• Unsustainable debts, dissaving deepening inter-generational poverty
• 65 million rural dwellers in extreme poverty
• Nigeria ranks among Chad, DRC, others at bottom of economic diversification index
• Country losing gateway market status to declining consumption
• No traction on poverty eradication programme, Ife insists
• Adenikinju: Middle-class Nigerians one shock away from poverty

Stubbornly high inflation, a weakened naira, low-paying jobs, widespread underemployment and declining access to basic essential services are reinventing the cycle of deprivation that is fast reproducing itself across different spheres of Nigeria.

The entrenched survivalist behaviour may be expanding the number of millions of households currently dissaving, liquidating productive assets, rationalising children’s education and reducing emergency buffers to fund immediate sustenance, leaving millions of citizens increasingly vulnerable to future shocks.

Even among several professional workers, who are traditionally classified as middle class, poverty is no longer a temporary consequence of economic shocks but an entrenched condition defined by prolonged deprivation, with dire consequences for sustained balanced diets, quality education, decent savings and investment.

The situation, Prof. Adeola Adenikinju, an economist at the University of Ibadan, said, has left most of the middle class only “one shock away” from falling into poverty.

Rising deprivation has grown from a personal vice to a social burden, undermining the country’s industrial drive. For instance, many multinationals have closed operations in the country in recent years following their inability to match huge investment requirements with commensurate supportive domestic consumption.

Last week, Uber was the latest global brand to quit the country. Although the company did not disclose why it included Nigeria, supposedly the gateway to the African market, among the markets affected by its restructuring, the numbers tell a sad story.

In South Africa, unconfirmed independent data put Uber’s active riders at about 1.4 million. Ghana, Nigeria’s neighbour, delivered about 180,000 as of 2018, two years into the company’s operations in the West African country, according to research on e-hailing in Ghana.

There are no credible up-to-date market analytics on Uber’s Nigerian operations when it closed shop. But a top executive in its sub-Saharan Africa (SSA) operation said it had a total of 7,000 riders in Nigeria as of 2017, three years after it launched operations in Lagos, Nigeria’s hub of economic activity and a city with more than half of Ghana’s population. The decision to deactivate and take down its Nigerian app as part of the e-hailing company’s cost-optimisation scheme was, therefore, perhaps not surprising.
Across consumer goods, Nigeria’s huge population, estimated at 236.3 million, is weakly correlated with consumption. Last year, industry tracking reports put the total units of brand-new cars sold in the Nigerian market at 23,779, about 56 per cent short of the all-time high of 53,900 units sold in 2014.

According to data obtained from Africa Facts Zone, Nigeria, the most populous country on the continent, is not among the top five African new-car markets. Last year, Tunisia, the fifth-largest market, recorded 93,095 units, about four times Nigeria’s purchases. South Africa, the continent’s top brand-new car market, recorded 596,818 units – approximately 0.01 per capita compared with Nigeria’s 0.0001.

The country does not come close to the other three – Morocco, Egypt and Algeria – even in terms of absolute car sales. Instead, Nigeria reels in the used automobile market, where maintenance costs and environmental hazards continue to reinforce deepening poverty.

With an inefficient informal public transport system and a near non-existent organised means of transportation in many cities, many Nigerian workers and entrepreneurs rely on self-owned cars for mobility.

But affordability and unavailable financing push thousands of prospective owners towards used cars, which are also serviced with second- or third-hand parts that have become a major drain on household incomes. Haphizibah Iniodu of Cardio Autotech said an average Nigerian car owner spends about $650 (N890,000) on yearly car maintenance – about 12 months of minimum-wage salaries – a burden that deprives many salary earners of resources for other financial needs.

Nigeria prides itself on being a huge entertainment market. But that is mere hype that tells little about the commercial value of the market. Netflix, for instance, has only 162,000 subscribers in the country compared with South Africa’s 1.3 million paid viewers.

The low consumption index has a push-and-pull relationship with poverty. Poor disposable income translates into weak purchasing power and lower consumption, reducing the incentive for new investment and plant expansion. In turn, low investment means lower employment and poor wages, which further depress general income levels. And the spiral continues.

Government, at different levels, has promised to break the vicious cycle. Ken Ife, a professor of economics and trade consultant at the Economic Community of West African States (ECOWAS), said “no traction” had been made in poverty reduction, a default policy programme of successive administrations.

But another professor of economics, Chiwuike Uba, disagreed slightly, saying the country recorded significant progress until 2015, when aggressive sovereign debt accumulation, rising debt-service costs, depletion of national savings and currency instability pulled the trigger on the average Nigerian through choking inflationary pressures that worsened the “survival crisis”.

In May 2015, when the late President Muhammadu Buhari assumed office, the headline inflation rate stood at nine per cent. A year later, when the administration celebrated its first anniversary, national headline inflation was near 16 per cent, marking the beginning of an era of ultra-high inflation that peaked at 34.8 per cent in December 2024.

The rebasing of the Consumer Price Index (CPI) last year marked a significant retreat in headline inflation. Yet, single-digit inflation has remained a distant dream.

A falling naira is no different from a falling knife for the average Nigerian, for obvious reasons. First, the country sits near the bottom of the economic complexity index (ECI), a metric that shows the diversity and sophistication of economies.

According to data from the Atlas of Economic Complexity, a Harvard Growth Lab ranking, Nigeria has oscillated between 144th and 135th positions between 2012 and 2024, with its best year being 2014.

In 2024, the last assessed year, the country ranked 142nd and was only ahead of four countries – Chad, the least complex economy; the Democratic Republic of Congo; Equatorial Guinea; and the Republic of Congo. At the most recent assessment, the country was seven positions less complex than it was a decade ago.

The report assigns figures to 146 countries to show how they rank from the most complex economy, represented by one, to the least. The top-ranked economies are less susceptible to shocks and provide their citizens with the widest opportunities across sectors to contribute to economic growth, while those at the bottom are prone to concentration risks, as Nigeria is with oil and gas.

More painfully, an oil-driven economy has left Nigerians importing most of their consumables, which are about six times more expensive today than they were in 2014, considering the currency pass-through effect strictly. The naira has depreciated by about 86 per cent since May 2015, the period Uba said Nigeria’s economic outlook took a deteriorating turn for households.

Market price data reflect the trend. Small used-car models that many households buy for N8 million today were quoted at about 15 per cent of that price, or N1.2 million, in 2015, suggesting the market has even marked up the dollar-equivalent value, perhaps mirroring the global cumulative inflation rate over the past decade.

Sadly, incomes have been crawling far behind prices, which have been on the highway. At a minimum wage of N18,000, the least-paid civil servant earned about $90 in 2015. At the current minimum wage of N70,000, the least-paid worker earns about $50, or 56 per cent of the 2015 value. The global compound inflation impact would put the real value far below $40, showing how the combined impact of the twin crises of inflation and currency depreciation has impoverished Nigerians.

The crisis was complicated by policy choices of the past few years, which many analysts said underscored the government’s poor understanding of wealth redistribution or its pro-rich ideological leaning.

Foreign exchange (FX) market reforms and fuel subsidy removal, acting in concert, have increased the cost of Premium Motor Spirit by more than 500 per cent, with attendant consequences for the geometric rise in transportation costs.

The government had promised to aggressively implement its social intervention programmes, a known strategy for reducing extreme poverty and narrowing inequality. Releases have not matched promises, with the World Bank calling on the government to ramp up the safety net to save millions more Nigerians from falling below the poverty line.

Last week, the Office of the Auditor-General for the Federation said in a report that the Federal Government could not provide sufficient evidence to prove that the release of N33.75 billion in cash transfers meant for more than 3.29 million vulnerable households reached genuine beneficiaries, triggering another debate about the controversial disbursement.

In the early days of the current administration, President Bola Tinubu suspended and later removed Dr Betta Edu, the then Minister of Humanitarian Affairs and Poverty Alleviation, for approving the payment of N585 million meant for vulnerable Nigerians into a private account.

Edu’s removal followed a history of allegations of sleaze associated with the office, which critics said had only succeeded in weaponising poverty. After Buhari left office, a court ordered Sadiya Umar-Farouq, who served in the administration of the late president as Minister of Humanitarian Affairs, Disaster Management and Social Development, to account for payments of N729 billion to 24.3 million poor Nigerians over six months.

For Nigerians who know a little about the long history of allegations of fraud in the management of social intervention programmes, it is not surprising that poverty continues to grow in leaps and bounds and become entrenched in the structure.

World Data Lab estimates Nigerians living in extreme poverty at 73.01 million, or 31 per cent of the population, making the country one of the five African sovereign entities where poverty is rising.

Nigeria ranks among countries that are not on track to meet Sustainable Development Goal 1 (SDG 1), which seeks to end poverty. In 2023, the figure was lower, but the condition was worse in proportional terms, at 32 per cent, while the situation was far better in 2016, when 25 per cent of Nigerians were estimated to be living in extreme poverty – 10 years ago.

The rural-urban composition adds another layer of complexity to the poverty crisis. About 64.94 million, or 89 per cent of extremely poor citizens, live in rural areas. On the other hand, 49 per cent of rural dwellers live in extreme poverty, below $3 a day.

The rising pro-market ideology, with the government winding down subsidies even in the face of limited investment in social services, may mean the global poverty line has fallen behind the debilitating impact of poverty. Like other citizens, the poor now pay the full economic cost of fuel and, perhaps in coming years, energy. At the same time, private goods and services previously classified as public goods – water, security and others – are increasingly being paid for by households.

Government’s pullback, inadvertently, from the provision of shared social services is better captured in the multidimensional poverty assessment. The last multidimensional data released by the National Bureau of Statistics (NBS) predated fuel and FX market reforms that have fed significantly into general deprivation.

The most recent data by the NBS, which many economists admit are outdated, put the percentage of multidimensionally poor Nigerians at 63 per cent, or 133 million people.

If the data are shocking, the demographic spread is frightening. A larger proportion, 67.5 per cent, of children and teenagers aged between zero and 17 years are affected. This suggests that more than two-thirds of those developing their productive abilities are being incapacitated by current deprivation – a sad way to view the future wealth level.

Corruption apart, the economic structure is also breeding poverty. In principle, when economic growth is inclusive, wealth is more evenly distributed and poverty is lower because the largest number of people can contribute to economic growth.

Sadly, Nigeria’s economic growth in recent times, as represented by the second-quarter (Q2) output data, is driven by capital-intensive sectors such as oil and gas, information technology and financial services, leaving labour-intensive sectors such as agriculture and manufacturing behind the average historical expansion path.

According to the Q2 data, key job-growth sectors – agriculture (4.39 per cent), industry (3.96 per cent) and manufacturing (3.24 per cent) – buckled under the 4.43 per cent average growth. This suggests that the celebrated economic expansion is more service-sector-led, meaning the rich benefit more while growth rarely moves the needle in the poverty data.

The prolonged and entrenched deprivation is eroding the very pathways through which households traditionally escape poverty. Children from poor families face greater risks of malnutrition, disrupted schooling and limited skills acquisition, reducing their prospects of securing productive employment and increasing the possibility of poverty being transferred from one generation to another.

Economists and development experts warn that without stronger job creation, targeted social protection, investment in human capital and sustained efforts to reduce the cost of living, Nigeria could face a deepening poverty trap in which economic growth fails to translate into meaningful improvements in general welfare.

For Ife, the trade expert, the deepening poverty crisis is tied to the huge infrastructure deficit. An economy where big companies have to generate their own power to produce, take days or weeks to truck raw materials from north to south and lose between 40 and 70 per cent of agricultural produce between farms and markets could only produce millions of extremely poor citizens.

Another economist and Chief Executive of Highcap Securities, David Adonri, pointed to a wide gap between the improving macroeconomic outlook and general welfare. The government, he said, is pushing through much in terms of demand management but little on the more important supply side to create a trickle-down effect that could break the cycle of poverty.

Uba believes a realistic approach to combating the crisis is to treat poverty more as a low-productivity, high-cost-of-living and limited-economic-opportunity challenge and less as a problem of insufficient cash. This, he said, would help the government design programmes that increase productivity and market access.

With rural deprivation driving the national headline poverty data, the economist said programmes that would make people more productive and connected to markets should be implemented alongside social protection, which should target only families that cannot “immediately support themselves”.

“That means not only better rural roads, electricity, irrigation, storage, access to finance and agricultural extension, but also stronger links between farmers and processors. We should be moving from subsistence production to commercially viable agriculture and rural enterprises. Government does not have the fiscal space to subsidise everyone indefinitely, so public spending must be concentrated where it can unlock private economic activity and raise household incomes,” he insisted.

With rent, transport, food, healthcare and education consuming much of a household’s income, he noted that rising urban poverty must be recognised as a major challenge that must be addressed through affordable housing, reliable transport and quality public education.

Indeed, sticky wages, high transportation costs and spikes in the cost of services have raised concerns about the growing number of working poor. Economists have suggested that wages and other incomes would necessarily rise to catch up with high prices. But the majority of poor workers are holding on to jobs where they cannot negotiate pay rises because of limited options.

There are no data to confirm the number of workers currently trapped in debts incurred to ‘subsidise’ their jobs. But digital-first banks, which have become sources of a new coping mechanism, said millions of workers across major cities borrow monthly to supplement their salaries, raising concerns about the sustainability of the trend.

About 4.2 million Nigerians, according to multiple estimates, enter the labour market yearly, while the World Bank said nearly 60 million young Nigerians will reach working age in the next 10 years, highlighting the scale of jobs needed to address the employment challenge.

Sadly, some estimates put the number of jobs currently created yearly at less than one million, pushing about 92 per cent of youths into the informal sector, where earnings are often insufficient to cover their basic needs.

Adenikinju said the coping mechanisms are compromising the physical and mental health of the productive population needed to drive the economy, calling for urgent attention.

“The economic reforms have massively reduced the value of real income relative to pre-reform years. Real wage has declined and much of the growth in the economy comes from the informal sector and capital-intensive mining sector. Employment and real income are depressed. The high cost of living has shrunk the middle-income class, raising the dependency ratio in the country…” the former member of the Monetary Policy Committee (MPC) said.