Nigeria’s economic stability. In 2013, the inflation rate averaged around 8.5%, with a slight increase to 9% at the start of the year but declining to 8% by year-end. This pattern persisted in 2014 and 2015, with average rates of 8.1% and 9.01%, respectively. However, from 2016 onwards, Nigeria struggled to sustain single-digit inflation, with rates soaring to an average of 15.6% in 2016, reaching a peak of 28.92% in December 2023.
One of the primary drivers of this inflation surge is the depreciation of the naira against the dollar, exacerbating the dollarization of Nigeria’s economy. The constant need for dollars to fund imports strained the local currency, leading to a series of devaluations. For instance, the worth-to-the-dollar-naira rate climbed from N159.3 per dollar in 2013 to N900 in 2023.
The repercussions of this economic turmoil have been felt across the board, particularly in the realm of food prices. Food inflation surged by an average of 186%, severely impacting the average Nigerian’s purchasing power. The price of staple foods like rice witnessed a staggering increase, with a 50kg bag soaring from N12,000 in 2013 to over N70,000 presently.
Similarly, other essential commodities experienced substantial price hikes, with cooking gas, maize, and cement prices surging by 257%, 209%, and 150%, respectively, over the same period.
Amidst this economic hardship, the government’s response has been limited, with a lone minimum wage increase in 2019 failing to keep pace with escalating costs of living. Consequently, citizens like Abigail Daniel, a civil servant, and Abdulrasheed Oladayo, a pensioner, struggle to make ends meet, relying on meager salaries and diminishing savings.
Economists argue that Nigeria’s economic woes stem from poor policy implementation and the failure to attract Foreign Direct Investments (FDIs). They emphasize the need for concerted efforts to stabilize the exchange rate, reduce inflation, and revitalize the economy. Yet, until substantial reforms are enacted, the challenges facing Nigeria’s economy are likely to persist, leaving its citizens grappling with the harsh realities of inflation and economic instability.
