BY OYEWOLE O. SARUMI
Introduction
[Nigeria finds itself at a decisive moment, with inflation surging, exchange rates surging, and the removal of fuel and electricity subsidies plunging millions into hardship, even as some of the country’s most powerful corporations report record profits. Despite this turmoil, the economic “bubble” hasn’t burst for a select few, particularly those with real estate holdings and financial assets. This disparity raises urgent questions: How can government at all levels – Federal, States, and LGAs- act swiftly to alleviate suffering among the poorest Nigerians? And why are the rich remaining cushioned while the poor bear the heaviest burden?
This article offers a comprehensive diagnosis, drawing on recent data and expert analysis, while proposing targeted, immediate responses to buffer the most vulnerable and encourage longer-term resilience. The premise is that a more inclusive and socially responsible Nigeria is not just morally necessary, it is fiscally prudent and foundational for sustainable stability.
1. The Anatomy of the Crisis: Inflation, Subsidy Removal, and Their Burden on the Poor]
President Bola Ahmed Tinubu
Two landmark reforms, fuel subsidy removal and exchange rate unification, have significantly reshaped Nigeria’s economic landscape. The floatation of the naira following the end of the currency peg caused drastic devaluations, from ₦1,400 per dollar in early 2024 to around ₦1,600 by mid-2024, which in turn provoked sharp increases in import-dependent goods. (Wikipedia)
These reforms triggered inflationary cascades, especially in transportation and food costs: notably, the “Jollof Index” showed that the cost of preparing one pot of Jollof rice had soared by 153% by mid-2025 and consumed nearly 40% of the minimum monthly wage. (Wikipedia)
More recent trends signal marginal relief; inflation eased from 31% in 2024 to around 23.7% in April 2025, courtesy of improved naira stability, better food production, and tighter monetary policy. (IMF) However, at over 22% inflation, the poor remain under crushing pressure, particularly given high unemployment (22.6% in Q1 2025) and persistent poverty rates near 39% as of 2023. (Wikipedia)
The abrupt end to fuel subsidies removed a vital social safety net; Afrobarometer data shows the policy was deeply unpopular, as many low-income Nigerians regarded subsidized fuel as a tacit “social contract” with the state. (Afrobarometer) The consequences have been dire, particularly in remote communities: for instance, from Ikom (Cross River State), to Illela (Sokoto State), skyrocketing transportation costs now limit access to healthcare, markets, and schools. Local remittance-driven community efforts serve as a stopgap, e.g., visitors returning from abroad have propped up teacher salaries and revived local markets. (The Washington Post)
Perhaps most heartbreakingly, desperation has claimed lives. In late 2024, stampedes at Christmas food-distribution events in Oyo, Anambra, and Abuja killed at least 67 people, illustrating acute public need. (AP News) The humanitarian toll extends into conflict-affected regions: the UN recently appealed for nearly US$910 million to help 3.6 million people in northeastern states, as inflation and food insecurity compound existing crises. (Reuters). Recent floods in Borno and Adamawa States, for example, have displaced many and worsened their poverty.
2. Why the Bubble Holds Steady for the Wealthy
Despite widespread economic distress, Nigeria’s elite appear insulated, and they hold firm financial ground. Several listed companies, MTN Nigeria, Dangote Cement, BUA Cement, Zenith Bank, GTCO, UBA, Access Bank, Nestlé Nigeria, Cadbury Nigeria, FBN Holdings, and Seplat Energy, continue to post impressive profits. (Wikipedia, IMF, Reuters) These gains stem from strategic business models, sectoral demand resilience, and government reforms that benefit large-scale operators.
Beyond corporate dividends, asset ownership plays an outsized role. Wealthy Nigerians often own real estate or have stakes in equities, assets that, while not perfect inflation hedges, arguably protect purchasing power better than cash for the marginalized. (Investopedia) Interestingly, studies worldwide indicate real estate is not a uniformly reliable inflation hedge. Still, localized Nigerian dynamics, such as rent and property appreciation in urban enclaves, have indeed conferred protection to asset holders. (MDPI)
This divergence underscores structural inequality, as the wealthy benefit from financial instruments and property ownership. Whereas, the poor, lacking such buffers, depend almost entirely on volatile wages, food prices, and fragile public services.
3. Systemic Challenges: Budget Constraints, Corruption, and Fiscal Inefficiencies
While Federal and subnational governments have recognized the need for action, structural impediments hamper progress. Nigeria’s 2025 budget is built on optimistic assumptions, $75/barrel oil, 2 million barrels/day production, inflation dropping to 15%, and naira appreciating to ₦1,400 per dollar, many of which have not materialized. (Wikipedia) Debt servicing alone consumes roughly 33–45% of government revenue, pushing the public debt–to–GDP ratio near 40% and reducing fiscal space. (Wikipedia) Capital expenditure is under-executed (below 80%), further weakening infrastructure investments essential for long-term economic resilience. (Wikipedia)
Corruption remains endemic, draining resources and undermining governance. Estimates suggest over $400 billion lost since independence, and opaque oil sector contracts further skew benefits toward political elites rather than the population at large. (Wikipedia) At the same time, fiscal mismanagement, inefficiencies, and weak tax administration hinder the delivery of public goods despite rising revenues. One hopes that with the new tax reform laws, the situation will look promising from January 2026.
Notably, States and LGAs have seen over 65% growth in allocations over the past two years, yet visible impact remains negligible. Instead of deploying these funds to provide relief, many subnational governments defer blame to the Federal Government, obfuscating accountability and undermining trust.
4. A Blueprint for Immediate Relief: What Government Can Do Now
4.1. Expand and Scale Targeted Cash Transfers
To stem immediate suffering, Nigeria must scale up direct cash transfers, especially in communities where remittances no longer suffice and health or access to essentials is compromised. The IMF recommends expanding these programs, though implementation challenges, poor data, and low financial access must be resolved. (Reuters) The World Bank and IMF models support conditional cash transfers focused on food access, healthcare, and school feeding. Data-driven targeting, using mobile registration, local councils, and digital infrastructure like AfriGo, can enhance reach. (Wikipedia)
4.2. Subsidy Glide Path and Price Stabilization Mechanisms
Rather than blunt subsidy removal, the government could adopt a gradual, transparent phase-out, offset by rebates or temporary vouchers for the poorest segments. Strategic food reserves, targeted fuel subsidies for transportation providers in rural regions, and market monitoring can dampen price shocks. Import parity pricing coupled with buffer stocks, especially for staples like rice, can reduce volatility.
4.3. Improve Budget Efficiency and Redirect Savings
Federal savings from subsidy removal, estimated at 2% of GDP, should be ring-fenced explicitly for social support and infrastructure in poor regions, rather than being diverted to recurrent expenditures or debt servicing. (Wikipedia) Improving capital expenditure execution, reducing slack in project delivery, and committing subnational allocations to transparent, visible projects (health clinics, rural roads, markets) will deliver tangible benefits.
4.4. Strengthen Anti-Corruption and Accountability Mechanisms
Deploy digital platforms for budget transparency (citizen dashboards, e-procurement) and community monitoring in States and LGAs to ensure funds translate to services. Encourage civic participation and transparency in resource deployment. Policymakers must prioritize accountability and deliver public goods rather than finger-pointing.
4.5. Expand Financial Inclusion and Digital Payments
With limited access to formal banking, the poor struggle to benefit from aid schemes. Expanding mobile money, simplifying registration, and leveraging AfriGo’s domestic scheme can enhance outreach, reduce leakage, and encourage inclusion. (Wikipedia)
4.6. Support Agricultural Productivity and Local Market Access
Given the inflationary pressure from food shortages, investment in farming infrastructure (irrigation, storage, logistics) and rural extension services can boost local supply and reduce rural poverty. However, security for farmers must be guaranteed because of banditry, kidnapping, and clashes with herders. Partnerships with private sector players in FMCG can help stabilize supply chains. In parallel, microcredit schemes for smallholder farmers and market infrastructure grants at the local level would improve resilience.
5. Why the Bubble Hasn’t Burst, Yet
Despite severe cost-of-living jumps, the Nigerian economy has not collapsed, and there is no uprising or revolt against the government. This resilience is attributable to several factors: substantial profits in key sectors (telecoms, banking, manufacturing), limited yet growing non-oil growth, and improved macroeconomic stability with tighter monetary policy and exchange-rate alignment. (Wikipedia, IMF, Financial Times, Reuters)
However, this stability is superficial. As long as inflation stays elevated and poverty deepens, the social fabric remains fragile, evident in tragic stampedes, rural isolation, and growing unrest. (meer.com, AP News, The Washington Post) Only deliberate, inclusive policy action can prevent a broader breakdown.
Conclusion
Nigeria stands at a critical point where courageous leadership is needed more than economic theory. The Federal and subnational governments must move swiftly to cushion people with low incomes through expanded, digitally delivered cash transfers, phased subsidy reforms, and targeted agricultural and infrastructure investments.
Funds freed by subsidy repeal must be deployed visibly and responsibly to restore trust. Transparent governance, strengthened accountability, and broader financial inclusion are essential to break the cycle of poverty and grow a stable middle class.
Meanwhile, Nigeria’s economic “bubble” persists thanks to resilient corporate profits and cautious macroeconomic support, but this fragile equilibrium cannot endure without deeper inclusion. The reform agenda must pivot from investor-facing rhetoric to citizen-focused action; only then can the bubble burst without breaking people with low incomes.
[Prof. Sarumi is the Chief Strategic Officer, LMS DT Consulting, Faculty, Prowess University, US, and ICLED Business School, and writes from Lagos, Nigeria. He is also a consultant in TVET and indigenous education systems, affiliated with the Global Adaptive Apprenticeship Model (GAAM) research consortium. Tel. +234 803 304 1421, Email: leadershipmgtservice@gmail.com.]
