THE IMPACT OF ECONOMIC DOWNTURN OF THE STANDARD OF LIVING IN NIGERIA (EVIDENCE FROM THE TINUBU ADMINISTRATION).

CHAPTER ONE

INTRODUCTION

Background of the Study

Nigeria, which is Africa’s most populous country and largest economy has faces numerous economic challenges as a result of its dependence in the exploration and exportation of crude oil, making it a mono-economy. Despite efforts to diversify the economy, progress has been slow, and non-oil sectors have not developed sufficiently to buffer against external shocks (OECD, 2023). This economic downturn has led to low economic growth, widespread unemployment, and high inflation rate (World Bank, 2022). An economic downturn is a period of slowed economic activity marked by declining GDP, reduced global demand, sluggish job growth, increased borrowing costs, and reduced credit availability. An economic downturn can occur within a nation, a region, or on a global scale4. An economic downturn can last for a few months or longer, and is usually followed by a recovery. An economic downturn that lasts for at least six months is called a recession (Market Business New, 2024). Economic downturn has negative connotations for Nigerians, as it affects their standard of living, and also the purchasing power of its citizenry. The country’s economic woes have been exacerbated by declining oil prices, political instability, and poor economic management (OPEC, 2022).

According to the National Bureau of Statistics, Nigeria's inflation rate reached 22.8% in June 2023, driven by rising food prices and currency devaluation (NBS, 2023). The rising unemployment rate has further worsened the economic woes of Nigerian, with the National Bureau of Statistics reporting an unemployment rate of 33.3% in the first quarter of 2023. The economic downturn has exacerbated job losses, particularly in sectors like manufacturing and services, which have been hit hard by reduced consumer spending and investment (NBS, 2023). According to a report by the World Bank, approximately 40% of Nigerians live below the poverty line, and the economic crisis has pushed more people into poverty (World Bank, 2023). Also, the education sector has suffered, with many schools lacking the necessary resources and infrastructure to provide quality education (UNICEF, 2023).

The Tinubu led administration which took over power in May, 2024, has tried its best to implement programs and policies to help cushion the effect of the economic downturn on the standard of living of Nigerian. This administration has implemented initiative like monetary tightening measures by the Central Bank of Nigeria to control inflation, fiscal reforms to increase government revenue, and social investment programs to support vulnerable populations. Critics argue that some measures, such as the removal of fuel subsidies, have had adverse short-term effects on the poor and middle class, exacerbating the economic hardship (Financial Times, 2023). 

1.2 Statement of the Study

The economic woes facing the nation of Nigeria is as a result of past administrations poor economic management framework, in previous administration, the Nigerian economy has been plagued with malpractices ranging from embellishments, corruption, political racketeering, and a total disregard for the plight of the common man (World Bank, 2023). Economic downturns often lead to significant declines in living standards, characterized by reduced purchasing power, job losses, and strained public services (World Bank, 2023).  In a study by Hoseni (2023) an economic downturn significantly erodes the standard of living. Rising prices for essentials like food, housing, and transportation outpace stagnant or declining wages, leaving individuals with less disposable income. Zaki & Samantha (2023) highlighted that job losses due to the hard time affecting organization thus retrenching their staffs has exacerbate financial strain on common man. The impact extends beyond finances, as reduced access to healthcare, education, and social services becomes a reality. This creates a vicious cycle where people are forced to make difficult choices, often sacrificing necessities for survival. Moreover, the psychological toll of economic hardship cannot be overstated. Increased stress, anxiety, and depression become prevalent as individuals struggle to cope with uncertainty and financial instability. This can lead to further deterioration in physical and mental health, creating a ripple effect throughout society.

The current administration led by President Bola Tinubu, has led initiatives to curb the challenges Nigerians face with the dwindling economy. But this has seen little to know significant effect on the standard of living in Nigeria. Arguably, some may say the economic situation is even worse under the present administration led by President Tinubu. Critics argue that some measures, such as the removal of fuel subsidies, have had adverse short-term effects on the poor and middle class, exacerbating the economic hardship (Financial Times, 2023). It is therefore necessary to study the impact economic downturn has on the standard of living in Nigeria, so we can proffer relevant solution, initiatives, programs, and policies to help mitigate he effect this has on the lives of Nigerian.

1.3 Objectives of the Study

The primary objective of the study is to ascertain the impact of economic downturn of the standard of living in Nigeria (evidence from the Tinubu administration). Other specific objectives include:

Determine the extent economic downturn has affected the house hold income of Nigerian.

Determine the extent economic downturn has affected the quality of food and clothing in Nigeria.

Determine the extent economic downturn has affected the quality of education in Nigeria.

Determine the extent economic downturn has affected the access to healthcare in Nigeria.

1.4 Research Questions

To what extent does economic downturn affect the house hold income of Nigerians?

To what extent does economic downturn affect the quality of food and clothing in Nigeria?

To what extent does economic downturn affect the quality of education in Nigeria?

To what extent does economic downturn affect the access to health care in Nigeria?

1.5 Research Hypotheses

H0: Economic downturn does not affect the house hold income of Nigerian.

H1: Economic downturn affects the house hold income of Nigerian.

1.6 Significance of the Study

For the government, it provides crucial data to inform policies aimed at mitigating the negative effects of economic crises. By understanding the specific challenges faced by citizens, policymakers can design targeted interventions, such as social safety nets and economic diversification strategies. Businesses can leverage the study's findings to develop robust risk management plans, adapt to changing market conditions, and ensure business continuity during downturns.

Furthermore, the research benefits individuals and households by raising awareness about financial management and providing coping strategies for economic hardships. On a broader scale, the study contributes to knowledge advancement, informs policy recommendations, and ultimately contributes to improving the overall quality of life for Nigerians. By understanding the complex relationship between economic downturns and living standards, stakeholders can work collaboratively to build a more resilient and equitable society

The study will shed more light on the impact of economic downturn on the standard of living in Nigeria (evidence from the Tinubu administration), The result from this study will contributes immensely to the body of academic knowledge and serve as a reference for student and scholars who wishes to conduct further studies in related field.

Scope of the Study

This study will focus on the impact of economic downturn of the standard of living in Nigeria (evidence from the Tinubu administration). Empirically, this study will determine the extent economic downturn has affected the house hold income of Nigerian, determine the extent economic downturn has affected the quality of food and clothing in Nigeria, determine the extent economic downturn has affected the quality of education in Nigeria, and determine the extent economic downturn has affected the access to healthcare in Nigeria.

This study will be carried out in Nigeria.

1.8 Limitation of the Study

The study may not be carried out for an extensive period of time to ascertain the impact of economic downturn of the standard of living in Nigeria (evidence from the Tinubu administration).The sample size is also limited to the current administration which may not reflect the overall role past administration has played on the impact of economic downturn of the standard of living in Nigeria (evidence from the Tinubu administration). The study relies of self-reported data, which is subject to biases, errors and inaccuracies.

Definition of Terms

Economic downturn:  An economic downturn is a period of slowed economic activity marked by declining GDP, reduced global demand, sluggish job growth, increased borrowing costs, and reduced credit availability.

Inflation: It is a situation of rising prices in the economy.

Administration: Administration in government refers to the management of a government or large institution. In American usage, the term generally refers to the executive branch under a specific president or the term of a particular executive. It can also refer to the period when a President is in office. Administration can also refer to the people who are in government.

Standard of living: is a term that reflects the material well-being of a population or a region. It is based on the amount and availability of goods and services that are produced and purchased by the people. It is often measured using indicators such as GDP per capita, income, life expectancy, and economic opportunity. Standard of living is considered to influence the quality of life of the people.