Nigeria, Africa’s largest economy, faces a grim reality as many citizens struggle to meet a stagnant minimum wage amid soaring food prices and inflation.
According to a recent report by SBM Intelligence, a Nigerian geopolitical intelligence platform, about 50% of Nigerian minimum wage earners spend their entire income on food, while 47% of those earning between N31,000 and N50,000 do the same. The report also revealed that 47% of the respondents had to cut back on spending, while another 27% said they now use loans to keep up with their expenses.
The report attributed the situation to the low purchasing power of the naira, which has been devalued several times in recent years due to the fluctuating oil prices and the impact of the COVID-19 pandemic. The report also cited security challenges in food-producing regions, which have disrupted farming activities and increased the cost of transportation.
The minimum wage in Nigeria is currently N30,000 (about $39) per month, which was approved by President Bola Tinubu in 2023 after months of negotiations with labor unions. However, the wage implementation has been uneven across the states, with some still owing arrears to their workers.
Meanwhile, the inflation rate in Nigeria has continued to rise, reaching 26.72% in September 2023, the highest since September 2005. According to the National Bureau of Statistics, the food inflation rate was even higher at 30.64%. This means that the prices of basic food items such as rice, beans, yam, garri, bread, milk, eggs, and cooking oil have increased significantly in the past year.
To cope with the rising cost of living, many Nigerians have turned to digital lenders who offer quick and easy loans through mobile apps. According to Nairametrics, a Nigerian business newspaper, there are around 161 loan apps with full approval from the Nigerian regulatory authorities. These apps charge interest rates ranging from 10% to 30% per month and require borrowers to provide their personal and bank details and access to their phone contacts.
However, some loan apps have been accused of engaging in unethical practices, such as harassing and shaming defaulters by sending messages or calling their contacts. Some have also been reported to collect data without consent or proper security measures. The Federal Competition and Consumer Protection Commission (FCCPC) has issued guidelines and regulations for digital lending in Nigeria to protect consumers from exploitation and abuse.
The FCCPC has also urged the government and the industry to work together to ensure that digital lending provides equitable, transparent, and beneficial alternative lending opportunities for Nigerians. The commission has also encouraged Nigerians to be financially literate and responsible when taking loans and to report any cases of malpractice or violation of their rights.
As Nigeria grapples with its economic challenges, many hope that the government will implement policies and reforms that will boost growth, create jobs, diversify the economy, and improve the welfare of its citizens.
Source: Business Insider Africa
