Cost of living crisis: Can Nigeria expand social safety nets?

Nigeria's House of Representatives has recently called on the federal government to reverse the recent fuel pump price hike and implement immediate measures to stabilize petrol and cooking gas prices. Bongo Adi, a Professor of Economics at Lagos Business School, discusses the country's strategy to expand safety nets amidst the escalating cost of living crisis. The government's reforms, aiming to bring stability to the economy, have been met with mixed reactions from citizens experiencing the brunt of the adjustments. Adi highlights the historical background of economic challenges in Nigeria, dating back to the 'Dutch disease' phenomenon in the 70s, leading to deindustrialization and investment discouragement due to an artificially strong currency. While acknowledging the necessity of reforms, Adi points out the harsh reality faced by citizens, exacerbated by non-economic factors like security concerns, supply chain disruptions, and low agricultural productivity. The central bank's monetary policies, aimed at addressing inflation, are not fully effective due to underlying issues hindering productivity in key sectors like agriculture. One of the major drivers of inflation in Nigeria is the rising prices in the food segment, further deepening the cost of living crisis for the population. The government has attempted to provide social safety nets for the most vulnerable through initiatives like cash transfers for poor Nigerians. However, criticisms have been raised regarding the adequacy, clarity, and duration of these interventions. Adi emphasizes the importance of alternative channels to reach the impoverished, suggesting community-based, faith-based, and solidarity groups as potential avenues for more effective implementation of relief measures. The need for better sequencing and prioritization of reforms and safety nets is also emphasized to alleviate the current hardships faced by Nigerian citizens. The ongoing struggles amidst the rising cost of living highlight the urgency for comprehensive and efficient government interventions to mitigate the economic challenges affecting the population.