The Nigeria Economy
HOW ARE NIGERIANS REALLY SURVIVING? (The Three Economies of Nigeria)
A few days ago in Virginia, I got into an Uber.
The driver was Turkish
Like many Uber rides, the conversation quickly moved from where I was from to what Nigeria was like.
Then he asked me a question that sounded simple
"What is the average monthly income in Nigeria?"
I smiled
Because I knew that answering that question properly would require explaining Nigeria itself.
I told him Nigeria's national minimum wage is ₦70,000 per month (US$51)
He looked genuinely surprised
I then explained that while incomes vary across sectors and regions, a large proportion of Nigerians earn between ₦70,000 and ₦250,000 ($51 - $181) per month, an income range that falls far short of what is required to maintain a modest standard of living in cities like Lagos.
He paused
Then asked another question
"If someone like me wanted to relocate to Lagos tomorrow, how much would I need every month to live?"
I told him that for a modest middle class lifestyle in Lagos, after accounting for accommodation, food, transportation, utilities, communication, healthcare and other everyday expenses, he should realistically budget somewhere between ₦700,000 and ₦1,000,000 per month (US$507 to US$725), depending on where he lives and his lifestyle choices.
He looked at me again
Then laughed
"So you're telling me that many people earn around ₦70,000 to ₦250,000, but realistically need around ₦700,000 to ₦1,000,000 to maintain a modest life?"
Exactly!
That is where Nigeria becomes one of the most fascinating economies in the world.
On paper...
The mathematics simply DOES NOT ADD UP!
The economist in me wanted to explain it with numbers
The Nigerian in me knew the answer was far more complex.
Yet millions of Nigerians somehow survive
Many even appear to thrive.
So I explained to him that Nigeria does not operate with just one economy.
In reality...
Nigeria operates with at least THREE ECONOMIES
Most countries have all three.
What makes Nigeria particularly interesting is the sheer size and influence of the second and, arguably, the third economy on everyday life.
THE FIRST IS THE FORMAL ECONOMY
This is the economy governments like to measure.
Registered companies
Banks
Manufacturers
Corporate organisations
Government ministries
Tax paying businesses
Employees on payroll
This is the economy captured in GDP reports, tax records, payroll systems and official statistics.
THEN COMES THE INFORMAL ECONOMY
This is where Nigeria becomes different
The mechanic
The market trader
The artisan
The roadside food vendor
The tailor
The POS operator
The commercial driver
The consultant
The freelancer
The civil servant with another business
The banker importing phones
The teacher running lesson classes after work
The engineer farming on weekends
Millions of Nigerians earn income from multiple legal activities outside the formal regulatory system
This economy is legal
It simply operates outside much of the government's formal structures.
For many households, the side hustle is no longer supplementary
It has BECOME THE ECONOMY ITSELF!
Various estimates suggest that Nigeria's informal economy ACCOUNTS FOR WELL OVER 50% OF ECONOMIC ACTIVITY AND PROVIDES LIVELIHOODS FOR THE MAJORITY OF WORKERS!
But there is another economy
The one we hardly discuss publicly...
THE ILL3GAL OR UNDERGROUND ECONOMY
This consists of proceeds from activities such as Yah00 Yah00 and other forms of internet fr@ud, corrvption, oil th3ft, k!dn@pping for rans0m, drvg trafficking, ill3gal mining, smvggl!ng, hvman traff!cking, pr0st!tution, commercial s3xval expl0itation, identity th3ft, cyb3rcr!me, financial sc@ms, c0unterfe!ting, ill3gal g@mbling operations, arm$ traff!cking, m0ney l@undering and other cr!m!nal enterprises.
Perhaps the most w0rrying development is not the existence of these activities, but how society increasingly perceives them. Activities that are clearly unlawful or expl0itative are NOW BEING CELEBRATED OR JUSTIFIED by some as legitimate ways of "making money" or "hustling." As our moral fabric continues to erode, the line between what is legal, what is socially acceptable and what is simply profitable is becoming increasingly blurred. Whether we admit it or not, this has profound implications for our values, our economy and the kind of society we are building.
Well, economists distinguish this from the informal economy because the activities themselves are unlawful.
Yet money rarely remains where it is earned
It moves
It circulates
It enters legitimate businesses
It books hotel rooms
It rents premium Airbnbs
It buys luxury vehicles
It purchases designer fashion
It fills lounges and nightclubs
It pays for expensive vacations
It sponsors concerts
It supports restaurants
It buys jewellery and watches
It pays school fees
It acquires real estate
Once that money enters circulation, separating legal spending from ill3gal origins becomes extremely d!fficvlt.
This is where the conversation becomes unc0mfortable
Visible prosperity is not always the same as productive prosperity.
Sometimes we m!stake spending for wealth.
Sometimes we m!stake consumption for productivity.
Sometimes we assume an economy is healthy simply because expensive restaurants are full...
Luxury cars are everywhere...
Hotels are fully booked...
Nightlife is booming...
Designer stores are busy...
Premium apartments are occupied...
YET beneath all that visible activity...
Manufacturing strvggles
Productivity remains weak
Exports remain limited
Millions of workers CANNOT SUSTAIN THEMSELVES ON THEIR SALARIES ALONE!
Which raises a question that I have never seen discussed honestly
WHERE EXACTLY is Nigeria's purchasing power coming from?
Because if a large proportion of Nigerians earn somewhere between ₦70,000 and ₦250,000 every month...
Yet a modest middle class lifestyle in Lagos can easily require between ₦700,000 and ₦1,000,000 every month...
Then something else must be filling that gap!
Part of the answer is obvious
Multiple jobs
Family support
Side businesses
Diaspora remittances
Entrepreneurship
The enormous informal economy
But is that the complete answer?
Or is there another conversation we have been unwilling to have?
Could part of the answer also lie in the purchasing power generated by the underground economy, money that eventually finds its way into legitimate businesses and fuels visible consumption?
IF NIGERIA'S UNDERGROUND ECONOMY DISAPPEARED TOMORROW...
How much of what we currently celebrate as economic vibrancy would remain exactly the same???
Would every sector continue unchanged?
Would some sectors experience a noticeable decl!ne in demand?
Would luxury consumption look different?
I do not claim to know the precise answers
Neither should anyone else without robust evidence.
But I believe these are questions worthy of national debate.
Because until we understand where purchasing power comes from...
We may continue measuring Nigeria's economy by what people spend...
INSTEAD OF WHAT THE COUNTRY ACTUALLY PRODUCES.
Perhaps Nigeria's greatest economic paradox is not that many people are p00r
It is that visible prosperity often appears disconnected from measurable productivity.
And until we understand that paradox...
We may never truly understand the Nigerian economy.
What are your thoughts?
- Abiodun Adetula
HOW ARE NIGERIANS REALLY SURVIVING? (The Three Economies of Nigeria)
A few days ago in Virginia, I got into an Uber.
The driver was Turkish
Like many Uber rides, the conversation quickly moved from where I was from to what Nigeria was like.
Then he asked me a question that sounded simple
"What is the average monthly income in Nigeria?"
I smiled
Because I knew that answering that question properly would require explaining Nigeria itself.
I told him Nigeria's national minimum wage is ₦70,000 per month (US$51)
He looked genuinely surprised
I then explained that while incomes vary across sectors and regions, a large proportion of Nigerians earn between ₦70,000 and ₦250,000 ($51 - $181) per month, an income range that falls far short of what is required to maintain a modest standard of living in cities like Lagos.
He paused
Then asked another question
"If someone like me wanted to relocate to Lagos tomorrow, how much would I need every month to live?"
I told him that for a modest middle class lifestyle in Lagos, after accounting for accommodation, food, transportation, utilities, communication, healthcare and other everyday expenses, he should realistically budget somewhere between ₦700,000 and ₦1,000,000 per month (US$507 to US$725), depending on where he lives and his lifestyle choices.
He looked at me again
Then laughed
"So you're telling me that many people earn around ₦70,000 to ₦250,000, but realistically need around ₦700,000 to ₦1,000,000 to maintain a modest life?"
Exactly!
That is where Nigeria becomes one of the most fascinating economies in the world.
On paper...
The mathematics simply DOES NOT ADD UP!
The economist in me wanted to explain it with numbers
The Nigerian in me knew the answer was far more complex.
Yet millions of Nigerians somehow survive
Many even appear to thrive.
So I explained to him that Nigeria does not operate with just one economy.
In reality...
Nigeria operates with at least THREE ECONOMIES
Most countries have all three.
What makes Nigeria particularly interesting is the sheer size and influence of the second and, arguably, the third economy on everyday life.
THE FIRST IS THE FORMAL ECONOMY
This is the economy governments like to measure.
Registered companies
Banks
Manufacturers
Corporate organisations
Government ministries
Tax paying businesses
Employees on payroll
This is the economy captured in GDP reports, tax records, payroll systems and official statistics.
THEN COMES THE INFORMAL ECONOMY
This is where Nigeria becomes different
The mechanic
The market trader
The artisan
The roadside food vendor
The tailor
The POS operator
The commercial driver
The consultant
The freelancer
The civil servant with another business
The banker importing phones
The teacher running lesson classes after work
The engineer farming on weekends
Millions of Nigerians earn income from multiple legal activities outside the formal regulatory system
This economy is legal
It simply operates outside much of the government's formal structures.
For many households, the side hustle is no longer supplementary
It has BECOME THE ECONOMY ITSELF!
Various estimates suggest that Nigeria's informal economy ACCOUNTS FOR WELL OVER 50% OF ECONOMIC ACTIVITY AND PROVIDES LIVELIHOODS FOR THE MAJORITY OF WORKERS!
But there is another economy
The one we hardly discuss publicly...
THE ILL3GAL OR UNDERGROUND ECONOMY
This consists of proceeds from activities such as Yah00 Yah00 and other forms of internet fr@ud, corrvption, oil th3ft, k!dn@pping for rans0m, drvg trafficking, ill3gal mining, smvggl!ng, hvman traff!cking, pr0st!tution, commercial s3xval expl0itation, identity th3ft, cyb3rcr!me, financial sc@ms, c0unterfe!ting, ill3gal g@mbling operations, arm$ traff!cking, m0ney l@undering and other cr!m!nal enterprises.
Perhaps the most w0rrying development is not the existence of these activities, but how society increasingly perceives them. Activities that are clearly unlawful or expl0itative are NOW BEING CELEBRATED OR JUSTIFIED by some as legitimate ways of "making money" or "hustling." As our moral fabric continues to erode, the line between what is legal, what is socially acceptable and what is simply profitable is becoming increasingly blurred. Whether we admit it or not, this has profound implications for our values, our economy and the kind of society we are building.
Well, economists distinguish this from the informal economy because the activities themselves are unlawful.
Yet money rarely remains where it is earned
It moves
It circulates
It enters legitimate businesses
It books hotel rooms
It rents premium Airbnbs
It buys luxury vehicles
It purchases designer fashion
It fills lounges and nightclubs
It pays for expensive vacations
It sponsors concerts
It supports restaurants
It buys jewellery and watches
It pays school fees
It acquires real estate
Once that money enters circulation, separating legal spending from ill3gal origins becomes extremely d!fficvlt.
This is where the conversation becomes unc0mfortable
Visible prosperity is not always the same as productive prosperity.
Sometimes we m!stake spending for wealth.
Sometimes we m!stake consumption for productivity.
Sometimes we assume an economy is healthy simply because expensive restaurants are full...
Luxury cars are everywhere...
Hotels are fully booked...
Nightlife is booming...
Designer stores are busy...
Premium apartments are occupied...
YET beneath all that visible activity...
Manufacturing strvggles
Productivity remains weak
Exports remain limited
Millions of workers CANNOT SUSTAIN THEMSELVES ON THEIR SALARIES ALONE!
Which raises a question that I have never seen discussed honestly
WHERE EXACTLY is Nigeria's purchasing power coming from?
Because if a large proportion of Nigerians earn somewhere between ₦70,000 and ₦250,000 every month...
Yet a modest middle class lifestyle in Lagos can easily require between ₦700,000 and ₦1,000,000 every month...
Then something else must be filling that gap!
Part of the answer is obvious
Multiple jobs
Family support
Side businesses
Diaspora remittances
Entrepreneurship
The enormous informal economy
But is that the complete answer?
Or is there another conversation we have been unwilling to have?
Could part of the answer also lie in the purchasing power generated by the underground economy, money that eventually finds its way into legitimate businesses and fuels visible consumption?
IF NIGERIA'S UNDERGROUND ECONOMY DISAPPEARED TOMORROW...
How much of what we currently celebrate as economic vibrancy would remain exactly the same???
Would every sector continue unchanged?
Would some sectors experience a noticeable decl!ne in demand?
Would luxury consumption look different?
I do not claim to know the precise answers
Neither should anyone else without robust evidence.
But I believe these are questions worthy of national debate.
Because until we understand where purchasing power comes from...
We may continue measuring Nigeria's economy by what people spend...
INSTEAD OF WHAT THE COUNTRY ACTUALLY PRODUCES.
Perhaps Nigeria's greatest economic paradox is not that many people are p00r
It is that visible prosperity often appears disconnected from measurable productivity.
And until we understand that paradox...
We may never truly understand the Nigerian economy.
What are your thoughts?
- Abiodun Adetula
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