According to a new study from NielsenIQ, about 93% of Nigerians feel the effects of an economic downturn in 2024, an upward surge from 78% in the last year. The report, titled “Growing Around the Big Squeeze”, examines how recent economic challenges in Nigeria have affected its citizens, shedding light on the harsh truth of decreased spending ability for many. Recent data shows a noticeable increase in the perception of an economic downturn in Nigeria, primarily influenced by economic policy changes and outside influences. According to surveys, 33% of Nigerians anticipate a worsening Economy next year compared to 18% in the previous year.
This rise in concern reflects the escalating apprehension about the country’s economic prospects. The NielsenIQ report revealed a troubling trend in Nigeria as 77% of the population is struggling to afford basic necessities due to inflation, low wages, and economic uncertainty. As a result, many Nigerians are focusing on survival by reducing spending on unnecessary items. Consumers are most worried about the increasing cost of food as prices have reached a record high of 39% in July 2024, causing significant financial strain for families.
People now spend less on non-essential items due to hunger.
Food Security is a major issue, as noted by organisations such as the World Food Programme (WFP) and the International Rescue Committee (IRC), who report that 16% of the population is currently experiencing severe hunger. As the economy continues to struggle, people are preparing for more difficult times ahead. The data shows a decrease in spending on non-essential items like dining out, clothing, and food delivery while spending on critical needs such as education, healthcare, and groceries has gone up.
President Bola Tinubu’s reforms in 2023 caused major macroeconomic shocks in Nigeria. The removal of Fuel Subsidies and the unification of the foreign exchange market, intended to foster stability and growth in the long term, have instead created immediate economic challenges. The increase in transportation costs due to the elimination of fuel Subsidies has caused a ripple effect, resulting in higher prices for food and Inflation in different industries. In the face of obstacles, Nigeria’s economy demonstrated strength, with a growth rate of 2.74% in 2023, slightly lower than the 3.10% growth in 2022.
An inflation rate of over 33% is causing a financial strain.
The GDP increased by 2.92% in the initial quarter of 2024, aligning closely with the government’s and global institutions’ forecasts of 3.3%, such as the World Bank and the IMF. Despite the increase in economic activity, it has not been able to offset the significant inflation rate of over 33%, causing a financial strain. In response to the declining quality of life, the government has raised the national Minimum Wage by over 100%. Despite this adjustment, inflation remains a significant challenge, leaving a large portion of the Nigerian population facing difficulty in affording essential necessities.
Also, the report highlights a shift in brand loyalty among Nigerians due to escalating prices. As prices continue to increase, a growing number of consumers are switching brands, with 70% making a switch in the last year. Categories experiencing the highest rates of brand disloyalty include cleaning and laundry products, toothpaste, cooking oil, and milk. Nevertheless, consumers showed a higher level of commitment to juice/nectars, alcoholic beverages, and Telecommunication brands. This could be attributed to the belief that these industries provide superior quality or are less easily replaceable.
Related Article: Nigerians beg to survive economic hardship
Lastly, the harsh reality of the economic downturn in Nigeria is undeniable, with rising inflation and stagnant wages placing immense pressure on citizens. Tough decisions must be made by many in order to simply get by, as the government’s necessary reforms have further exacerbated the immediate economic challenges faced by the population. The country is in a tight corner with a large number of people living in Poverty and millions suffering from hunger. It is imperative that immediate measures are taken to improve the economy and help those in need.