In an urgent address to the National Economic Council (NEC) on Tuesday, Nigeria’s Minister of Finance, Wale Edun, outlined the deep-rooted challenges Nigeria faces as inflation rates continue to climb, posing a significant threat to the nation’s economic stability.
Speaking at the Presidential Villa in Abuja, Edun highlighted the country’s dependency on imports and its vast informal economy as key drivers behind Nigeria’s unique inflation crisis.
According to Edun, the nation’s inflationary challenges are more severe than those of advanced economies, where inflation has largely stabilized.
Countries like the United States and many European nations have managed to bring their inflation rates close to target levels of around 2%.
Italy, for example, boasts inflation rates even lower than 1%.
This stability, Edun explained, is due to carefully balanced economic policies that foster both inflation control and continued growth.
“In our case, inflation remains high, growth is relatively low, and debt levels continue to challenge economic stability,” Edun said, pointing to Nigeria’s specific economic circumstances.
A Complex Inflation Crisis Exacerbated by Structural Issues
According to Edun, Nigeria’s inflation is “structural” in nature, which means it is embedded deeply in the country’s economic system and is not as easy to control as in more developed economies.
This structural inflation, he noted, is further compounded by Nigeria’s reliance on imported goods, which exposes the country to global price fluctuations and foreign exchange pressures.
A large informal economy—where transactions often occur outside formal financial channels—also makes inflation harder to monitor and manage.
Edun highlighted that inflation is only one of several challenges facing Nigeria’s economy, which has recently undergone a series of drastic reforms under President Bola Tinubu’s administration.
In his presentation, Edun defended the Tinubu administration’s decision to remove subsidies on petroleum and foreign exchange.
Previously, he explained, these subsidies cost the Nigerian government between $15 billion and $20 billion annually, which amounted to about 5% of the country’s GDP.
The elimination of these subsidies has freed up substantial funds, now redirected toward critical social and infrastructure projects.
However, Edun acknowledged that this move has led to a surge in living costs, particularly impacting Nigeria’s lower-income citizens who relied on these subsidies to ease their financial burdens.
Despite the short-term strain, Edun emphasized that redirecting subsidy funds is part of a broader strategy to improve Nigeria’s economic health and encourage self-sufficiency.
One significant change, according to Edun, is the government’s new policy requiring local refineries to pay for crude oil in Naira rather than foreign currencies.
This policy shift, implemented in October, has already generated around N700 billion monthly, which is funneled into the Federation Account to support key national projects.
Edun described this measure as a “fiscal boost,” adding that it also reduces Nigeria’s dependence on international oil prices, which are often volatile.
To ease the burden of rising inflation and living costs, Edun announced a range of welfare initiatives aimed at helping Nigeria’s most vulnerable citizens.
These include raising the minimum wage, offering direct financial assistance to low-income households, and providing wage support to low-income workers.
Through Nigeria’s social register, the government has provided financial support payments to approximately five million households, reaching around 25 million Nigerians.
These payments are processed biometrically to ensure the funds reach their intended recipients and to prevent fraud.
Affordable Loans and Credit Schemes for Nigerians
In addition to direct support, Edun introduced a consumer credit scheme allowing workers to access affordable loans for essential goods and services.
So far, over N3.5 billion has been disbursed to 11,000 beneficiaries to help them purchase compressed natural gas (CNG) kits, a more affordable and eco-friendly fuel option.
Additionally, Edun said the administration’s new student loan program has already benefited over 500,000 students, disbursing N90 billion to cover educational and living expenses.
These loans are part of the government’s strategy to alleviate financial strain on families struggling with high education costs.
Recognizing the critical impact of food inflation, the government has implemented measures to make staple foods more affordable and accessible.
Edun announced a program allowing rice millers to import brown rice duty-free, lowering processing costs and, ultimately, consumer prices.
The administration is also encouraging increased domestic production of staple crops like rice and wheat, with plans to support 600,000 farmers in upcoming planting seasons.
This program will provide farmers with subsidies on essential farming inputs like fertilizers, herbicides, and improved seeds, helping to increase crop yields and reduce dependency on imported food.
Given the importance of small businesses to Nigeria’s economy, Edun outlined nearly N50 billion in grants allocated to support micro-enterprises, with 90% of the funds already disbursed.
Small and medium-sized enterprises (SMEs) and large-scale industries are also being offered loans with a 9% interest rate to support growth and job creation.
Each loan is capped at N1 billion to avoid overwhelming businesses with debt, allowing them to grow sustainably.
