What many Nigerians can buy today is three times less of the usual consumption basket they could afford five years ago, thanks to the country’s high cost of living and its record high unemployment rate.

Nigeria’s misery index, an indicator used in determining how economically well off the citizens of a country are, has jumped to 50.48 percent in March 2021 from 14.75 percent in 2015. It is calculated by adding the seasonally adjusted unemployment rate to the annual inflation rate.

“Climbing misery index implies declining economic activity and reduced consumption,” Charles Akinbobola, an analyst at Sofidam Capital, said. Among the saddest countries in the world, Nigeria’s high level of unemployment and stubbornly high inflation mean that there is a mismatch in the cost of living and the earning capacity of its citizens.

While Nigeria’s inflation rate quickened to a 49-month high at 18.17 percent in March, a level that shows it is more expensive to live in Africa’s most populous nation today than it was in 2015, the unemployment rate, which worsened to 33.3 percent in Q4 2020, from 27.1 percent the previous quarter implies that Nigeria now has a stagflated economy, a situation of poor Nigerians getting poorer in real terms, and the middle class getting thin out.

While the impact of COVID-19 is easily blamed for the recent economic woes in Nigeria, an evaluation of the country’s macro-economic indicators before the pandemic exposes how the pandemic only made what was already a bad situation worse. Long before the pandemic started spreading across the globe late last year, Nigeria’s economy had been gasping for breath for five years.

Economic growth in Africa’s most populous nation averaged 1.2 percent between 2015 and 2019. The problem with that is the population grew two times faster at an average of 2.6 percent per year.

The government’s focus to further improve the ease of doing business in Nigeria is key if the current situation will change, according to Yinka Ademuwagun, research analyst, FMCGs, United Capital plc. “We believe the government or monetary authorities will need to go beyond pumping or injecting liquidity to stimulate growth across sectors,” Ademuwagun said, adding that the Nigerian government would need to “concentrate on driving productivity across sectors by leveraging technology.”

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