In view of the growing intellectual confusion and complacency in public discourse, it has become increasingly necessary to bring clarity to the current economic crisis affecting ordinary Nigerians.
The administration of Bola Ahmed Tinubu has repeatedly emphasized that the salaries of civil servants and university workers have increased significantly.
However, a fundamental economic concept known as money illusion helps us understand why such claims can be misleading.
Money illusion occurs when people focus on the nominal value of income rather than its real value. In simple terms, individuals may believe they are better off because their salaries have increased in naira terms, while in reality their purchasing power has declined due to inflation.
For example, if a worker’s monthly income rises from ₦120,000 to ₦350,000 but the prices of goods and services rise at an even faster rate, the worker’s real wage—that is, the quantity of goods and services that income can buy—may actually fall. This situation reflects the classical economic distinction between nominal income and real income.
Nigeria is currently experiencing high levels of cost-push and structural inflation, driven by rising energy costs, exchange rate depreciation, transportation expenses, and supply chain inefficiencies. When inflation rises faster than wages, the standard of living of workers inevitably declines.
Recently, the Minister of Finance, Wale Edun, stated on national television that the government is on the right course. According to him, the administration has stabilized the foreign exchange market. He also argued that the removal of fuel subsidy has reduced corruption in the oil sector and increased government revenue. Consequently, state governments now receive larger allocations, while food inflation has reportedly declined from 34 percent to 26 percent.
While such macroeconomic indicators may appear encouraging on paper, the microeconomic realities faced by households tell a different story. Food prices remain high, transportation costs have increased dramatically, and basic services such as electricity, healthcare, and education continue to deteriorate.
A major challenge in Nigeria’s economic management is the persistent imbalance between physical infrastructure and human capital development. Governments at both the federal and state levels continue to invest heavily in road construction and other capital projects—often at enormous cost—while critical sectors such as education, healthcare, agricultural productivity, and technological innovation receive insufficient attention.
The consequences of this imbalance are visible across society. Many young Nigerians struggle to find quality employment opportunities, resulting in delayed family formation and rising social frustration.
Farmers lack adequate institutional support in terms of credit facilities, extension services, storage infrastructure, and modern technology, which contributes to declining agricultural productivity and persistent food inflation.
Furthermore, the structure of Nigeria’s oil and gas industry raises fundamental questions about resource governance and economic distribution. In many cases, oil wells are controlled by private interests and corporate entities, while the broader population experiences limited benefits from the country’s vast natural resources.
Recent geopolitical tensions involving the United States, Israel, and Iran also underscore the vulnerability of countries that lack strong domestic economic institutions and energy security policies.
Ultimately, sustainable economic development requires more than increases in nominal salaries or temporary fiscal adjustments. It requires sound macroeconomic management, institutional accountability, productive investment, and policies that genuinely improve the real income and welfare of citizens.
Until these structural issues are addressed, many Nigerians will continue to survive not because of effective governance, but through resilience, informal economic activities, and faith.
Ndubuisi Anaenugwu
Ambassador General
Good Governance Ministry (GGM)