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Nigeria, like many other countries, has faced significant economic challenges in the past year, including hyperinflation, currency fluctuations, and an increasing cost of living that has almost reduced earnings to nothing. In this situation, individuals need different strategies to survive the challenges, writes DARE OLAWIN
In the past year, Nigerians have had their incomes eroded as daily expenses rise beyond imagination. People’s situation becomes dire when the cost of living surpasses income, leaving individuals and families struggling to make ends meet.
To survive this economic situation, individuals need to adopt various practical strategies for coping with the rising cost of living in Nigeria.
Before diving into solutions, it is essential to understand the scope of the problem. Nigeria’s inflation rate has been soaring, with prices of basic goods and services increasing exponentially. In the latest report, the National Bureau of Statistics said the inflation rate rose to 32.70 per cent in September, up from 32.15 per cent in August, due to increases in transportation costs and food prices.
The country’s economy has not been encouraging, leading to a widening gap between income and expenses. The rise in the exchange rate and the too much reliance on importation.
The inflation rate escalated for 13 consecutive months due to various factors, including the removal of fuel subsidies, which led to increased transportation and production costs, and the depreciation of the naira against major currencies.
A breakdown of the NBS monthly inflation report by The PUNCH showed that the average price of commodities moved from 22.41 per cent in May to 22.79 per cent in June. In July, the rate increased by 1.29 per cent to 24.08 per cent. August inflation was 25.80 per cent, September (26.72), October (27.33), November (28.20), and December (28.92).
As of late 2023, inflation surged, driven by higher prices for food, energy, and essential goods.
By January 2024, the inflation rate increased further to 29.90 per cent, mainly on the cost of food items.
It was 31.70 per cent in February, 33.20 per cent in March, 33.69 per cent in April, 33.95 per cent in May, and 34.19 per cent in June 2024 before it dropped to 33.40 per cent in July, 32.15 per cent in August and 32.70 per cent in September.
The World Bank recently released the Nigeria Development Update report, stating that over 129 million Nigerians now live below the national poverty line. This represented a sharp rise from 40.1 per cent in 2018 to 56 per cent in 2024.
The World Bank report read, “With growth proving too slow to outpace inflation, poverty has risen sharply. Since 2018, the share of Nigerians living below the national poverty line16 is estimated to have risen sharply from 40.1 per cent to 56.0 per cent.
“Combined with population growth, this means that some 129 million Nigerians are living in poverty. This stark increase partly reflects Nigeria’s beleaguered growth record. Real GDP per capita has not recovered to the level it was at before the oil price-induced recession in 2016.”
The World Bank added, “Multiple shocks in a context of high economic insecurity have deepened and broadened poverty, with over 115 million Nigerians estimated to have been poor in 2023. Since 2018/19, an additional nearly 35 million people have fallen into poverty, so that more than half of Nigerians (51.1 per cent of the population in 2023) are now estimated to live in poverty.”
The PUNCH observed that there was an increase from 115 million in 2023 to 129 million in 2024, which means that 14 million Nigerians have become poorer this year.
The World Bank report is a stark reality of how Nigerians fall into poverty day in and day out. Many have lost their sources of income, as many entrepreneurs run out of business due to the harsh economic conditions. Over the years, employers keep downsizing, sending many back into the hopeless labour market.
Under President Bola Tinubu’s administration, the prices of items have skyrocketed. Food prices continue to jump, leaving many Nigerians with extreme hunger.
Energy cost is another challenge. Power and petrol costs have surged astronomically beyond the purchasing power of Nigerians.
Despite promising to bring down the price of petrol during his campaign, Tinubu’s administration had repeatedly increased the price of petrol by about 488 per cent—from N175 in May 2023 to N1,030 in October 2024, inflicting more pain on the already impoverished people.
What is the way out?
Here are some of the survival strategies:
Budgeting and prioritisation
At a time like this, budgeting becomes very important. Everybody needs to become an accountant, planning for their daily, weekly and monthly expenses. Create a budget for essential expenses, such as rent, food, and utilities. If you are married with kids, plan their academic needs. In your budget, prioritise needs over wants to ensure you allocate resources efficiently. There must be a scale of preference. List your needs according to their order of importance. Forgo what is not necessary and pay attention to what you really need.
Cutting expenses
Now that things are getting tough, each person must identify areas where he or she can reduce spending, such as cooking at home instead of eating out, using public transport when necessary, and driving or going out only when it is important. It is important to stop food waste and adopt energy conservation. You may need to change your children’s school to a good but less expensive one. All these and more are strategies to cut expenses.
Increasing Income
During economic hardships, it is not advisable to have a single stream of income; one needs multiple sources of income to make ends meet. Explore ways to boost your income, such as taking on a side hustle or freelance work. You may consider a weekend job or a remote one.
You can also plan a shop you can retire to in the evening. Similarly, farming is an option to consider for those who have the means.
Aside from seeking other jobs, you can also sell unwanted items to make more money or ask for a raise at work. In short, develop multiple sources of income to reduce dependence on a single salary.
Seeking assistance
When things get tough, there is nothing wrong with seeking financial support. Reach out to family, friends, or non-profit organisations for temporary support. Many out there want to help; reach out to them. Though this is not sustainable, it is a stop-gap measure to reduce hunger.
Getting soft loans
Get a low-interest loan; borrow money to start a business or carry out important tasks. However, make sure you don’t borrow from loan apps, as you don’t want to face the humiliation that comes with it. It is also important to use the loan for something profitable. Do not borrow for parties or other frivolous things.
Lifestyle changes
There is a need for general lifestyle changes. As individuals and families, we know those we spend money on without a particular benefit to the family. Different times call for different approaches. Do away with those expenses that have no significant impact on the family. Discuss with your partner and children; let them know why there will be some adjustments in the family expenses. Reduce your charity—give to others when you can but not to your detriment.
Some long-term strategies for survival are:
Investing in education and skills
Enhance your employability and earning potential by acquiring new skills or certifications. This may not be something so easy considering shrinking income and the high rate of school fees. However, there could be opportunities for scholarships or student loans; please embrace them. Look for colleges with cheaper fees. Acquire new skills like catering, plumbing, tiling, hairdressing, and sewing, among others. These are other avenues to make extra income.
Entrepreneurship
As earlier said, being one’s boss is great. Consider starting a small business or investing in a viable venture if you have the means. Let the money keep coming from different legitimate sources, and you will survive this biting economic crunch.
Financial literacy
Educate yourself on personal finance, budgeting, and investing. Know when to spend money and when to zip up your pockets. Do not forget that even in this harsh economy, the importance of saving can never be overemphasised. Save for the rainy days and save yourself from running out of cash.
Practical tips
Use the 50/30/20 rule
Allocate 50 per cent of your income towards essential expenses, 30 per cent for discretionary spending, and 20 per cent for saving and debt repayment. Take a pen and do your calculations. This will guide you in your spending and prevent incurring unnecessary financial burdens.
Leverage technology
Utilise mobile apps, online platforms, and digital marketplaces to access affordable services and products. Do your survey to be certain that the price you see online is cheaper than what the physical stores offer.
Join cooperative societies
Collaborate with others to pool resources and access discounted goods and services. Cooperatives and credit and thrift societies are ways through which people get financial support.
Patronise local businesses
Promote economic growth by patronising local entrepreneurs. There are farm markets where you can buy food items directly from farmers at cheaper rates; go to those markets if they are close to you.
Take advantage of government palliative initiatives such as the National Social Investment Programme. Explore available subsidies and grants for small businesses, farmers, and entrepreneurs. Understand tax breaks and exemptions offered by the government.
Coping with the rising cost of living in Nigeria requires a combination of short-term and long-term strategies.
By budgeting, cutting expenses, increasing income, and seeking assistance, individuals can navigate the challenges of economic uncertainty. Investments in education, entrepreneurship, and financial literacy will position Nigerians for success in the face of adversity.
