Tackling Nigeria's cost of living challenge

The recent introduction of policies such as the removal of petrol subsidies and the float of the naira has left many Nigerians grappling with the immediate impact on their disposable income and cost of living. Andrew Nevin, former partner and Chief Economist at PwC Nigeria, shed light on the government's reforms and the challenges they pose in an exclusive interview with CNBC Africa. Nevin highlighted the tough decisions made by the government, emphasizing the unsustainability of the subsidies in the face of the country's fiscal situation. He pointed out that borrowing money for palliatives might not be the most effective solution, as it doesn't directly address the core issues at hand. The economist stressed the importance of focusing on fundamental changes to improve the Nigerian economy, emphasizing the need for structural shifts rather than short-term fixes. One of the critical issues Nevin addressed was inflation, particularly food inflation. He attributed this to insecurity, which hinders agricultural productivity and exacerbates price pressures. To combat this, Nevin underscored the importance of addressing security concerns and boosting oil and gas production to stabilize the exchange rate. The economist also delved into the potential of a digital economy in Nigeria, highlighting the vast opportunities for remote work and high-value services. He commended the government's ambition to create a million jobs annually in the digital sector and underscored the need for supportive policies to facilitate the growth of digital jobs. Nevin emphasized that the government could play a limited but crucial role in providing access to reliable power and expanding bandwidth to enable young Nigerians to participate in global value chains. He pointed to issues such as excessive taxes on the telecom sector as hurdles that need to be addressed for the digital economy to thrive. Addressing the current challenges faced by Nigerians, particularly in urban areas, Nevin acknowledged the significant impact of transportation costs on daily expenses. While recognizing the need for short-term solutions, he emphasized that Nigerians have already begun adjusting their behavior in response to rising costs. Nevin argued against targeted palliatives, suggesting that a more holistic improvement in the economy, including wage increases and price stabilization, would benefit individuals more effectively. Overall, Nevin's insights shed light on the complex economic landscape in Nigeria and the critical reforms needed to navigate the country's challenges.