Nigeria: An economic shadow over a political year
In a political year, however, nothing can be taken for granted, which is why President Jonathan Goodluck who is seeking another term in the upcoming elections moved with lightning speed to admonish state-owned energy company for unilaterally raising the price of liquefied petroleum gas, typically used for cooking, citing an unnecessary burden on the Nigerians.The name of the game may no longer just be personality, but the ability to deliver prosperity. Multiple studies have shown that Nigerians are less optimistic these days as the country basks in the global spotlight for all the wrong reasons from abductions of more than 200 school going children to corruption scandals.The Nigerian economy may have slowed over the past few months and is unlikely to record the huge growth this year that it has registered in the past four years. However, consumption remains strong and domestic spending is still buoyant.The emergence of the middle class and its tremendous potential, according to a recent report, has been the main driver of growth over the past six years. There are an estimated 30 million Nigerians who ate today considered to be middle class.This number is expected to double over the next 10 years, creating one of the largest domestic markets in the world.The report notes that middle-class households spend 25 percent of their income on housing and 10 percent on food and household items.Transportation takes up 10 percent and entertainment 15 percent. Education only takes up 3 percent while health care and others takes up the rest.
The definition of the middle class, however, remains rather loose. By and large, the middle class in Nigeria includes the lower middle class, for whom food takes up a larger chunk of the household budget. This group is therefore highly sensitive to increases in the price of foods such as chicken, beef and vegetables.But although inflation has risen in the recent months, mainly because of the depreciation of the Naira, the Nigerian consumer remains resilient and consumer confidence remains high.Independent experts argues that the company was well within its legal rights to raise the price, given that it has been incurring heavy losses on the product due falling International prices of the oil in the global markets. No political leader, especially one standing in the legislative election in February 20th election which could be postponed according to reports in Nigerian media or the presidential election can afford to be seen as being insensitive, or worse, unsympathetic, to the aspirations and concerns of the growing influential middle class.Nigerian consumers will have to brace themselves for significant price increases this year as producers and importers adjust to the new level of the Naira against the US dollar.The Naira depreciation against the greenback means that apart from LPG and fuel prices, Nigerian consumers will have to pay more for electricity, electronic goods such as Tv sets, mobile phones; clothing; and food.With the US ending tapering policy, the Naira is unlikely to strengthen before the elections slated for Friday next week on 20th February 2015. Politicians vying for public office must therefore attempt to convince voters that they will do everything in their power to keep prices from rising, even if it means expanding the budget deficit.
This brings me to the question of just how much the Nigerian economy will affect the public mood and thus influence the political climate. The short-term economic outlook in 2015 does not look too promising as the headline numbers are still in negative path, which means consumer confidence could slide further if election on February 20th doesn’t produce an outright winner. So while the presidential candidates keep their sights firmly fixed on the long term and fulfilling Nigeria’s undoubted potential, they must also find answers to Africa’s largest economy shorter-term challenges. The voters, especially the lower middle class, will be more concerned about whether they can continue to afford the few luxuries they have enjoyed to date and more pressing concern which is the terror threat posed by terror group, Boko Haram that killed more than 2000 people in 2014 alone according to an International report released last month.The 2015 elections will be defining in many ways. It could mark the transfer of power to a new cohort of political leaders who have cut their teeth in the post-military dictatorship era; the emergence of 20 million young voters, many of whom will be voting for the first time and they will determine whether Nigeria takes off and becomes a developed economy like South Africa or other G20 countries.Politics has a great deal of influence on the Nigerian economy, but the economy will also influence politics in 2015. The candidate who can best meet the aspirations of the Nigerian, especially the new middle class, stands the best chance of winning.