Do Tinubu and co know Nigerians cannot take it anymore?

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Nigerian Elite Face Hard Times As Inflation Hits All – BUSINESSDAY

DECEMBER 13, 2023
BY Lolade Akinmurele

In Nigeria where prices are rising at the fastest rate in 18 years, the rich are also crying.

Several Nigerians considered rich are struggling almost as much as the country’s poor as rampant inflation affects every class of Nigerians from those earning multiple figures to those living on two dollars a day.

“I have to cough up N41 million every 90 days to pay school fees for my three children in the UK,” an affluent Nigerian who did not want to be named said. “I have sold my house in London just to meet up with the bill,” the person told BusinessDay.

The same fees were about N20 million last year but the devaluation of the naira last June, which paved the way for a more than 40 percent slide in the currency in the more accessible parallel market, has left parents with children schooling abroad scampering for extra cash.

The naira devaluation is not the only factor driving fees higher. The cost of private education in the UK is increasing at its fastest rate in over a decade. Fees have increased by an average 5.6 percent this year, compared with a 4.1 percent increase in 2020 and only 1.1 percent in 2021, according to a 2023 census of the Independent School Council’s (ISC) 1,395 member schools.

Beyond education, healthcare is another area where the affluent are feeling the pinch. Medical treatments that were once considered routine and affordable have now become significantly more expensive. This increase is partly due to the higher costs of medical equipment and drugs, most of which are imported and now cost more due to the weakened currency.

Some drugs have risen by 1000 percent after the withdrawal of healthcare giant, GSK, from Nigeria, added to already rising prices.

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“I bought two packets of Augmentin for N114,000 last week and I still can’t believe it,” another Nigerian said. The same drug would have cost him less than N12,000 three months ago. “I even had to google it to confirm the seller was not lying,” the person said.

For the Nigerian elite, the increasing inflation rate, which hit a record 27.3 percent in October, is not just a number in economic reports; it’s a drastic change in their lifestyle and financial planning.

The situation is even more dire for the poorer segments of the Nigerian population.

For them, inflation is not just about adjusting budgets or cutting down on luxuries; it’s a matter of survival.

With prices for necessities like food, shelter, and clothing skyrocketing, many are struggling to make ends meet. For those living on as little as two dollars a day, the current economic situation means having to choose between food and other essential needs.

The cost of staple foods has increased dramatically, pushing many to the brink of hunger. The situation is exacerbated by the fact that many low-income earners are engaged in jobs with little to no protection against inflation, such as casual labor or small-scale farming. As prices rise, their income remains stagnant, eroding their purchasing power and pushing them deeper into poverty.

For Nigerians who can afford to plan towards escaping the cost of living crisis in Nigeria, it is even more difficult. Canada, for instance, a choice destination for many Nigerians seeking to flee the country, has increased the proof of funds required for international students by 100 percent to $20,000 from $10,000.

In naira terms, when the devaluation is factored in, it means a Nigerian seeking to go to school in Canada must now have N20 million as opposed to the N7 million that would have been required before June.

What’s worse is that the rampant inflation in Nigeria still has legs to run even when other countries are starting to report a slowdown in rates.

When inflation data for November is published on Wednesday, it is likely to reflect another surge as prices continue a steady march to 30 percent by December, as predicted by several economists.

Inflation will continue to rise in early 2024, as a result of market reforms made in June 2023 and ongoing currency volatility on the black market, which handles a sizable share of currency trade, according to the Economist Intelligence Unit.

In the absence of further rises to petrol prices or devaluations, inflation will moderate from an estimated 28.7 percent at end-2023 to an average of 23.6 percent in 2024, according to the EIU.

This will still be the second-highest average rate of the 21st century (after 2023), reflecting the intensity of second-round pass-through from past currency losses and a weak commitment to price stability by the fiscal and monetary authorities.

Analysts say Nigerian President Bola Tinubu’s reforms have been too hard and too fast.

Tinubu has embarked on the biggest economic shake-up of a generation in Nigeria, rapidly rolling out market reforms that economists and analysts longed for but he has since exposed the lack of coherent planning necessary to withstand the shocks they have caused an economy still reeling from two recessions in five years.

A wasteful petrol subsidy practice that had been on for decades was brought to an abrupt end while the new administration is delivering on a thorough monetary policy house cleaning that has since led to a more than 40 percent devaluation of the naira and higher market interest rates.

While the reforms hold the key to bringing Nigeria onto a higher growth path, they have been painful for Nigerians who are reeling from a cost-of-living crisis.

The reforms have led to clashes with labour unions and Tinubu will be under continuous pressure given an outlook of stubbornly high inflation.

Insecurity is chronic in many areas, with the security forces too overstretched to counter multiple security crises effectively. High inflation, low economic growth and unpopular market reforms present substantial political stability risks in the context.

Appetite for further reforms has waned, according to the EIU, as Tinubu’s political capital wears thin especially as it appears the political class is not sharing in the belt-tightening that the people have to endure.

While the senate president needs a football stadium to throw a birthday bash at a time when there is widespread suffering, there may be no food let alone birthday cakes for several Nigerians on their special days.

“No one can cope with this pain for much longer,” Chibuike, a university lecturer, told BusinessDay.