The middle class has long been considered a pillar of economic progress and stability in any community. However, as rising inflation and stagnating salaries reduce purchasing power, this crucial group is coming under increasing strain in Nigeria.
Nigeria’s middle class, which formerly drove innovation and consumption, is fast declining. This reflects underlying economic issues endangering the country’s long-term progress.
The growing disparity between inflation and income growth is at the core of economic decline. Nigeria has experienced ongoing inflationary pressures over the past 10 years, as the cost of housing, food, and energy has increased significantly in terms of income levels.
Many middle-class households are finding it difficult to maintain their quality of living as a result of this discrepancy. With more families falling into lower economic groups, the middle class is now struggling with downward mobility rather than upward mobility.
This tendency has broad ramifications for both businesses and the whole economy. Consumer spending, the lifeblood of important industries like manufacturing, real estate, and retail, will decline as the middle class shrinks.
Understanding this change is essential for businesses and entrepreneurs alike to modify their tactics to satisfy the changing demands of a more budget-conscious clientele.
In addition to affecting household spending, the decline in disposable income also restricts opportunities for investments in healthcare, education, and other vital sectors, further impedes economic growth.
Last year, Abdulhakim Alfa, a father of two, could purchase clothing and other household items and stock up on food for the month.
However, he can only buy daily food items and can no longer afford clothing or household products because inflation has reached a 28-year high.
Christian Isah, a supervisor in Abuja, stated, “I can’t afford to stock up as I used to, so I now shop for a meal.”
Experts claim that real salaries in Nigeria have dropped by more than 100%, putting Nigerians under increasing strain every day and requiring them to make difficult decisions as the cost of goods keeps rising.
Abdulhakim and Christian, like millions of middle-class workers nationwide, are suffering from Nigeria’s rapidly rising inflation, which has severely reduced their incomes and purchasing power.
It is stated that a portion of Nigeria’s middle class has been wiped away as their purchasing power has plummeted due to the skyrocketing costs of everything from food to stationery.
The most recent half-yearly assessment report from the Manufacturers Association of Nigeria (MAN) shows a sharp decline in Nigerians’ expenditure.
According to MAN, the manufacturing sector’s unsold goods inventory increased to N1.24 trillion in the first half of 2024, a 357.6% increase from last year when Nigerians had more money to spend.
Nigeria is experiencing its biggest cost-of-living problem in decades, exacerbated by the elimination of subsidies, depreciation of the naira, and the growing effects of climate change and insecurity.
Experts claim that the confluence of all these problems has mostly destroyed the nation’s middle class, keeping inflation in the double digits.
According to Uchenna Uzor, a marketing professor and academic director of the Africa Retail Academy at LBS, “the middle class in Nigeria has been severely impacted and is going extinct as a result of stagnant income and rising prices.”
“They have dropped either to the aspiring middle class or to the bottom of the pyramid. But the good news is that they have retained their spending habits, even though they now buy less of everything,” he said.
According to the World Bank’s most recent Nigeria Development Update report, poverty has temporarily increased due to rising inflation’s impact on purchasing power.
According to the international financial organization, at least 129 million Nigerians, the most populous nation in Africa, live below the national poverty line.
Rising costs and stagnant income growth are burdening households. Most Nigerians live hand-to-mouth, meaning they spend almost all of their income on daily necessities and have little to no extra money to invest or put in a savings account.
Based on a recent survey by the National Bureau of Statistics, 133 million Nigerians live in multidimensional poverty. This means that two out of three individuals are impoverished and suffer from just over 25% of deprivations in areas including employment, health, and standard of living.
According to the statistics office, inflation reached 33.8 percent in October 2024, the highest level in recent memory.
