In Nigeria, prices continue to rise, while incomes and returns on savings are falling. Households and businesses are now under great pressure.

The purchasing power and savings of companies and households are under pressure in Nigeria, noted the Ecofin Agency from various analyzes published on the situation of inflation and the evolution of exchange rates. Purchasing power, which is the ability of businesses and individuals to consume goods and services with a specific amount of money, continued to deteriorate after the first half of 2020.

According to data from the National Bureau of Statistics of this country, inflation taken here as the general increase in the prices of goods and services within an economy has continued to rise. Overall, it reached 12.5% for all the goods analyzed, and nearly 15.8% for food products.

However, at the same time, the unemployment rate started to rise again. It is currently estimated by analysts at 27.1% compared to 21.7% two years ago. Finally, agricultural production, which employs and feeds hundreds of millions of people, has declined.

In this context of falling incomes for individuals and businesses and rising prices, the ability to consume is greatly reduced. Additional pressure is added. This is the depreciation of the naira, the local currency. It is now trading at more than 440 to the dollar on the parallel market which fuels a large volume of foreign exchange transactions. For an economy that imports nearly 75% of its consumption needs, this currency depreciation is a challenge.

With their incomes under pressure, households and businesses in Nigeria cannot even count on their savings of less than a year to secure comfortable capital gains. Despite a slight recovery since March 2020, the Lagos Stock Exchange remains on an overall decline in value since the beginning of the year.

Under these conditions, almost everyone flocked to government treasury bills and bonds where interest rates are falling and investors' returns (interest rate adjusted for price changes) have continued to rise. go down.

For 12-month bonds that pay 3.8% interest, you have to reckon with inflation, a gap of nearly 9.4% yield to fill. In January 2020, this difference was only 6.5%.

Clearly, the gain generated by lending one's money to the government, one of the safest investments, does not make it possible at the end of the year to be able to cope with the rise in prices. For local investors, this situation in Nigeria looks like an area of prolonged turbulence with the added bonus of permanent fears.