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Business News of Tuesday, 29 August 2023


The Shege Promax Economy: Average Nigerians ditch quality for survival

President Bola Ahmed Tinubu President Bola Ahmed Tinubu

In the wake of President Bola Ahmed Tinubu’s announcement to completely remove the subsidy on petroleum products, a move that has led to a staggering increase in petrol prices, soaring as high as N600 per litre from the previous average of N185/litre, Nigerians are faced with the daunting dilemma of devising alternative strategies for navigating their lives amidst this steep surge in costs.

Nigeria’s inflationary trajectory has shown a persistent upward trend, defying efforts by the Central Bank of Nigeria (CBN) to curb the escalating prices of goods and services.

This economic predicament has been further compounded by an array of policies instituted by the recently established administration.

Two of the major policies by the new administration that have had the most adverse effect on Nigerians are the removal of petrol subsidies and the unification/devaluation of the official exchange rate.

The twin effect of these policies has led to skyrocketing prices, which has seen Nigeria’s headline inflation hit an almost 18-year high of 24.08%, as inflation continues to pile immense pressure on the income of average Nigerians.

In a determined bid to navigate the hardships stemming from the ripple effects of these inflationary policies, businesses and individuals have made a conscious stride to sacrifice comfort and luxury, channelling their focus towards mere survival rather than pursuing satisfaction.

One would wonder how Nigerians are coping with these hard times. Here are a few:

Car owners park their vehicles for public transport
Since the removal of the petrol subsidy, Nairametrics Research has noticed fewer vehicles on the roads of major cities across the country like Lagos, Abuja, and Ibadan amongst others.

Enquiries into the causes of the fewer vehicles on the road reveal that several Nigerians have abandoned their private cars and chosen the public transportation system instead.

In an interview with Henry Orji, a manager at a professional service firm in Lagos, he told Nairametrics that he had to park his car at home, to patronize public transport due to the high cost of fuel.

“Before the removal of subsidy, I fill my tank with less than N20,000, but how, I have to spend as much as 35,000 to 40,000 to fill my tank, while my salary has remained the same,” he said.

“If I have to continue to ride my car every day to work, I might as well budget my entire salary for transportation,” he added.

Similarly, Mr. Lekan who lives on the mainland and works on Victoria Island in Lagos has had to park his Mercedeez, which according to him consumes fuel ‘alot’ in favor of public transport. “Since petrol price has tripled, i spend over N120,000 monthly to fuel my car. That does not make any business sense, so i decided to leave the car at home, unless it is totally necessary for me to drive,” he said.

Poorer Nigerians trek to work

While several workers have ditched their cars for the public transport system, many others have had to reduce their reliance on vehicular transport, due to the high cost of transportation. In a conversation with Kingsley, a clothes seller in Yaba, he explained that he has succeeded to partially, and sometimes fully trekking from his house to his store.

“Usually, going from my house to the shop costs me an average of N300. It has increased to around N600, which means it is either I increase the cost of my clothes, which customers are not keen to buy at the moment or find a way to reduce my costs. I chose the latter, by cutting my transport costs,” he said.

Food rationing

The popular food terminology amongst university students, 101, 001 etc., is now a common concept amongst working-class Nigerians in recent times, as some individuals interviewed by Nairametrics Research revealed that they have had to ration their food consumption lately.

For better context, a 101 food calendar is such in which an individual skips lunch only to eat breakfast and dinner, while 001, is typically eating just dinner throughout the day.

The case of Roland is the 001 food calendar. Mr Roland told Nairametrics research that he has had to train himself to go through the day without eating.

He explained that the cost of ordering food at work has doubled and now he has to rely on snacks, like biscuits during the day to minimise cost, while he eats a proper meal at night.

Roland noted that while starvation is not an ideal cause of action for him, there are limited options available to him because food and transport costs already account for over 80% of his monthly income.

Firms adopt flexible work plans for employees
In a bid to cushion the effect of the rising cost of goods and services, some firms have adopted flexible work plans for their employees.

Some of these plans include adopting hybrid work plans, and allowing workers to close early.

This is aimed at relieving the employees of the pressure of high transport costs, stemming from the evening rush hour. Also, there have been reports of firms increasing the salaries of their employees by as much as 80%.

In addition, Nairametrics also identified some organizations that have embarked on free lunch packages for employees on their workdays.

Bottom line
The intertwined outcomes of the petrol subsidy removal and exchange devaluation have yielded unfavourable results for the well-being of Nigerians, particularly among the impoverished and susceptible people of the economy.

Escalating living expenses has undermined their buying capacity and diminished their ability to obtain essential commodities and services, leading to less desirable alternatives as means to survive rather than comfort.