Calculating Nigeria’s new minimum wage—a complex dance

Life comes at you fast as a Nigerian consumer. One day, you're grappling with the challenge of providing for your family amidst soaring food prices devouring 56% of your income. And in the blink of an eye, petrol prices skyrocket, causing transportation costs to double. Now it’s harder to make ends meet and even commute to work to earn a meagre salary that can no longer sustain your family's needs.

It's the same for your employer, too. She faces the difficult decision of downsizing due to the escalating expenses of keeping the business running. Last year, when diesel prices tripled, she invested in a petrol generator to keep the lights on and passed on the additional costs to customers because, ultimately, someone had to bear the burden. Although sales initially suffered, they eventually bounced back. Now, she faces a similar predicament with the petrol generator, but the outlook is even bleaker as there’s no relief in sight.

Nigerian incomes are chasing the wind, trying to catch up with the increasing cost of living (and doing business).

President Tinuubu, in the last few weeks, implemented a couple of austere policies—which should improve the government’s fiscal position in the long run; but, in the short term, place a huge burden on Nigerian consumers and business owners.

The government is aware of Nigerians’ struggles. Plans have been announced to roll out palliatives to alleviate these policies’ impact. For instance, the president plans to increase the minimum wage to reflect the increased cost of living and roll out mass transit buses for the most vulnerable.