By Adebayo Ahmed | Prior to the transition in government in 2023, Nigeria's economic conditions were deteriorating significantly. Inflation increased from approximately 10% at the beginning of 2012 to over 21% by the end of 2022^[1], accompanied by considerable volatility throughout the period. Concurrently, real median incomes were in decline. The World Bank estimates that GDP per capita in 2023, adjusted for purchasing power parity, was lower than it was a decade earlier in 2013^[2], as shown in Figure 1 below. These indicators were compounded by recurrent fuel shortages, foreign exchange rationing, and additional economic shocks. According to the Food and Agriculture Organisation, the proportion of the population experiencing moderate or severe food insecurity increased from 34.7% in 2015 to 73.9% in 2022. Collectively, these factors placed substantial pressure on the average Nigerian household. Public sentiment surveys corroborate this assessment. Afrobarometer data, as shown in Figure 2, indicated that 88.7% of Nigerians believed the economy was moving in the wrong direction in 2022, a figure that increased to 92.8% by 2024.

Fig 1: GDP per Capita (Purchasing Power Parity) in Constant 2021 USD. Source: World Bank

Fig 2: Percent who believe economy moving in the wrong direction. Source: Afrobarometer

The severity of economic conditions, particularly regarding petrol subsidies and exchange rate management, generated broad consensus among all the major presidential candidates on the necessity of reform. The President Bola Tinubu administration proceeded with implementing several of these recommended reforms. While implementation details remain subject to retrospective evaluation, there is near-unanimous agreement that reforms concerning the exchange rate and petrol subsidies have been largely successful. The Nigerian macroeconomy currently demonstrates greater stability. Petrol subsidies, which previously constituted a significant drain on public finances, have been substantially eliminated, and following initial volatility, the exchange rate has stabilised. Certain segments of the population have benefited from the reforms as well, but these have mostly been the big business and the institutional investors—the mostly wealthier part of the population.

Fig 3: Percent of Population living in Poverty. Source: National Bureau of Statistics - National Living Standards Survey, World Bank Estimates.

However, these reforms imposed considerable costs on ordinary citizens, the majority of whom have not yet fully recovered or realised tangible benefits. The prevailing reality remains that most Nigerians are economically worse off than prior to the reforms, and living standards have not improved meaningfully for the majority. According to the National Bureau of Statistics (NBS), the number of individuals living in poverty increased from 40 million to 56 million between 2019 and 2023, with further increases likely following the implementation of economic reforms. Inflation reached 34.8% in 2024 and, while moderating, remains elevated relative to pre-pandemic levels in 2019. Although the macroeconomy has been stabilised, the welfare of ordinary Nigerians remains at historically poor levels.

The central policy question is therefore: what measures should be pursued next? Given that additional reforms are necessary to generate meaningful improvements in living standards, how can policymakers ensure that hard-won macroeconomic gains are preserved while simultaneously delivering tangible benefits to Nigerians?

Addressing this question is critical, as public tolerance for the status quo cannot be assumed indefinitely. As evidenced by security challenges across multiple regions, diminished public confidence has contributed to instability threatening national cohesion. Furthermore, as demonstrated during the post-COVID-19 recovery period, deterioration can occur rapidly. Importantly, with another election cycle approaching, various political actors may advocate for a return to pre-reform arrangements, specifically fuel subsidies and foreign exchange rationing, under the pretext of protecting vulnerable populations.

Strategic Policy Responses

The ideal policy response towards ensuring the general population continues the support for the reforms can be structured around two strategic dimensions: (1) immediate measures to alleviate suffering, particularly among the most vulnerable, and (2) medium-to-long-term structural interventions.

Immediate Action 1: Social Transfer Programmes

Direct financial transfers to Nigerians represent a priority intervention. This component was intended to form part of the 2023 reform package, with the rationale that eliminating fuel subsidies and liberalising foreign exchange markets would generate fiscal space for redistribution to vulnerable populations. While fuel subsidies were removed and foreign exchange markets liberalised, the social transfer component of the reforms has been ineffective. As of February 2026, the Federal Government reported that nine million households received some form of social transfer, though implementation details remain unavailable. One-time transfers of ₦25,000 are unlikely to constitute meaningful support.

What is required is a systematic, institutionally-funded social transfer programme. A viable approach would involve allocating a percentage of resource revenue inflows directly to citizens. Instituting a first-line charge on a specified percentage of federation inflows from crude oil and other natural resources, distributed as direct social transfers, would accomplish multiple objectives: (1) providing immediate benefits from reforms to the population, (2) creating public stakeholder interest in reform sustainability, and (3) establishing an automatic buffer against fluctuations in Nigeria's resource export prices, as currently observed with crude oil price increases driven by geopolitical tensions involving the United States, Israel, and Iran.

Immediate Action 2: Cost Reduction Measures

Citizen welfare depends not only on disposable income but also on the overall cost of living. The government has taken positive steps to reduce food prices through trade liberalisation and credible monetary policy, evidenced by food inflation declining from approximately 40% annually in 2024 to roughly 12% currently. Additional efforts beyond trade and monetary policy are warranted, particularly regarding food and transport, the two categories comprising the majority of Nigerian household expenditure.

Fig 4: Percent difference between maximum and minimum food price – January 2026. Source: National Bureau of Statistics

One potential immediate option is to focus on the internal logistical challenges which significantly constrain the free movement of goods, resulting in substantial price variations across states. For instance, according to the NBS, in January 2026, yam prices in Delta State exceeded those in Niger State by more than 100%. Frozen chicken prices in Enugu State were nearly 100% higher than in Taraba State. Canned evaporated milk prices in Gombe State were approximately 50% higher than in Kano State. These disparities indicate serious internal logistics deficiencies with direct implications for cost of living. Addressing the logistical barriers generating such intra-national price variation constitutes an immediate priority for reducing living costs.

Medium-to-Long-Term Strategic Planning

Immediate interventions to increase household income and reduce living costs will provide direct relief and enhance short-term reform sustainability. However, medium-to-long-term reform sustainability depends on the government's capacity to articulate a credible pathway to improved living standards that convinces citizens to endure interim hardships.

Currently, no comprehensive national development strategy exists. Vague aspirations of achieving a $1 trillion economy by 2030 lack credibility and relevance for most citizens. Nigeria's nominal GDP was approximately $250 billion in 2024, a statistic with limited meaning for the 60% of Nigerians living in poverty. Similarly, achieving a $1 trillion economy while 70% of the population remains in poverty would not constitute an agenda capable of generating public support.

A more appropriate objective would be an agenda for elevating the average Nigerian to middle-income status by 2050. This would require median annual income growth of approximately 4%, increasing from the estimated $1,663 in 2023 to approximately $5,000. This target is both achievable and credible. Importantly, focusing on median income provides a more meaningful and relatable metric than an arbitrary aggregate GDP target.

What reforms would be needed to attain this median income status of $5,000 a year? It is useful to think about what an economy with a $5,000 a year median income would need to look like. This economy would likely need people to be reasonably educated with relevant skills. You would therefore need a measurable and actionable plan for education. This economy would need people to be healthy and have access to healthcare as that is one of the primary reasons why incomes get decimated. You would therefore need a similar plan for healthcare. You can estimate that half the population in 2050 are likely to be women. If you want the median Nigerian income to be at middle income status, then you would need to at least have the median income for women to also get to middle income status. You would therefore need a plan for issues relating to women targeting the things that limit their income growth, such as the costs of unpaid care work or social norms around participation in the labour market.

It is also clear that the most sustainable path to increasing median incomes is to have sustainable decent job growth that is large enough for the size of Nigeria’s population and for the number of people entering the labour market each year including those who are unemployed or underemployed. Pre-pandemic data from the NBS estimated that about four to five million individuals entered the labour market annually. Thus, a plan for sustainable job growth at the scale that is required would be needed. It is also known that historically, labour-intensive manufacturing sectors that focus on exporting to global markets have been a sustainable engine of job growth in many countries. A plan to engineer growth in labour-intensive manufacturing sectors would therefore be needed.

Supporting this labour-intensive manufacturing growth of the scale that is required would need good infrastructure and access to stable and reliable electricity. A plan for infrastructure and stable and reliable electricity would be needed. All this of course would need to be done within the context of keeping costs low. There are likely many other dimensions of planning that would be required but the rationale in each is the same.

Conclusion

Without articulating a feasible, measurable objective that resonates with Nigerians, the reform agenda faces significant risk of stalling. Nigerians may be inclined to prioritise immediate benefits even when these undermine longer-term potential. Convincing Nigerians to defer gratification and sustain commitment to the reform path requires a credible, measurable development framework that demonstrates clear, tangible, and believable pathways to improved living standards for the average person. 

[1] Source: National Bureau of Statistics – Consumer Price Index.

[2] World Bank: International Comparison Program (ICP) - https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?end=2024&locations=NG&start=2011

By Samuel Ajayi | The economic reforms implemented in Nigeria since 2023, particularly the removal of petrol subsidy and exchange rate liberalisation, represent a necessary but disruptive shift toward macroeconomic stability. These reforms have corrected long-standing fiscal distortions, improved revenue flows, and created significant fiscal space across all tiers of government.

By Adebayo Ahmed | There is hunger in the land and you don’t need to go too far to see it. On almost every lip in the country today is a statement on how food prices are rising so fast that it is becoming increasingly difficult to survive. The data backs up this claim. According to the National Bureau of Statistics (NBS), food inflation, at 30.64% in September 2023, is higher than is has ever been since the NBS started reporting more formally on it in 2009. According data from the Central Bank of Nigeria (CBN), food inflation was never persistently so high in the last few decades as it is currently. This situation has worsened in 2023 where monthly changes have never been so consistently high, at least since 2009. As is clear in Figure 2, this trend was present even before the removal of fuel subsidies which added to the pressure.

Fig 1: Food inflation chart. Source: National Bureau of Statistics. Central Bank of Nigeria.

The consequences for Nigerians and Nigeria are dire. Substantial segments of the population are struggling to feed themselves and their families, a situation which poses a threat to social and political stability in the country and worsens the country’s food insecurity profile. Though official figures are hard to come by, food insecurity has been on a steady increase in Nigeria for most of the last decade.

Fig 2: Monthly Change in Food Prices since 2009. Source: National Bureau of Statistics.

According to a recent publication by the IMF, more than 40% of Nigerians as at 2019 could be described as food insecure based on the average income and the amount of money required to consume the recommended number of calories¹. This was before the COVID-19 pandemic and the following years of high food inflation. The Food and Agriculture Organization (FAO) estimates that 69.7% of the people in Nigeria were moderately or severely food insecure as at 2019². The Cadre Harmonisie, a unified and consensual tool that measures acute food and nutrition insecurity in the Sahel and West African region, estimated that at least 25 million people in 27 states of Nigeria were at risk of facing hunger in 2023. The other nine states were not analysed so the overall number is likely higher.

Whichever way you slice it, there is hunger in Nigeria. It appears to be getting worse, and people are struggling to cope. Layering consistent spike in food prices with lingering and widespread food insecurity does not bode well for Nigeria. This combination should keep policy and development experts and officials awake at night, as there is something smoldering beneath the surface that could, with a mere spark, compound Nigeria’s unflattering development challenges.

Fig 3 Graph of index of nominal GDP per capita versus food inflation. Source: National Bureau of Statistics.

Importantly, this struggle is not just for people employed in agriculture. According to the 2023 Cadre Harmonise, the state with the largest number of people at risk of food insecurity is actually Lagos, where very few people are engaged in agriculture. Yes, there are apparently more people at risk of food insecurity in 2023 in Lagos that in Borno or Katsina or any of the agriculture-heavy states plagued by violence which disrupts food production and distribution. The reality is that food prices have likely been rising faster than incomes, squeezing households in the process. Although data on this is few and far between, a comparison of average growth in nominal per capita GDP and food inflation, as shown in Figure 3, makes this very clear. This does not mean that even those engaged in agriculture are also not feeling the pressure. As is clear in Figure 4, the hunger is spread almost across the entire country. Ironically, our neighbours, especially those who are not mired in some conflict are mostly fine, even if they are not significantly richer than Nigeria.

Figure 4: Food insecurity across West Africa. Source: Cadre Harmonisie.

Drivers of Food Inflation

What has caused this consistent spike in food inflation? We can think of this from a standard supply and demand framework. Things that disrupt supply tend to push prices up while factors that boost demand also tend to push prices up, and vice versa. Importantly, these factors in principle need to be “new” factors for them to matter, especially on the supply side. For example, if we have always had logistical challenges that hinder food distribution resulting in a mark-up on food prices then that does not really impact food inflation because it has always been there. However, if it gets better or worse, then it impacts food inflation for the better or worse.

The same can be said for our low levels of productivity, which are recognized as low even compared to our peers. For example, maize yields in Nigeria, at about 21,000 grams per hectare are lower than Ghana’s and even the African average, half as much as South Africa’s and Brazil’s and only a tenth of the United States’³. Low yields are bad especially for those employed in agriculture whose low yields imply they remain in poverty. But Nigeria has always had low yields and previously did not have such high food inflation.

What then, on the domestic supply-side could have worsened significantly enough to really impact food inflation? The escalation in violence, especially in key agriculture-intensive states in the North West and North Central is likely one culprit. The floods in 2022 which occurred during the peak harvest season also likely resulted in harvest losses and affected food supply. The COVID-19 pandemic and the disruptions to the fertilizer market as well as the markets for other inputs also likely negatively impacted food supply, at least for 2023.

However, in many countries the direct impacts of domestic supply shocks on food prices are actually pretty limited. This is because domestic shocks are mostly localised and don’t affect all food production everywhere. A drought might reduce production of maize in Zimbabwe but as long as the drought is not global, maize will be produced somewhere else and be traded in other places. International supply is vulnerable to shocks of course, such as is the case with the Russia and Ukraine crisis. Regardless, in the presence of international trade, the ability for domestic shocks to severely impact food prices should be limited.

Fig 5: Food inflation in select African countries. Source: Food and Agriculture Organisation – FAOStat.

In the last few years, global food prices have increased due to a variety of factors. That increase has however not been enough to explain most of Nigeria’s food inflation. As is clear in Figure 5, except those who are involved in some conflict, and whose livelihoods would be directly affected, food inflation is significantly lower in other African countries, and there is little food insecurity even in the face of similar global food shocks.

Indeed, it is more likely that Nigeria’s increasing restrictions to international food trade have contributed more to domestic food inflation. The anti-trade policies such as the border closure and the banning of foreign exchange for some food products have restricted international supply of food and put upward pressure on food prices. The exchange rate problem has probably also contributed to food inflation although it is likely not the major driver. A look at food inflation in Figure 1 shows two distinct patterns. The long-term trend which keeps inching upwards, and the more temporary bumps which can be attributed to the episodes of foreign exchange crises. The bumps are important of course but they are usually temporary. The longer-term upward should be of more concern.

The Role of Demand Pressures

What explains the more longer-term trend? On the other side of the price equation is demand. As basic economics suggests, prices can go up because of supply or demand. On the demand side we have a population that is growing by about 2.6% a year on average. This means actual food supply has to be growing by at least 2.6% in real terms just to keep up with population growth. In the presence of international food trade this will likely not be a challenge. But given that we have moved to limit food trade, then it becomes important. Unfortunately, in the past half a decade agriculture growth has slowed. In the 2^nd quarter of 2023 agriculture GDP had slowed to 1.5% in real terms. It was negative in the first quarter. This means the agricultural sector wasn’t even growing fast enough to meet the demand pressures from a larger population.

Fig 6 Select Food price inflation with Maize, Rice, and Yams highlighted. Source: National Bureau of Statistics

But perhaps a larger source of demand has been the growth in money supply. More money chasing fewer goods, including food, typically means higher inflation. Money supply has been growing at over 20% a year in the past few years⁴. This has likely contributed to the growth of inflation. In general, if you observe an increase in prices of a few goods then you can typically pin it down to supply side shocks. However, if you observe an increase in the price of all goods then it is likely a demand problem. As is clear from Figure 6, all food prices have been on the increase, including those produced locally and imported and those eaten by a few and those eating by many. In such a situation, the likely driver is too much demand driven by money supply that is growing too fast.

The Path Forward for Reducing Food Inflation

Given the likely causes of high food inflation identified above, the path to reducing it is clear. Simply, it involves tackling the challenges on both the demand and supply sides. Some things will be easier to implement and will result in quicker impacts while others will be more long term.

On the quick demand side, the obvious policy measure is to slow the growth of money supply. Regardless of what happens to the supply side, if money supply growth continues to be too fast then inflation, and food inflation, will continue trending upwards as well. If people’s incomes cannot keep up, then that additional means more affordability problems and even worse food insecurity.

On the quick supply side, the obvious policy measure is to ease the restrictions on international food supply. The borders may now be open and the restrictions on foreign exchange access for food and fertilizer may have been removed but there are still other significant restrictions, chief of which is the relatively high tariffs on food imports. The argument may be that reducing tariffs on food will negatively affect local producers of the food items. But there is a case to be made for the consumers as well. Consumer surplus matters and in principle more people eat food than grow food hence the consumer should matter at least as much as the producers. The best practice is not necessarily to have high tariffs on food but to re-channel some of the revenue from the lower tariffs to directly support food producers.

The more longer-term supply-side actions will include fixing some of the more structural issues that affect food supply: resolving the violence and issues in rural areas; resolving logistical challenges in food transportation; improving the productivity of farmers; building resilience to climate change; and so on. These are prescriptions that will be beneficial for food prices and food security in the long-term.

Right now though, quick wins are needed to halt the consistent price spikes that put food out of the reach of many citizens and potentially put the country at larger risks.

Footnotes

[1]      Food Insecurity in Nigeria: Food Supply Matters. Thomas and Turk. IMF Selected Issues Paper No. 2023/018

[2]      Food and Agriculture Organization - FAOStat

[3]      Food and Agriculture Organization - FAOStat

[4]      According to data from the Central Bank of Nigeria.

PHOTO CREDIT: Mansur Ibrahim