Key Highlights
- Stabilizing FX: Create a flexible exchange rate policy to stabilize the foreign exchange market, encourage local production, and boost exports. This will benefit middle-class professionals and business owners who transact online and need to purchase materials not available in the country.
- Healthcare: Increase budgetary allocation for health to improve public health facilities, address brain drain among medical professionals, and ensure each local government has at least one General Hospital. This will help middle-class individuals access affordable healthcare and reduce reliance on expensive medical tourism.
- Housing: Address Nigeria’s housing deficit by improving existing housing units, introducing an effective mortgage system for middle-class earners, and partnering with the private sector to provide affordable housing units with tax incentives. This will make housing more accessible for middle-income earners in urban areas.
The long-anticipated 2023 general elections have come and gone as Nigerians look forward to the start of a new government, which will be the fifth (by the number of presidents sworn in) since the start of the fourth republic in 1999.
At the top of the list for a new democratic dispensation, are plans to improve the economy and improve the lives of its citizens. In every society and country, there exist social classes or strata which can be divided into the upper, middle, and lower classes. Hypothetically, social classes are often determined based on level of income, net worth, lifestyle, and area of residence, among other factors.
In Nigeria, the middle class is often seen as an important fabric of Nigerian society, socially and economically. They serve as a bridge between the other social classes which are distant. The middle class can be interpreted as the working class or slightly above, who have a job, or education and might own a property. There exists a varying degree of who the middle class is.
According to Visual Capitalist, the middle class represents 45% of the global population with 2.9 billion in 20220 and a projected 3.8 billion by 2030. In Nigeria, there’s a dearth of data on the middle class in correlation with the current economic realities of the country. A report in 2011 by Renaissance Capital, puts the middle class at 23% of the Nigerian economy with a monthly income between N75000 – N100,000. The president upon assumption of office should prioritize the middle class in the following ways;
Stabilizing FX
Every economy depends on the purchasing power of the consumer, and a healthy middle class is essential and serves as its foundation. In the last decade, Nigeria has been plagued with FX issues creating an imbalance with the exchange rate, such as the official and black market rates.
The Internet has grown from just social interaction sites to having commerce sites, and commercial activities even take place on social media. To buttress the point made earlier on the unavailability of data to reflect current economic realities, the 2011 report puts N100,000 around $645, with the current official rate, that amount is around $217.
The Nigerian middle class consists of professionals from different sectors of the private and public sectors, civil servants, MSMEs, and others. Stabilizing FX will go a long way to help a lot of these individuals who now transact online and business owners have to purchase materials not available in the country.
One such way is to create a flexible exchange rate policy through a reference rate to serve as the benchmark and also allow market forces to determine the rate. Also, the president should look towards production to ensure Nigeria starts producing some products than can be made in the country instead of importing and also encourage exports. Another way is to increase diaspora remittances into the country.
Hospitals
The popular aphorism “Health is Wealth” applies to the Nigerian middle class. According to Statista, life expectancy in Nigeria as of 2020 for males was 60 years, while the female was 63 years.
This makes Nigeria one of the countries in the world is an average or below-average life expectancy. In 2022, the Minister of Information and Culture, Alhaji Lai Mohammed, revealed that Nigerians spend between $1.2 and $1.6 billion on medical tourism annually. Furthermore, a 2022 report showed that Nigeria has 17 health facilities (across all levels) for 100,000 people, and 39914 operational hospitals and clinics.
In another issue, the country has 24,000 licensed medical doctors and would require at least 363,000 doctors to meet with WHOs recommendation of one doctor to 600 patients.
The middle class in the country uses public health facilities due to the high cost of private hospitals. The president should ensure the budgetary allocation for health is increased to meet the recommended benchmark. Also, a project which will see each local government in the country have at least one General Hospital, and some health centers should be embarked on.
In addressing the brain drain, the president should meet with the NMA heads to proffer solutions to Nigerian doctors moving abroad by creating an improved environment, better pay, and equipment to work with.
Housing
Nigeria currently has a housing deficit, with most middle-income earners unable to afford a one-room self-apartment in urban areas like Lagos and Abuja. According to several reports, Nigeria’s housing problems have increased in the last two decades and currently has a deficit of 22-28 million housing units deficits.
This means with a million units every year, it will take the country 22+ years to meet up with the deficit, and the government currently provides around 5% of the one million housing units projected annually. According to Nigeria Property Centre, a room bedroom could cost as high as N4 million in Lagos.
The housing problems for middle-income earners in places like Lagos have increased due to the proliferation of short lets, Airbnb, and others. The president should improve on the existing housing units that are being built across the country. Also, an effective mortgage system should be introduced to make it affordable for middle-class earners.
Also, a partnership could be reached with the private sector to provide housing units at affordable cost, with tax incentives for the private sector to provide this service.
Inflation
In April 2019, President Buhari signed the new minimum wage into law, which puts it at N30,000. There are over 10 states yet to implement four years after. In 2019, when the new minimum wage was signed into law, the inflation rate in the country was at 11.40%. In February 2023, the inflation rate has risen to almost 100 percent at 21.82%.
The president should look into diversification of the economy and creating favorable policies. Also, there should be a boost in food production, more infrastructure, and ease of doing business. Despite rising inflation, some Nigerian states still owe salaries, with only a handful consistent with payment of salaries monthly. Lagos State recently increased the salary of its workers.
Electricity
The Nigerian economy like every economy in the world is energy dependent. In 2022, erratic power supply cost the country around $28 billion, which represents 2% of GDP. Most businesses in the country due to erratic power supply, have resorted to providing electricity on their own.
The sound of generators is much present in major cities. The cost of fueling a business has also increased. For instance, in 2022, diesel moved from around N200 to N800, leaving the business to put the cost on its product. The president should ensure that the Nigeria-Siemens deal delivers.
Also, with the recent bill passed which gives states the power to generate electricity, the states should ensure they improve access and availability of electricity. The potential of renewable sources should be explored across the country to further improve electricity in the country.
The middle class is crucial to a country’s development. Improving and prioritizing them would ensure that the country continues its bid to lift more out of poverty.
