Nigerians Are Getting Poorer And Government Policies Are To Blame.

The rising cost of food and transportation is now threatening the purchasing power, current social standing, and potential for social mobility of the average working-class Nigerian.

While the income of the average working-class Nigerian has remained stagnant, the rising cost of food and transportation is now threatening their purchasing power, current social standing and potential for social mobility. Recall that in 2019, the National Bureau of Statistics estimated that Nigerians spent about N22 trillion on food items and about N2.5 trillion on transportation - both of which added up to 63% of the total household expenditure.

It is, therefore, safe to deduce from this data that, as long as the price of food items and the cost of transportation continues to rise, the average Nigerian will inevitably fall further below the social ladder. To put it quite bluntly, the average working-class Nigerian will have to work twice as hard on his/her job to maintain a certain level of productivity but will become poorer because inflation will eat away his income which has remained stagnant.

It is dumbfounding that public policy in Nigeria, at this time of economic depression, has been re-engineered to take whatever is left of the damage that rising inflation has inflicted on citizens. In Lagos State, state-run mass transportation services have increased fares by 46%. The Federal Inland Revenue Service (FIRS) has put forward the enforcement of the payment of Stamp duties on tenancy agreements while the perennially inefficient Nigeria Postal Service has sought to increase the tax burden on operators in the courier service and logistics industry.

The disconnect between public officials, who feed fat on the taxes of hard-working Nigerians, and the people they pretend to serve is bewildering. The policy choices they make tell a pathetic story. Granted, the federal government and several state governments are faced with a shortfall in revenue and have had to resort to hard choices. However, there must be a balance between the efficient collection of taxes and offering the needed support for businesses to thrive. Because if businesses fail, unemployment will increase and so will poverty. Also, government revenue will take a drastic hit.

As a policy recommendation, both the federal and state governments should focus on driving down the cost of food and transportation for most Nigerians by deliberately pursuing a series of social public policy choices. Many of such social policies have proven effective in East Asia, one of which is a carefully managed subsidy on the transportation of food items across the country to ensure that prices are kept low.   Another, which should be quite obvious, is making sure that the cost of mass transportation, especially state-owned, are not impacted by inflation.

Except the government moves in the direction of these policy choices, many Nigerians will come out of this pandemic the poorest they have been in two decades.