Nigeria’s lost purchasing power: How a decade of economic shocks changed money

Nigeria’s economy has undergone a profound transformation over the past decade, with currency depreciation, rising inflation, fuel subsidy removal and high interest rates eroding household purchasing power even as nominal wages, government revenue and financial market valuations increased.

A report by Comercio Partners, titled The Decade That Changed Money, examines Nigeria’s economic performance between 2016 and 2026, highlighting how successive oil shocks, the COVID-19 pandemic, global conflicts and domestic policy changes reshaped the economy, investment decisions and the cost of living.

The report found that the naira lost nearly 90% of its dollar value between 2015 and 2024, while headline inflation peaked at 34.8% in December 2024.

Nigeria also spent more than N21 trillion on fuel subsidies between 2005 and 2023, according to the Nigeria Extractive Industries Transparency Initiative.

Although macroeconomic conditions have become more stable since the turbulence of 2023 and 2024, the report cautioned that stabilisation does not automatically translate into improved living standards.

Oil shocks, currency reforms and inflation

Nigeria’s economic challenges unfolded in three broad phases. Between 2016 and 2019, falling oil prices and disruptions to crude production triggered a recession, foreign exchange restrictions and rising inflation. The introduction of the Investors’ and Exporters’ foreign exchange window in 2017 supported a tentative recovery, but structural weaknesses persisted.

The COVID-19 pandemic caused another recession in 2020, prompting a ₦2.3 trillion Economic Sustainability Plan and monetary easing. While the economy returned to growth in 2021, the report argued that the recovery was shallow, with weak oil production and rising inflation undermining its benefits.

Between 2022 and 2026, global inflationary pressures, domestic supply constraints and long-delayed economic reforms converged. The removal of petrol subsidies in May 2023 and the unification of foreign exchange windows triggered sharp price and currency adjustments.

The Central Bank of Nigeria subsequently raised its Monetary Policy Rate from 11.5% in 2022 to 27.5% in 2024 to contain inflation and restore confidence. Inflation reached 34.8% in 2024, while the naira weakened to around ₦1,534 per dollar at the end of that year.

Conditions improved in 2025, when reported inflation fell to 15.15% by December following a rebasing of the Consumer Price Index. External reserves reached about $45 billion, while the naira strengthened. By May 2026, the report put the exchange rate at approximately ₦1,370 per dollar and the Nigerian Exchange All Share Index’s year-to-date gain at 55.7%.

However, the report noted that inflation began rising again in early 2026, demonstrating the economy’s continued vulnerability to external shocks.

Wages rise as household purchasing power falls

Despite successive minimum wage increases, the cost of essential goods and services has outpaced income growth for many Nigerians.

The national minimum wage rose from N18,000 in 2015 to N70,000 in 2024. However, the report estimated that cumulative inflation between 2020 and 2025 reached 152.7%, exceeding nominal minimum wage growth over the decade.

The pressure has been particularly severe in food, housing, transportation, education and healthcare. Food inflation reached 40.87% year-on-year in June 2024, while petrol prices climbed from approximately N87 per litre in 2015 to N1,239 in April 2025.

In Lagos, rents increased sharply, with some neighbourhoods recording increases of up to 200% over the 24 months leading to early 2026. The report estimated that rent could absorb about 70% of household income, significantly above the commonly cited 30% affordability benchmark.

The report also highlighted the growing burden of mobile data, school fees and medical expenses, with currency depreciation increasing the cost of imported inputs and services.

These pressures have forced households to cut spending, defer medical treatment, move to cheaper neighbourhoods and adjust consumption. The report noted that lower inflation does not mean prices have fallen, but rather that they are increasing more slowly.

Investors shift from yield to wealth preservation

Nigeria’s financial markets also experienced a fundamental shift as investors responded to currency weakness and persistent inflation.

Treasury bills and other fixed income instruments frequently delivered negative real returns between 2020 and 2025. In 2024, for example, the average one-year Treasury bill yield was 16%, against inflation of 33.2%, resulting in a negative real return of approximately 17.2%.

Equities performed better in several years, with the NGX All Share Index returning 51.2% in 2025 against inflation of 23.33%. However, the report warned that positive nominal returns do not necessarily translate into increased purchasing power.

Companies with pricing power, dollar-linked earnings, strong dividend capacity and hard assets were better positioned to withstand inflation. Telecommunications, consumer goods, banking and oil and gas businesses featured among the sectors with characteristics that helped protect value.

Property owners also benefited from rising replacement costs and rental income, while prospective buyers, developers and tenants faced higher acquisition, construction and financing costs.

The report described this as a widening divide between asset owners, who were better positioned to preserve wealth, and households dependent on wages or low-yield savings.

Fiscal pressures and insecurity remain major risks

Despite improvements in tax collection, Nigeria’s fiscal position remains constrained by debt servicing and a narrow revenue base.

The report cited an estimated debt-service-to-revenue ratio of 53.2% in 2025, meaning a substantial share of government revenue was absorbed by debt obligations rather than infrastructure and public services.

It also identified insecurity as a major economic risk, particularly because violence disrupts agricultural production, increases logistics costs and discourages investment. Oil theft and pipeline vandalism further weaken government revenue.

The approach of the 2027 general elections presents another risk, as political pressure could weaken the consistency of reforms that have imposed substantial costs on households and businesses.

Productivity will determine the next decade

Comercio Partners argued that Nigeria’s next phase of growth will depend on translating macroeconomic stability into higher productivity, stronger exports and better public services.

The report called for more effective public spending on power, transport infrastructure, education, healthcare, security and digital infrastructure. It also highlighted the need to expand non-oil exports and direct affordable, long-term financing towards agriculture, manufacturing, logistics and small businesses.

For households, it recommended building emergency savings, budgeting around actual living costs, setting separate savings goals and evaluating investments based on inflation-adjusted returns rather than nominal gains alone.

The report said digital financial services, regulated investment products and cooperative savings structures could help Nigerians manage economic uncertainty, but sustained progress would depend on financial discipline and consistent planning.