2024 Misery Index: Nigeria’s Troubling Economic Prospects

As Nigeria grapples with the uncertainties of 2024, the economic landscape under President Tinubu’s seven-month-old administration has witnessed a significant surge in the Misery Index, posing a formidable challenge for economists attempting to forecast the nation’s economic trajectory amid persistent challenges.

While the official release of the 2023 Hanke’s Misery Index is awaited, the tangible effects of Nigerians slipping into poverty are palpable on the streets and within households, exacerbated by the ongoing rise in inflation. Commencing at around 73.05 in 2023, Nigeria’s misery index has experienced a noticeable escalation. Esteemed economists, such as Dr. Ikchukwu Okafor and Dr. Gbenga Omotosho, anticipate a crossing of the ominous 100% threshold in the forthcoming Hanke’s report, attributing this projection to significant economic shifts since June 2023.

Dr. Okafor draws attention to the soaring food prices, citing the example of a bag of rice, which skyrocketed from N28,000 in June to a staggering N70,000 in December. This surge has had a cascading impact on the entire agricultural value chain. Furthermore, World Bank’s Lead Economist for Nigeria, Alex Sienaert, underscores the repercussions of the removal of fuel subsidies in May, revealing that over four million individuals were plunged into poverty by July.

The projection for the future issues a stark warning, estimating that an additional 7.1 million Nigerians may slip below the poverty line by December 2023 unless urgent palliative interventions are implemented. Despite the removal of fuel subsidy and the unification of exchange rates, substantial measures to alleviate the economic distress remain elusive in many states.

The Misery Index, derived from the 12-month Consumer Price Index (CPI) percentage change plus the unemployment rate, presents a distressing panorama for Nigeria. As of the end of the third quarter of 2023, the country’s CPI stood at a disconcerting 27.33%. Despite assurances from the Central Bank Governor, Finance Minister, and government officials regarding an improved economic outlook, numerous economists remain skeptical due to the persistent depreciation of the naira.

Hanke’s Annual Misery Index delves comprehensively into Nigeria’s economic challenges, encompassing indicators such as unemployment, inflation, bank lending rates, and GDP per capita. Current rankings position Nigeria among the world’s top 50 most afflicted nations. Dr. Nelson Nkwo, a financial economist at Ebonyi State University, emphasizes the imperative of prioritizing good governance, anti-corruption measures, poverty reduction, human rights, economic stability, regional cooperation, and innovation to address challenges and foster sustainable economic growth.

Amidst economic challenges marked by soaring unemployment, inflation, and lending rates, Umar Sagagi of Growth Concepts asserts that solutions will not materialize overnight. He contends that overcoming Nigeria’s economic challenges requires decisive action and effective leadership, with a focus on citizen well-being and the implementation of sustainable economic policies. Sagagi advocates learning from successful economies, adopting transformative strategies, and embracing a comprehensive approach that includes economic reforms, education investments, entrepreneurship promotion, institution strengthening, infrastructure improvement, and regional cooperation.

Furthermore, Sagagi emphasizes the significance of prudent fiscal policies, controlling government spending, promoting transparency, and creating sustainable jobs through investments, entrepreneurship, vocational training, and public-private partnerships. Additionally, he underscores the importance of political stability, peaceful societies, conflict resolution, democratic institutions, the rule of law, human rights, and citizen participation for long-term economic growth and favorable investment environments in African nations.

Professor Tayo Bello from Adeleke University underscores Nigeria’s need for a sustainable future through prioritizing infrastructure development and regional integration. The promotion of decentralized renewable energy, such as mini-grids and community-owned projects, is seen as a potential solution to provide electricity to remote areas, reducing dependence, saving costs, enhancing security, lowering emissions, and stimulating local economies. Successful implementation, however, requires government support, financial incentives, and collaboration with the private sector.

While some economists believe that President Tinubu’s policies hold the potential to unlock the country’s economic growth, others caution that the pace of reforms may be too fast for the masses to keep up, leading to increased poverty levels. Acknowledging the positive policy decisions, Professor Uche Uwaleke, Nigeria’s first capital market professor, stresses the need for the effective sequencing of reforms.

Dr. Muda Yusuf, CEO of CPPE, supports the reforms but urges the swift provision of palliatives for the most affected poor masses. Bismarck Rewane, CEO of Financial Derivatives Company, warns that public discontent may rise if the benefits of subsidy removal aren’t felt soon. On the contrary, Gbenga Johnson, an economic affairs analyst, believes that the masses have accepted the sacrifice, viewing subsidy removal as beneficial and suggesting that past subsidies favored the rich. Johnson contends that the absence of widespread riots indicates that the effects on the masses may not be as severe as feared.

Under President Tinubu’s economic policies, Nigeria’s Misery Index paints a concerning picture, necessitating swift and targeted measures to alleviate poverty and reform impacts. Balancing economic growth with social welfare is crucial for a stable and prosperous future, though predicting the masses’ endurance in the current economic affliction remains challenging.