President Bola Tinubu's economic reforms, including the removal of fuel subsidies, currency devaluation and reductions in electricity subsidies, have been designed to stabilise public finances and strengthen the economy over the longer term. But the measures have also increased immediate pressure on household budgets.
Food and transport costs have risen sharply, while petrol prices have increased substantially since the reforms began. Reuters reported that some everyday food costs have also doubled, putting pressure on workers whose incomes have not increased at the same pace.
The economic adjustment has produced mixed signals. Foreign capital inflows have reached a six-year high and Nigeria's stock market has risen almost 60%, suggesting stronger investor confidence in the country's economic direction. Yet relatively few Nigerians participate directly in the equity market, meaning gains in financial assets have limited immediate impact on most households.
High interest rates add another constraint. With borrowing costs elevated, households and smaller businesses face greater difficulty accessing affordable credit, limiting consumption and investment.
The political implications are increasingly important. Public dissatisfaction over living standards, wage negotiations and employment conditions could become a significant issue as the election approaches. Reuters reported that a large majority of Nigerians surveyed believe the country is moving in the wrong direction, although opposition parties remain fragmented.
For businesses, prolonged pressure on household incomes could weaken consumer demand even as macroeconomic indicators improve. Companies serving mass-market consumers may therefore face a more difficult operating environment than headline investment figures suggest.
The policy challenge is to convert macroeconomic stabilisation into broader improvements in household purchasing power.
What to watch: inflation, wages, food and fuel prices, interest rates, consumer demand, labour actions and the political response to economic hardship.
