Nigeria’s Economy has suffered over the years plummeting primarily due to its ineptitude management of its vast resources. The period preceding 2015 witnessed the country accumulating substantial amounts of foreign exchange, totalling billions of dollars. Astonishingly, between 2012 and 2013, Nigeria experienced a remarkable Economic Growth rate of 12.7%. In 2013, the country underwent a rebase from $270 billion to an impressive $510 billion, effectively positioning it as the Africa leading economy. Newly emerging industries like telecommunications, movie, and Retail were responsible for a remarkable surge of roughly 90%, as they had previously been unaccounted for or underreported.
Over a span of 10 years, spanning from 2013 to 2023, a thorough analysis of various economic indicators unveiled a prominent pattern of escalating inflation and rising costs of crucial goods. One of the key ambitions for an economic giant like Nigeria is to uphold a single figure Inflation rate. Data sourced from the Central Bank of Nigeria (CBN) indicates that Nigeria’s average inflation rate in 2013 hovered around 8.5 percent. In 2014, the average rate stood at 8.1 percent. However, the year 2015 witnessed a higher average inflation rate of 9.01 percent. This figure started at 8.2 percent in January and gradually escalated to reach 9.55 percent by December.
Heavy reliance on imports creates a high demand for dollars.
The average inflation rate for 2018 was 12.13 percent, with rates of 15.1 percent in January and 11.44 percent in December. In 2022, the average inflation rate was 18.7 percent, starting at 15.6 percent and rising to 21.34 percent by December. In 2023, the average inflation rate was 24.52 percent, starting at 21.82 percent in January and reaching a peak of 28.92 percent in December. The pervasive surge in inflation throughout the years can be attributed to the complete adoption of the US Dollar as the major currency in the Nigerian economy.
In order to satisfy the demands of its population, the nation heavily relies on imports, creating a high demand for dollars and causing the Naira to weaken. As per statistics gathered from the CBN, the value of the naira in relation to the dollar witnessed a gradual decline at the Inter-bank Foreign Exchange Market (IFEM) starting from 2013, beginning at ₦159.3/$. In 2014, it was ₦164.9/$, rising to ₦195.5 in 2015, it reached ₦253.5/$ in 2016, and ultimately peaked at ₦305/$ in 2017. In the year 2018, it was ₦306/$, ₦306.9/$ in 2019, ₦358/$ in 2020, ₦435/$ in 2021, ₦461/$ in 2022 and finally peaked at ₦900/$ in 2023.
Fuel cost in the year 2015 was ₦87 per litre.
In the absence of access to the IFEM rate from banks, Nigerians turned to the parallel market provided by Bureaux De Change (BDCs). As a result, the entire nation witnessed an escalation in food prices, which further burdened its inhabitants. According to data released by the CBN, average food inflation surged by 9.7% in 2013. Although it slightly decreased to 9.4% in 2014, it subsequently rose to 9.8% thereafter in 2015 before experiencing a further escalation to 14.8% in 2016. In the subsequent year, 2017, it reached a peak of 19.5%, only to decline to 14.4% in 2018 and eventually settle at 13.7% in 2019.
Moving forward, there was a sudden surge to 16.1% in 2020, followed by subsequent escalations to 20.4% in 2021, 20.8% in 2022, and a significant leap to 27.7% in 2023. Despite the plentiful reserves of crude oil within the nation, the cost of Premium Motor Spirit, commonly referred to as petrol, has remained consistently steep throughout the years. In 2013, the fuel cost was ₦97/ litre. Meanwhile, in 2015, there was a considerable decrease, bringing the price down to ₦87/litre. Subsequently, in 2016, a later surge in price saw it climb up to ₦145/ litre. Fast forward to 2020, when it was reduced to ₦125/ litre. Unfortunately, the product experienced yet another hike in 2021, soaring to ₦165/ litre, followed by a subsequent jump to ₦195/ litre in 2022.
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Removal of fuel subsidy in May 2023 had a drastic impact on the cost, resulting in an astronomical price of ₦617/ litre. This price range has remained unchanged until present, despite the soaring expenses of everyday life. Surprisingly, amidst this challenging period, the federal government only made one adjustment to increase the minimum wage. In 2019, employees were granted a salary raise, boosting their wages from ₦18,000 to ₦30,000. However, the ongoing decline in the currency’s value relative to the dollar gradually eroded the purchasing power of individuals. While the incumbent government has revealed its plan to increase the Minimum Wage since last year, no changes have been made till present.