Ifeanyi Caleb, a 35-year-old analyst in a finance firm, bought a wristwatch for N12, 000 in October, 2024. In the corresponding period of 2023, the price of this watch was N4, 500.
Hence in just one year, the price had jumped nearly three times. The reason was not far-fetched. The wristwatch was imported from the United States and the foreign exchange crisis in Nigeria meant it would be expensive.
In dollar terms, the selling price was $7.5, but about 12,000 in naira
“It is very expensive to buy imported or even local items,” he said.
“We not only battle with the foreign exchange crisis but also inflation,” he noted.
Read also: How Nigeria VAT reforms will reduce inflation
“I’m not yet married, yet I find it difficult to provide daily needs. The cost of transportation has skyrocketed in recent months, impacting about 49 percent of my salary. I have to still feed and take care of other issues,” he told BusinessDay.
Mariam Adetayo, a mother of three, said economic hardship has significantly reduced her disposable income.
“Every time I go to the market, I notice that prices have doubled or tripled. My salary hasn’t increased in years, but feeding my family now costs almost everything I earn.”
Adetayo said she is not satisfied with her earnings because the cost of living in Nigeria has jumped.
The Duplo 2024 Salary Report revealed that 90.7 percent of Nigerians said that exchange rate fluctuations and inflation had negatively impacted their earnings.
“High inflation and frequent naira fluctuations are pushing professionals to seek roles that can better hedge against these effects, whether through FX-linked compensation or opportunities abroad,” it said.
A survey carried out among 593 finance professionals in Nigeria revealed that 91.6 percent have been affected negatively by these economic indices, with only 8.4 percent positively satisfied with their earnings.
“Despite efforts by finance professionals to adapt to Nigeria’s inflationary environment, satisfaction with compensation packages remains notably low,” it said.
KPMG, in a recent report, noted that Nigeria’s inflation rate has eroded real wages and purchasing power.
According to the National Bureau of Statistics, Nigeria’s inflation rate remained among the highest in Africa in 2023.
The NBS data show that Nigeria’s annual inflation increased to 33.88 percent in October from 32.70 percent reported in September 2024.
According to analysts, this was driven by high petrol prices and reduced food supply resulting from logistics and transportation costs.
The Financial Derivatives Company (FDC) said in its recent economic bulletin that the impact of the naira in the forex market has been profound.
Similarly, analysts at CSL Stockbrokers said that the increase in inflation is as a result of the increase in pump petrol price and depreciation of the naira.
“For core inflation, it is expected that the lagged effect of the recent increases in petrol pump prices and the continued depreciation of the Naira in the period would exert upward pressure, contributing to a month-on-month increase,” they said.
Data from FMDQ Securities Exchange Limited show that the naira was quoted N1,535 on December 6 in the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Yele Oyekola, CEO and co-founder of Duplo, said, “Chief finance officers and finance leaders need to prioritise transparent and inflation-adjusted compensation packages to mitigate the current economic pressures and give themselves the best chance of retaining talent.”
Oyekola further said, “Beyond salaries, organisations can explore innovative benefits such as flexible work arrangements, performance-based incentives, and adequate technology solutions to retain and get the best from top talent without overburdening their budgets. Employee upskilling can also drive higher levels of engagement that is critical to fostering loyalty and maintaining a competitive edge in the marketplace.”
In September 2024, GTBank, Nigeria’s most cost-efficient commercial bank, raised staff salaries by 40 percent, responding to the ongoing cost-of-living crisis.
Similarly, BusinessDay reported that Nigeria’s firms have seen their salary bill rise to the highest in at least nine years, as they scramble to retain employees amid soaring inflation.
According to the Nigerian Gross Domestic Product Report (Expenditure and Income Approach) report by the NBS, the compensation of employees rose by 77.7 percent to N28.26 trillion last year from N15.9 trillion in 2015.
“The increase in salaries shows companies’ investments for employees in light of some of the macroeconomic challenges. Inflation has gone up and companies, especially in the banking sector, have revised their salaries,” Omobola Adu, an economist at BancTrust & Co, said.
Israel Odubola, a Lagos-based research economist, said that some banks took it upon themselves to increase personnel costs so that their human resources would not be affected by the cost-of-living crisis.
BusinessDay reported that the nine-month financials of listed Nigerian banks showed that between January and September 2024, 11 banks spent N1.08 trillion on wages and salaries, marking a 91 percent year-on-year growth from the N564.7 billion spent by these banks within the period in 2023.
Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reforms Committee, at Channels Television’s town hall meeting on tax reforms last Monday, said: “Taxes also burden Nigerians. The average household in Nigeria today spends 52 percent of its income just to eat. The lower you go down the ladder, the higher that percentage. So, we do not think that anybody should have to suffer hunger because of taxes.”
