The Impoverished Nigerian Consumer


Thursday, November 18, 2021 / 1:13 PM / by CSL Research / Header Image Credit: Mercy Corps


A news report by the World Bank titled COVID-19 in Nigeria: Frontline Data and Pathways states that COVID-19 has continued to threaten food security in Nigeria, as households and firms are yet to recover from the devastating impact of the pandemic. The bank, therefore, called on the government to adopt urgent policy actions to curb the long-run impact of the pandemic on lives and livelihoods in the country. The report states that many of the primary effects of the COVID-19 crisis on Nigeria have been economic, rather than being health-related.

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The early part of the COVID-19 crisis ushered in Nigeria's deepest recession since the 1980s, with services and industry hit especially hard. This partly stemmed from lockdown measures restricting people's ability to go to work. Added to that, the price of oil, which represents over 50% of government revenues, fell over 60% between February and May 2020. In the later stages of the COVID-19 crisis, even though economic activities recovered, inflation rose faster, especially for food items that are crucial for consumption among the poor and vulnerable.


The food supply chain disruptions caused by the pandemic translated to an increase in price across food items in the country. Insecurity in the country, ranging from incessant attacks on farmers by herdsmen to banditry and kidnappings, have further worsened the situation, leading to a greater risk of food crisis. The move by the CBN to encourage local production by not allocating foreign exchange to importers of food and fertilizers also contributed to the rise in the price of food items. Added to the increase in food prices is the surge in utility costs (Fuel and electricity and most recently gas prices) continue to weigh on the average Nigerian consumer. Despite the reopening of the land borders, food prices continue to rise as trade flows are yet to return to normal. Clashes between farmers and herders continue to impede increased food production. Also, local production still lags consumption significantly.


The economic recession witnessed in 2015-17 had a major impact on Nigerian households, eroding their purchasing power and driving joblessness nationwide. The pressure on disposable income was further exacerbated by the impact of higher petrol and food prices, leading to a higher cost of living in the face of muted growth in disposable income. Although the exit from recession in Q2 2017 was expected to translate into improved consumer spending, a sluggish pace of recovery amid the rising population left consumers still financially stifled. Still stuttering from the hit of that recession, the onset of the global pandemic worsened the situation and drove the country into another recession in Q3 2020.


In our view, the government needs to be proactive and strategic about policies it intends to adopt to resuscitate the economy. The focus on interventions in agriculture, emphasis on infrastructure development, and advocacy for local manufacturing may not be sufficient to alleviate the current level of poverty. The World Bank report states that between March 2020 and March 2021, just 4% of households had received support in the form of cash from the federal, state, or local government. This, according to the bank, is significantly below what would be needed to counteract the widening and deepening of poverty brought about by the crisis.

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