27-year-old tech bro, Josiah Sinebe doesn’t mind moving back in with his parents. It’s a perk that comes with working a remote tech job. That perk has proved convenient with the current hike in fuel prices in Nigeria. “In the last few weeks, I spent more than double what I would previously spend on the same amount of fuel,” he said. “It was telling on my finances. That is when I remembered that I am still a child and I have parents that love me.”
For the over 200 million people living in Nigeria, the removal of fuel subsidies in Nigeria is having significant implications for their living conditions. Fuel prices have increased astronomically by more than 160 percent, leading to higher transportation costs, and a hike in the prices of goods and services across various sectors of the economy. Bus fares, taxi fares, and other forms of transportation costs have increased, making it more expensive for individuals to commute to work, school, or access essential services. This is particularly affecting low-income individuals who rely on public transportation as the primary mode of commuting. In the last few weeks, Mr. Tyberus has had to allocate more funds to his transportation budget. “I only embark on long journeys that will require me to spend money only when it is important,” he said.
As transportation costs rise, businesses pass on these higher costs to consumers, leading to an increase in the prices of goods and services. Bread and other staple foods have increased by 10 percent or more in recent days, while some readily affordable and available products are no more available or getting costly to afford. The increase has contributed to the country’s steadily increasing inflation rate. Last month, inflation rose to a new 17-year high of 22.41 percent, from 22.22 percent in the previous month. Analysts project that inflation may reach 30 percent by the end of June and July, due to the effect of the subsidy removal.
For Mr. Tyberus, spending more on transportation has led him to make budget cuts in other areas such as food. “Due to increasing cost of living, the reduction in disposable income, with monthly increment in the inflation rate, there is an increased inability to meet financial expectations, and this result in loss of confidence, depression and a sense of hopelessness,” said economists and financial analysts, Adeola Ogunbodede.
A wave of companies have reviewed their prices in response to increased operating costs. Two weeks ago, Bolt reviewed its pricing in Nigeria to accommodate increased operating costs for drivers on its platforms. The ride-hailing company increased its minimum fare for a trip to ₦800, up from the previous ₦650. Shuttlers, a logistics tech firm that empowers employers to transform their approach to staff transportation, is helping employers cushion the effect of subsidy removal on employees by creating a system for them to purchase seats rather than buses, thereby subsidizing transportation cost for them.
Despite these changes, drivers and ride-hailing unions have remained dissatisfied with these new prices, saying that it still does not cover their costs. According to a report from Punch, the Amalgamated Union of App-Based Transport Workers of Nigeria asked ride-hailing companies to increase fares by at least 200% and establish a minimum fare of ₦2000. However considerate this request seems, the repercussion of such a drastic change is bound to be detrimental for everyone involved. Bolt for example has stated that it is wary of decreased patronage if fare prices are too high. “Taking into account the issue of demand and supply, we understand that excessively high prices may not only discourage passengers but also affect the availability of drivers on our platform, as well as negatively impact their earnings. Therefore, our revised fares aim to strike a balance that prioritizes the welfare of our passengers and drivers,” a statement from the company read.
As colleagues, Sharon Areola and Esther Victor made their way to the bus stop after a long day’s work last Tuesday, they weren’t expecting the bus fare to be more than their budget. “Before, we would pay 300 naira for the distance. But after the increase in fuel price, it became 500. So we had to alter our transport budget too,” Sharon said. Unfortunately, the few buses that arrived at the bus stop that day stated 700 naira as the fare. “We could manage to spare an extra 100 but here they were adding an extra 200 naira to the price,” Esther added. As more people continued to flood the bus stop, and fewer buses came along, they knew if they wanted to get home before it got dark, they needed to make a move soon. Eventually, they both trekked to the next bus stop to cover the 100 naira difference.