What is happening in Nigeria?

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Hello Everyone. TGIF.

How’s the week been for you?
For me, this week has not been as cool as the previous ones. Work has been a bit stressful and social media has not been the escape it used to be for me. I plan to take a break from it in the coming weeks. 

If you have any feedback or suggestions on how to improve the newsletter, please share them with me. 

If you missed last week’s newsletter, you can read it here.

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Here’s a quick fun fact before you read today’s newsletter

321%

The percentage increase in the price of tomatoes in Nigeria.

(June 2023 -June 2024)

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Now to this week’s newsletter:

I live in Nigeria, and there’s been a feeling of hopelessness. A dwindling economy, high inflation, and currency devaluation have led to reduced purchasing power. Tweets bemoaning the situation have been the order of the day throughout this week. 

The charts below explain the issue in detail.

Inflation Surge: A Persistent Problem

Nigeria's inflation has consistently maintained double-digit figures since 2015, escalating to a staggering 34.2% in 2024 . This reflects the weakening of the naira and  structural inefficiencies in the Nigerian economy. Fuel subsidy removal, coupled with the cost of imports, has exacerbated the situation. 

For businesses and households alike, rising prices have resulted in decreased purchasing power and a higher cost of living. 

Side Note: This is why your salary increase doesn’t feel substantial.

GDP Decline: A 36.75% Drop Since 2014

While inflation soared, Nigeria’s Gross Domestic Product (GDP) has been on a worrying decline. After reaching its peak of over $500 billion in 2014, the GDP has fallen by 36.75% over the past nine years. The reasons for this downturn include the oil price crash, a decline in foreign investments, and slow growth in non-oil sectors. The GDP's reduction, combined with inflation, has made it challenging for the government to meet its development goals, leading to rising debt levels and financial instability.

Population Growth: A Boon or a Burden?

From 1999 to 2023, Nigeria’s population grew by 86.79% , soaring from about 120 million to over 230 million people. While this population growth presents a potential opportunity for economic expansion, it also places a strain on infrastructure, education, healthcare, and employment. The job market is unable to keep pace with the influx of new workers, leading to higher unemployment rates and an expanding informal economy.

What does this mean?

Together, these three factors—escalating inflation, a contracting GDP, and rapid population growth—create a complex problem for Nigeria. A growing population increases the demand for resources, but inflation erodes incomes, and a shrinking GDP limits the government’s capacity to provide essential services. 

What does the future look like?

Nigeria’s economy remains a paradox of potential and peril. With the right mix of policy interventions, investment in non-oil sectors, and targeted population control measures, Nigeria can still steer its economy back on track. However, ignoring the signs of economic distress could lead to deeper crises in the future if the right policies are not implemented.