Uber, Bolt drivers resort to offline negotiation | We now operate on a tighter budget – salary earners, artisans | Financial experts share survival strategies
In Nigeria, where resilience is a way of life, the economic storm is hitting harder than ever. As food prices and inflation soar, countless low-income.
Back in 2023, President Bola Tinubu’s rallying cry, “Let the poor breathe. Don’t suffocate them,” was a beacon of hope for many Nigerians. Yet, as time has passed, the gap between promise and reality has widened. Prices for everyday essentials have skyrocketed, plunging millions more deeply into poverty and sparking nationwide protests. The struggle is accurate, and the pain is palpable.
Nigeria’s financial landscape has changed dramatically. According to the National Bureau of Statistics (NBS), inflation has surged to 29.90 percent as of January 2024, up from 28.92 percent just a month earlier. Food inflation, in particular, has soared to a staggering 35.41 percent, up 11.10 percent from the previous year. The end of the fuel subsidy in June 2023 and escalating insecurity in critical agricultural regions have compounded the crisis, making it nearly impossible for many Nigerians to afford necessities.
Despite Nigeria’s vast agricultural potential—boasting over 81 million hectares of arable land—the country faces a severe food security crisis. The International Monetary Fund (IMF) highlights that while rural areas benefit somewhat from local food production, urban and peripheral regions struggle the most. Rising global food prices and domestic challenges have created a perfect storm, leaving many families battling to buy staple foods.
The cost of kerosene, a crucial cooking fuel for many low-income Nigerians, has jumped dramatically. In January 2024, the average price per litre was ₦1,329.53, a 15.27 per cent increase from the previous year. This surge has exacerbated the financial strain on households grappling with skyrocketing costs.
The naira’s plummet against the dollar has further intensified the crisis. From January 1 to January 31, 2024, the naira lost 50 per cent of its value, and since mid-June 2023, it has depreciated by 115 per cent. By January 2024, the naira was trading at ₦1,356/$1, making imports and local production even more expensive.
Petrol prices have also hit record highs. At the end of 2023, the average retail price was ₦671.86 per litre—an astronomical 225.85 per cent increase from ₦206.19 in December 2022. In 2024, Nigerians are buying petrol at N1200 per litre. This rise in fuel prices has driven up transportation costs and inflated prices for goods and services, adding even more pressure on already strained households.
The economic pressures are hitting small traders hard. Benjamin Bello, a former fried fish seller in Lagos, recounts how he was forced to abandon his business. “The price of fish kept rising, and I wasn’t making any profit,” he explained. He has turned to selling used cartons and scrap iron to survive.
Gloria Essien, a fellow fish seller, laments the escalating costs. “The price of iced fish is now about ₦19,500. We barely break even with firewood, flour, and groundnut oil costs,” she said.
Michael Promise, a petty trader from Abia State, shares similar frustrations. “Pepper that used to cost ₦3,000 isn’t enough for a day’s cooking anymore. Rice now costs ₦90,000 per bag, and beans ₦110,000. We’re no longer thinking about profits; it’s all about survival,” Promise said. He also faces challenges collecting payments from debtors, adding to his financial woes.
Fashion designers are also feeling the squeeze. Due to rising costs, Mobolaji David, an Abuja resident, has had to increase his prices. “Fuel prices make it hard to run my generator. I had to raise my rates from ₦3,000 to ₦ 6000 per outfit,” he said. Some customers complain, but he stresses that the price hike is necessary for survival.
Football viewing centres, where many Nigerians enjoy their favourite pastime, are also struggling. Monday Adesina, Adesola, who runs a viewing centre in Abuja, has reduced the number of matches shown to manage high fuel costs. “We’ve reduced the number of matches. If a match doesn’t draw a crowd, we skip it,” Adesina said. Fans like Ikechukwu Okoronkwo, have had to change their viewing habits, opting for centres rather than running expensive generators at home.
Ride-hailing drivers are also feeling the pinch. With Premium Motor Spirit (PMS) prices soaring to between ₦855 and ₦1200 per litre, many drivers have begun negotiating fares directly with passengers. One Uber driver, who prefers to remain anonymous, reveals his new strategy: “I can’t buy fuel at nearly ₦1,200 per litre and accept requests for ₦2,000 or ₦3,000. I either negotiate for higher fares or park my car.”
Bolt has made some adjustments in Abuja, increasing minimum fares and other components to help drivers cope. Drivers across the country are taking matters into their own hands, negotiating higher fares and selectively accepting trips to manage their expenses.
Residents of Lekki and other parts of Lagos, as well as various parts of Nigeria, are grappling with the surging cost of living, particularly after the removal of the fuel subsidy. The areas most affected by this change are transportation and food, and many individuals and families have adopted diverse coping mechanisms to manage these new financial pressures.
Johnson Adindu, a businessman residing in Lekki, explained how his family had shifted to bulk buying from the Mile 12 Market, as purchasing foodstuffs on the Island had become prohibitively expensive. He shared, “We no longer buy food items on the Island. My wife sends someone to Mile 12 monthly to buy food items for the house. It is more economical for us.”
Adindu’s family also made adjustments in energy consumption to reduce costs. “We switch to the inverter during the day, whether or not there’s light, and turn off the prepaid meter. We only use the generator if it is inevitable or the inverter batteries run low.” Additionally, he is considering selling his two-horsepower air conditioners and replacing them with one-horsepower units to burn less fuel. “We no longer switch on air conditioners during the day; I got rechargeable fans for every room,” he added.
Similarly, another resident, Tope Iginla emphasised the benefits of switching to renewable energy. She stated that her family had installed solar panels before the subsidy removal and was now relying on them instead of a generator. “At least, we know that it is only the cars we are fuelling. My work is remote, so I only go out when necessary. We were lucky to get our solar panels late last year, when the price was still fair. I learned that the prices have increased because more people are rushing to get them.”
The situation is also felt outside Lagos. Roseline Idaho, also, described the tough financial adjustments her family had to make. Her husband, the family’s primary breadwinner, has struggled to meet their needs, especially with two children in private secondary schools and one in a private university. “Since the fuel subsidy removal, my husband has been moody and always complaining of inadequate funds; I pray every day that he won’t enter into depression,” she shared.
To manage food costs, Idaho partners with her sister-in-law in Ibadan to buy foodstuffs, such as garri and yam, sent through commercial bus drivers. “This has led to some savings,” she said, adding that she now shares the cost of buying meat and frozen fish with friends to cut expenses. “I have also reduced the heavy meal to just dinner.”
In Lagos, public servant Adesuwa Adekunle is considering charging a small fee to pick up children for school to supplement his pension and earnings from his building materials shop. She noted, “It would be a win-win situation for me and the parents as I would not charge as much as the school buses.”
In Ibadan, local government worker Rashhed Babalola plans to expand his farming venture to generate additional income. He is turning the land in his compound into a vegetable garden, hoping to sell the produce to residents. Likewise, civil servant Kehinde Bashiru from Ilorin, Ogun State, is currently focusing on his farming and trading side businesses.
Many workers are finding ways to stretch their incomes. Emmanuel Ibeabuchi, a credit officer at a microfinance bank, has started seeking cheaper alternatives to his usual purchases to avoid falling into debt. He mentioned that even boarding buses or tricycles from the roadside, which used to be more affordable, no longer works as prices are uniform everywhere.
Timothy Ikechukwu, an engineer, noted how transportation, food, and data subscription costs had skyrocketed. As a result, he now works mainly from home and walks short distances to cut costs. “Walking short distances instead of public transport has been a necessary change,” he said.
The economic strain has led to concerns about food insecurity, increased poverty, and potential social unrest. Moses Isong, a political scientist, commented, “With higher food prices, Nigerian citizens now struggle to afford necessities. This could lead to declining living standards and push more Nigerians into poverty.” He warned of possible social unrest if prices continued to rise unchecked. Mr David Ayorinde, a development economist, explained that reduced purchasing power will affect the overall standard of living. “The level of inflation has risen despite all the measures by the CBN to control it. Salary earners, who are fixed income earners, will also suffer, and the basket of goods they can consume will likely reduce,” he said.
As Nigerians grapple with the financial strain brought on by skyrocketing prices and inflation, experts offer essential advice for managing finances and maintaining stability:
One key strategy is to consolidate financial obligations. Simplifying your finances by centralising bank accounts and reducing unnecessary subscriptions can significantly reduce redundant fees. This approach not only helps in streamlining your financial management but also in saving money. As Benjamin Franklin wisely noted, “Beware of little expenses. A small leak will sink a great ship.” This timeless advice underscores the importance of managing even seemingly minor costs.
Another crucial step is to tackle debt strategically. With rising living costs pushing many into deeper debt, it’s vital to focus on paying off existing liabilities rather than accruing new ones. Consider using the Debt Snowball Method, which involves paying off smaller debts first to gain momentum and motivation. Alternatively, the Debt Avalanche Method prioritises eliminating high-interest debts, saving more money by reducing the total interest paid.
Effective savings management is also essential. Rather than keeping all savings in a single account, compartmentalise them into categories for different goals, such as emergency funds, future purchases, and retirement. This can be done through spreadsheets or budgeting apps like 22seven, which help track and manage your savings progress. These tools can set spending limits and alert you when approaching them, fostering disciplined spending and supporting overall financial health.
SOURCE: nationaleconomy.com