Nigeria’s low-income communities bear the brunt of faltering economy

On a recent morning in Abuja, endless rows of cars and trucks dotted the roads as drivers waited for a chance to fill up. 

An ongoing fuel scarcity problem in Nigeria has frustrated drivers like Chris Nwagboso. 

“Without fuel, I can’t work. And if I don’t work, what will my family eat? My family depends on me,” said Nwagboso, who provides for his wife, their two children, his mother and younger brother. 

He said the fuel shortage has raised its price, which means that other household needs are also more expensive as sellers adjust their rates. 

The recent shortages have been attributed to a supply problem at the Nigerian National Petroleum Company Limited. Nigeria produces about 1.5 million barrels of oil a day, but the West African nation depends heavily on imported fuel because it lacks the capacity to refine its oil. 

In January, the largest oil refinery in Africa built at a cost of $20 billion  opened here in Lagos with hopes of increasing refining capacity. But this privately owned facility currently only produces diesel and aviation fuel.

Basic goods and services in Nigeria have gotten four times more expensive largely due to the fuel shortages.

At Tejuosho Market in Lagos, Nigeria’s largest city, frustration and anger have set in at the pump. 

In line, 68-year-old Charles Omezerika held a yellow gallon jug, sweat trickling down his cheeks. He said he had been in line for hours, but people were cutting in front of him.

“I’ve seen many crises in my lifetime,” he said, “but this … this is too much. It’s like we’re back in the olden days, queuing for rations.”

Lagos is notorious for its traffic congestion even under normal circumstances, but the fuel shortages have led to major gridlock, disrupting the normal flow of people and goods across the megacity of nearly 15.5 million people. 

Black market sellers have popped up everywhere on busy roads, taking advantage of the situation by selling petrol for as much as $8 per gallon — more than double the actual price.

This compels some cab drivers to hike their fares, which can sometimes result in arguments with passengers.

“I’ve been taking this route for years, and suddenly he wants to increase the fare? No. I won’t agree. I won’t agree,” trader Folasade Busari said.

Jimoh Olatunji, a commercial bus driver, said he can hardly get by now on his earnings. 

“Last year, by this time, I was making a lot of money. But now, all my sales go into buying fuel. I am struggling to feed my family,” he said. He worries that he might lose the bus he drives because he can’t meet the daily targets set by the bus owner.

Economic reforms

When President Bola Tinubu took office last May, he implemented a raft of reforms to set Nigeria on a pathway to financial growth, including the removal of fuel subsidies amounting to about $10 billion in 2022. 

The aim was to deregulate the oil sector by removing these subsidies. But Africa’s largest oil producer is now grappling with one of its worst economic crises in years.

A recent forecast by the International Monetary Fund  predicts Nigeria’s fall from its 2022 position as Africa’s largest economy to fourth place this year. According to the IMF’s World Economic Outlook, Nigeria’s gross domestic product is estimated at $253 billion this year — placing it behind Algeria, Egypt and South Africa. 

Tinubu justified the reforms as a “necessary action” to avoid bankruptcy when he spoke recently at the World Economic Forum in Saudi Arabia. 

But Abuja-based economist Joel Haruna said the president needs to reconsider his decision.

“I don’t think pulling the plug on the energy subsidy is in the best interest of the nation,” Haruna said. “The subsidies were a crucial safety net for low-income Nigerians. And that’s why now we are seeing that the poor are the ones bearing the biggest brunt of the current challenges.” 

Roughly 40% of Nigeria’s 220 million people live below the poverty line and increased living expenses are pushing more people into poverty.

The devaluation of the local currency, the naira, is also making an impact on the lives of everyday Nigerians. Over the last year the Tinubu administration implemented a free-float for the naira, removing the central bank’s control over the exchange rate.

This has led to a drastic decline in its value. Nigerians are now seeing a surge in inflation that has led to significantly higher interest rates. 

“When you have a rate today, tomorrow the rate is going up, then tomorrow is going down, it makes it difficult for people to plan,” Haruna said. “It makes it difficult for companies to plan and it makes it difficult for even the government to plan,” he added. 

Haruna said the government must prioritize stabilizing and growing the economy by focusing on increasing exports, reducing imports and boosting domestic production — especially food. 

“This way, we will not only improve the country’s trade balance but also enhance food security and our economic resilience,” he said.

‘Prices have skyrocketed’

Amid the loud rumble of generators in the Surulere neighborhood in Lagos, Joseph Sanwah laid out dozens of catfish covered in spicy red-hot chili pepper sauce on a grill.

Sanwah has been selling grilled catfish for three years. He said the increased cost of fuel to power his generator has made business more difficult. 

Just a year ago, he used to sell a catfish for 2,000 naira, or about $1.46. Now, he sells one for about $4. He said it’s because he buys his catfish from farmers who use the circulatory system of raising the catfish, which requires costly fuel 24 hours a day. 

“One fresh catfish used to be 1,200 naira from the market [.85] but now it is 3,000 naira [$2.13]. So the fresh catfish prices have skyrocketed and it is cutting into my  profits,” he said.

Most of his customers can no longer afford his catfish. 

“But it is not our fault,” he said.