Feature/OPED
Nigeria’s Booming Growth Leaves Citizens Trapped in Deeper Poverty
By Blaise Udunze
With the chanting of the ‘Renewed Hope’, it appears to be Uhuru in Nigeria, following the recent World Economic Outlook presented by the International Monetary Fund, which projected that Nigeria’s economy would expand by 4.1 per cent in 2026. Though this specifically shows an economy faster than economies like the United States and the United Kingdom, as it handed the administration of President Bola Tinubu a powerful narrative. No doubt, the projection happens to be a narrative of progress, of reform, of a nation supposedly turning the corner after years of instability and setting the kind of moment that reassures investors, quiets critics and signals competence.
But once its statistical sheen is put aside, the weight of reality takes centre stage. The truth is, while Nigeria may be growing on paper, it is simultaneously shrinking and does not in any way reflect the lived experience of its citizens, as the populace can attest to. With the current lived experience, nowhere is this contradiction more glaring than in the widening gulf between macroeconomic projections and the daily economic suffering of over 200 million people.
The truth is uncomfortable, but it must be said plainly that a country where poverty is deepening, inflation is persistent, debt is rising, and basic survival is becoming more difficult cannot meaningfully claim economic success, no matter what the growth figures suggest.
The most damning evidence against the “fastest-growing economy” narrative, as enumerated by the Special Adviser to President Tinubu on Policy Communication, Daniel Bwala, comes not from opposition voices or political critics, but this time it is coming from the World Bank itself. Alarming to this is that according to its latest Nigeria Development Update, poverty in the country rose to 63 per cent barely months back, translating to roughly 140 million Nigerians living below the poverty line. This is not just a statistic; it is a humanitarian crisis unfolding in real time, which in a real sense calls for quick interventions.
Even more troubling is the trend. Poverty has not plateaued; it is accelerating, worsening and not stabilising at all. From 56 per cent in 2023 to 61 per cent in 2024, and now 63 per cent in 2025, the trajectory is unmistakable, as can be seen the data shows a clear upward trend over time that calls for concern. And projections from PwC suggest that the numbers will climb even higher, with an estimated 141 million Nigerians expected to be poor in 2026.
It would surprise many that these figures expose a fundamental contradiction; it is a total irony that an economy is growing while its people are becoming poorer, hence, while no one would hesitate to say that the type of growth taking place is flawed. Well, without jumping to a hasty conclusion, the answer lies in that growth. To say that the economic growth taking place is imbalanced, it is uneven, exclusionary, and not absolutely linked or largely disconnected from the sectors that sustain the majority of Nigerians. Growth driven by services and capital-intensive industries does little for a population whose livelihoods depend heavily on agriculture and informal enterprise. When growth bypasses the poor, it ceases to be development and becomes mere arithmetic.
The government’s defence often leans on the argument that inflation is easing and that reforms are beginning to stabilise the economy. But even this claim is increasingly fragile, as reported that the recent data from the National Bureau of Statistics shows that inflation has begun to rise again. This now shows that the headline inflation is ticking up to 15.38 per cent in March 2026, alongside a sharp month-on-month increase of 4.18 per cent. The pain Consumer Price Index climbed to 135.4, underscoring sustained pressure on household spending.
Another aspect that raises further questions is that the most critical component for ordinary Nigerians, which is the food inflation, skyrocketed to 14.31 per cent, with a similar month-on-month surge. It must be made known that these are not just numbers on a chart; they represent the escalating cost of survival, mostly for the common man. The ripple effect of this, which is yet to change, is that families are compelled to pay more for basic meals, more for transportation, and more for the essentials of daily life.
Noteworthy is that even when inflation showed signs of moderation in previous months, the fact is that it did little to reverse the damage already inflicted. The World Bank has been clear on this point when it said that household incomes have not kept pace with price increases. The underlying point is that the earlier spikes in inflation eroded purchasing power to such an extent that any subsequent easing has been insufficient to restore real income levels, and this is where the figures churned out were misleading.
This explains the inconsistency at the heart of Nigeria’s economy, where nominal indicators are improving, but real conditions are deteriorating. Nigerians are earning more in absolute terms but are able to afford less. This is further confirmed by data showing that while nominal household spending increased significantly, real consumption declined, while it would be said that people are spending more money, but they are consuming less. That is not growth; but the right word for it is economic suffocation.
The structural consequences of ongoing reforms compound the situation. The removal of fuel subsidies, which was the gift to Nigerians for electing President Tinubu and the liberalisation of the foreign exchange market were framed as necessary steps toward long-term stability. And in theory, they are defensible policies. But in practice, the result has been an extraordinary cost-of-living crisis, especially for the larger section of struggling Nigerians.
Speaking of the fuel subsidy removal, which has driven up transportation costs across the country, affecting both urban commuters and rural farmers, the pain has been further intensified by the geopolitical conflict in the Middle East. The second policy shift, which was the exchange rate liberalisation, has led to currency depreciation, with the experiences biting hard across the board, making imported goods more expensive and fueling inflationary pressures. These policy choices, which were perhaps deemed necessary, and without further ado have imposed immediate and severe burdens on households that were already vulnerable.
The International Monetary Fund has warned that these pressures are far from over. Rising global tensions, particularly in the Middle East, are pushing up the cost of energy, food, and transportation. For Nigerians, especially those at the lower rung in society, this translates into even higher living costs and deeper economic strain to contend with.
In this context, the government’s insistence on celebrating growth projections begins to appear not just disconnected, but insensitive. For millions of Nigerians, the economy is not an abstract concept measured in percentages. It is a daily struggle defined by whether they can afford food, transport, and shelter.
Compounding these challenges is Nigeria’s growing debt burden. Unexpectedly, public debt has climbed to over N159 trillion, with projections indicating a continued rise in the coming years because of the government’s appetite for borrowing. While the debt-to-GDP ratio may appear moderate compared to global averages, this comparison is totally misleading. The question is why the debt is ballooning when Nigeria’s revenue base is narrow, heavily reliant on oil, and constrained by a large informal sector that contributes little to tax income.
The current position of things is that debt servicing consumes a disproportionate share of government revenue, leaving limited fiscal space for investment in infrastructure, healthcare, education, and social protection, which has continued to expose the majority of Nigerians to untold hardship. It is a precarious position, one where the government is borrowing more while having less capacity to translate that borrowing into meaningful development outcomes, and the part that is also critical is that Nigeria’s rising debt profile is entering discomforting quarters, as concerns shift from the sheer size of borrowings to the growing risks associated with refinancing existing obligations.
Even more troubling are the emerging questions around fiscal transparency and governance. Only recently, there were allegations by Peter Obi on the missing N34 trillion in federation revenue that remains unaccounted. This, according to him, has intensified concerns about systemic leakages and institutional corruption. The fact is, even though these claims remain contested, they resonate deeply in a country where public trust in government financial management is already fragile and has remained a subject of discussion for many Nigerians.
The truth is that if even a fraction of such resources were effectively managed and invested, the impact on infrastructure, social services, and poverty reduction could be transformative, but this has yet to be embarked upon. Instead, the persistence of such allegations reinforces the perception of an economy where wealth exists but is inaccessible to the majority, which brings to bare if there will ever be a respite in a situation like this.
Adding another layer to this complexity is the excessive contradiction of oil revenue. With global crude prices that were once sold above $113 per barrel and currently hovering around $85-$90, which is still far exceeding Nigeria’s budget benchmark, the country stands to hugely benefit from a significant windfall, as was the case in the past. You know that history is more revealing than ever; it suggests that such opportunities are often squandered.
Analysts repeatedly have continued to warn that without disciplined fiscal management, these revenues may be absorbed by debt servicing or recurrent expenditure rather than being invested in productive sectors. The risk is that Nigeria once again experiences a boom without transformation, a cycle that has defined its economic history for decades.
Meanwhile, the irony in all of this is that, despite having plenty, every day Nigerian continues to bear the brunt of systemic inefficiencies. As the people bear the brunt, the country’s transportation costs are rising, food prices remain volatile, and access to basic services is increasingly strained, while the rural areas are not left out of the equation, as insecurity continues to disrupt agricultural production. This has further constrained food supply and driven up prices. In urban centres, the cost of living is pushing more households into financial distress.
The cumulative, as well as the ripple effects of these pressures, are a society under strain. Lest we mistake this, economic hardship is not just a financial issue; it has social and psychological consequences, while unbeknownst to many, its resultant effect fuels frustration, erodes trust in institutions, which also leads to fertile ground for instability.
What makes the current situation particularly troubling is the widening disconnect between official narratives and lived reality. There are two instances in which it was noted that, on the one hand, the government points to IMF projections and macroeconomic indicators as evidence of progress. On the other hand, citizens experience rising poverty, declining purchasing power, and limited opportunities. Another good example stems from when President Tinubu declared in September of last year that the federal government had met its 2025 non-oil income goal by August.
However, the former Minister of Finance, Wale Edun, stated that the Federal Government lacked sufficient funds to appropriately fund its capital budget during a public hearing at the National Assembly late last year. The minister stated that in order to pay the N54.9 trillion “budget of restoration,” which was intended to stabilise the economy, ensure peace, and create prosperity, the federal government had estimated N40.8 trillion in income for 2025.
These two reports sounded and appeared contradictory, and it was probably one of many factors responsible for the fallout.
This disconnect is more than a communication gap; it is a credibility crisis. When people’s lived experiences contradict official claims, trust erodes. And without trust, even well-intentioned policies struggle to gain acceptance.
The claim that Nigeria is growing faster than advanced economies may be technically accurate, and perhaps it must be seen as an absolute insult to Nigerians and it must be noted that it is fundamentally irrelevant to the country’s core challenges. This key fact must be taken into cognisance that growth rates, in isolation, do not capture the quality, inclusiveness, or sustainability of economic progress, and this is because they do not reflect whether growth is creating jobs, reducing poverty, or improving living standards. Note that in Nigeria’s case, the evidence suggests otherwise, in which the reality continues to dominate outcomes, and this is not the case.
For growth to be meaningful, it must translate into tangible improvements in people’s lives. At this point, it is necessary to understand that it must create jobs, raise incomes, and expand opportunities. Another important factor that must not be left out is that it must be inclusive, reaching not just the top tiers of society but the millions at the base of the economic pyramid. At present, Nigeria falls short on all these counts.
The path forward requires more than optimistic projections and reform rhetoric. It demands a fundamental rethinking of economic priorities. Policies must be designed not just for macroeconomic stability but for human welfare, and while investment must be directed toward sectors that generate employment and improve productivity, particularly agriculture and manufacturing. Social safety nets must be strengthened to protect the most vulnerable from economic shocks, which has yet to be considered by the government of the day.
Equally important is the need for transparency and accountability in public finance. Without trust in how resources are managed, even the most ambitious economic plans will struggle to gain legitimacy.
Nigeria is not lacking in potential, and this is one of the ironies of it all since it has a young population, abundant natural resources, and a dynamic entrepreneurial spirit. But potential, without effective governance and inclusive policies, remains unrealised.
The uncomfortable reality is that Nigeria is at risk of normalising a dangerous illusion, which connotes that growth on paper is equivalent to progress in practice. The truth is that it is not and cannot be contested. And until this illusion and deception are confronted, the gap between economic narratives and human realities will continue to widen.
In the end, the true measure of an economy is not how fast it grows, but how well it serves its people. By that standard, Nigeria’s current trajectory raises serious questions, take it or leave it. Because in a nation where over 140 million people live in poverty, where inflation continues to erode incomes, where debt is rising and where basic survival is becoming more difficult, the claim of being a “fast-growing economy” is not just misleading. Yes, it is a mirage!
And for millions of Nigerians struggling to get by each day, it is a mirage that offers no relief, no hope, and no future.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: bl***********@***il.com
By Blaise Udunze
Chapter Two, Section 14 (b) of the 1999 Constitution of Nigeria (as amended) is explicit when it states that the security and welfare of the people shall be the primary purpose of government. Hence, by every standard, the welfare of Nigerians should be the first priority of the government. What would be said if the same government had failed on this path? Judging by this rhetorical question and series of unfolding events, indications have shown that Nigeria is drifting into a dangerous territory where politics increasingly overshadows governance, and the amazing part of it is that insecurity, poverty and social despair continue to consume the very foundations of the state.
Surprisingly, this is eventually playing out when millions of Nigerians expect leadership, empathy and decisive action, the political class appears preoccupied with permutations for 2027, coalition-building, defections, endorsements and electoral calculations. Meanwhile, criminals are expanding their territory.
The horrendous, tragic kidnapping of pupils, teachers and school workers in Oriire Local Government Area of Oyo State has become one of the most painful symbols of Nigeria’s deepening security crisis. Shamefully, it would be recalled that recently armed terrorists invaded three schools in Ahoro-Esinle and Yawota communities. Yes, this might not be the first time of abducting school pupils, but one thing that is more troubling in this case is that dozens of schoolchildren and teachers were abducted, as this includes toddlers barely old enough to understand what was happening around them.
Intently looking at the incident, one vicious act is that among those abducted were two-year-old Christianah Akanbi and three-year-old Sikiru Salami, who are also not exempt from the daily torture.
The horror became even more devastating when a video emerged confirming the gruesome murder of Michael Oyedokun. He was a Mathematics teacher who had simply gone to work on a Friday morning to educate Nigerian children. He never returned home. The life of a teacher, a father and a mentor was cut short when beheaded in captivity by terrorists in Nigeria in May 2026.
His death is not merely a tragedy for his family. But the harrowing experience is that it is an indictment of a nation that appears increasingly unable to guarantee the safety of its citizens.
Let us consider the recent attack in Oyo State; this is not an isolated incident. It is part of a growing pattern that demonstrates the alarming deterioration of security across the country. And this is one harrowing and traumatic situation that might continue to heighten fear in the southwest: barely days after the Oyo school abductions, gunmen invaded Yashikira in Baruten Local Government Area of Kwara State, attacked the Emir’s palace, set parts of it ablaze and abducted ten residents. Also, of great concern is that just days earlier, worshippers had been killed and others abducted from a prayer ground in the same state.
Worst still, these nightmares have been the lived realities confronting Nigerians across Benue, Plateau, Katsina, Zamfara, Borno, Niger and other states. Stories of killings, kidnappings and displacement have become routine headlines.
The frightening reality is that Nigeria is gradually normalising the abnormal. Schools are becoming targets. Highways have become theatres of terror. Farms have become killing fields. Communities are becoming refugee camps. And citizens increasingly feel abandoned.
What makes the situation even more troubling is the growing perception that governance has been subordinated to politics.
This is to say that it has become glaring that while communities mourn their dead and families desperately search for abducted loved ones, the “sorry” situation is that public attention at the highest levels of government often appears focused on political calculations ahead of the 2027 elections.
This perception gained further traction following the Oyo school abductions. Nigerians watched grieving parents cry on television. Videos emerged showing abducted teachers pleading for help from captivity. This has triggered a negative notion, as many citizens felt there was insufficient urgency from the federal authorities in responding to one of the most horrifying school attacks in recent years.
Leadership is not measured only by policies and speeches. It is measured by empathy, responsiveness and the ability to assure citizens that their pain matters.
Section 14(2)(b) of Nigeria’s Constitution leaves no room for ambiguity. It states clearly that the security and welfare of the people shall be the primary purpose of government. Not politics. Not elections. Not defections. Not coalition building. Security and welfare.
Unfortunately, many Nigerians increasingly believe that the priorities of government no longer reflect this constitutional obligation. The consequences extend far beyond security. The educational sector is becoming one of the biggest casualties of the country’s security collapse.
The vicious incidents have brought the society to a standpoint whereby parents who once worried about examination results now worry whether their children will return home alive from school. Meanwhile, teachers who have continued to work tirelessly and still should be focused on learning outcomes are increasingly forced to think about survival.
One glaring adverse impact from all these abnormalities is that school enrolment in vulnerable communities is likely to decline as parents choose safety over education.
The long-term implications are frightening because the fact is that every child denied education today becomes a future economic liability. Every school abandoned due to insecurity creates another generation vulnerable to poverty, extremism and social exclusion. Every teacher lost to violence weakens Nigeria’s human capital.
Another aspect that is more of concern is that the abduction of children from schools represents more than a security challenge, but this is a thorough attack on Nigeria’s future. Perhaps the most heartbreaking and horrendous aspect of these attacks is the psychological damage inflicted on children. It must be established beforehand that when rescued, many victims may never fully recover from the trauma. This could be linked to, especially to the screams, the gunshots, the confusion, the separation from parents and the terror of captivity.
With the recent and past occurrences, without any iota of doubt, such experiences often leave invisible wounds that endure for years. Considering that the children who should be learning multiplication tables and nursery rhymes are instead learning fear.
The real question is, can a nation that cannot protect its children confidently speak about its future? Never! Emphatically, it should be understood that beyond education, insecurity is fueling a broader socio-economic epidemic.
Nigeria is already grappling with one of the worst affordability crises in its history, which also depicts the continued governance complacency. Talking of the removal of fuel subsidy and exchange rate liberalisation, inflation has eroded purchasing power, while food prices, transportation costs, rents and utility bills continue to soar, and worse off is the skyrocketing price of cooking gas.
Yet insecurity is making the crisis even worse. Farmers cannot access their farmlands. Harvests are disrupted. The country has witnessed the rural economies collapsing heavily. The resultant effect is that food production has continued to decline, and supply chains are increasingly vulnerable. The result is predictable because the simple arithmetic is that higher food prices, worsening hunger and deeper poverty.
The level of security collapse has shown that many northern farming communities, bandits now function as parallel authorities, imposing levies and determining who can farm and who cannot. This directly impacts food availability in urban centres hundreds of kilometres away.
Thus, insecurity is no longer merely a security problem; the truth is that it has become an economic problem, which is developmental, educational, and humanitarian. And ultimately, a governance problem.
The inability to effectively confront insecurity also raises difficult questions about institutional capacity.
As public affairs commentator Leonard Umunna recently observed, weak institutions produce weak outcomes. Corruption, poor accountability and ineffective governance structures have collectively undermined the state’s ability to deliver security and development.
Some of the terrifying truths Nigerians must take into cognisance are that when institutions become compromised, citizens lose confidence. Also, when accountability disappears, impunity flourishes, as the same applies when governance fails, criminality fills the vacuum. One truth that cannot be argued is that the vacuum is becoming increasingly visible across Nigeria.
The irony being experienced today in Nigeria is that while political actors are preparing intensely for 2027, the very foundations required for democratic stability are being eroded.
The terror and anxiety are definitely obvious, and the fact is that democracy cannot thrive in an environment of widespread fear.
Citizens who cannot travel safely, farm safely, worship safely or send their children to school safely are unlikely to have confidence in democratic institutions.
Perhaps, some ought to translate these messages to those at the helm of affairs in Nigeria that security is the foundation upon which every other national aspiration rests. And, without security, economic reforms become ineffective. Without security, educational investments become vulnerable. Without security, foreign investment declines. Without security, national unity weakens. Also, another underlying fact is that without security, democracy itself becomes fragile.
The well-known truth, which is quite unfortunate today, is that Nigeria’s challenges are not insurmountable because the country possesses the manpower, resources and institutional structures necessary to reverse the tide.
What appears lacking is the political will, urgency and strategic focus required to confront the crisis comprehensively.
This moment demands more than condolences after attacks. It demands intelligence-driven operations. It demands stronger coordination among security agencies. It demands improved local intelligence networks. It demands accountability. It demands institutional reforms. Most importantly, it demands leadership that places governance above politics.
As Nigeria inches toward another election cycle, political leaders must recognise a simple truth, and that truth is that there may be little value in winning elections in a nation increasingly overwhelmed by insecurity, poverty and social fragmentation.
The pursuit of political power cannot become more important than the survival of the republic itself. The death of Michael Oyedokun should haunt the conscience of the nation. So should the tears of Christianah Akanbi. So, should every parent be afraid to send a child to school? So should the pain of every community living under the shadow of terror. Nigeria is at an intersection; it has reached a tough moment where important and critical decisions must be made.
One path leads to deeper insecurity, educational decline, economic hardship and national instability. The other requires courage, responsibility and a renewed commitment to governance. The choice should not be difficult.
For if politics continues to take precedence over governance, the greatest casualty may not be any political party or administration. It may be Nigeria itself. The country is redeemable, and there is still hope for a better Nigeria.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: bl***********@***il.com
By Timi Olubiyi, PhD
Currently, many are passing through one of the most difficult times due to inflationary pressures. From transportation to food, electricity, healthcare, school fees, rent, and communication, the rising cost of living has altered the daily experience of millions of households. What used to be considered necessities have now become luxuries for many families. Across the country, the average citizen is under enormous pressure to survive amid worsening inflation, shrinking purchasing power, and economic uncertainty.
While inflation is a global phenomenon, the Nigerian experience has become particularly severe because of the combined effects of fuel subsidy removal, exchange rate volatility, high transportation costs, insecurity in food-producing regions, and weak wage growth. The reality of petrol selling at nearly N1,400 per litre in some parts of the country has significantly changed household economics and business sustainability. The consequences are visible everywhere in markets, offices, homes, schools, hospitals, and on the streets.
In practical terms, transportation fares have more than tripled in many cities within a short period. Food inflation has equally become alarming. Bread, eggs, cooking gas, yams, tomatoes, beans, and other staple foods continue to rise beyond the reach of average Nigerians. Electricity tariffs and telecommunications costs have also increased, while rent in urban centres keeps climbing. Unfortunately, salaries and wages have not kept pace with these realities. This is perhaps the greatest crisis confronting workers and small business owners today. Many employees still earn wages negotiated several years ago under entirely different economic conditions. Yet the value of those salaries has been severely eroded by inflation. In real terms, many workers are poorer today despite remaining employed.
The truth is that the salary structure available now can no longer effectively support decent living standards for many households. Even professionals with stable employment now struggle to meet basic obligations. Civil servants, teachers, artisans, small traders, entrepreneurs, and even middle-income earners are feeling the weight of the economic squeeze.
For many families, survival now depends on borrowing, reducing consumption, postponing healthcare, or sacrificing savings and investments. More troubling is the psychological effect of this prolonged hardship. Economic pressure is increasingly and significantly affecting mental health, marriages, productivity, and social stability.
Anxiety, frustration, depression, anger, and emotional exhaustion are becoming common experiences among citizens trying to survive difficult conditions. Difficult times and hardship often fuel marital conflicts, domestic tension, and reduced emotional well-being. In workplaces, economic uncertainty lowers morale, concentration, and productivity as employees struggle to cope with transportation costs, food, and other basic needs.
In fact, many people now live permanently in survival mode, uncertain about what tomorrow may bring. Businesses are equally under pressure. Rising operational costs continue to threaten sustainability, especially for small and medium-scale enterprises. Diesel prices, transportation costs, imported raw materials, electricity bills, taxation, and weak consumer spending have reduced profitability across many sectors. Several businesses have downsized operations, reduced staff strength, or shut down completely. Others remain in operation but merely struggle to survive.
Consequently, the era when a single salary could comfortably sustain a family is gradually disappearing in Nigeria. One of the clearest lessons from the current economic climate is that relying solely on one source of income has become increasingly risky. Economic realities now require individuals and households to think beyond traditional salary structures and embrace income diversification. In fact, multiple streams of income are no longer optional; they are becoming a necessity for financial survival and resilience. Families that depend entirely on one monthly salary are highly exposed to economic shocks, inflation, job loss, or business disruptions. The harsh reality is that even regular employment no longer guarantees financial security.
Therefore, Nigerians must begin to intentionally explore additional income opportunities that can complement existing earnings. This does not necessarily mean abandoning primary jobs or businesses, but rather creating alternative sources of income that can provide support during difficult times. Technology and digital platforms have made this more possible than ever before. Social media, e-commerce, freelancing, online consulting, digital content creation, virtual training, and remote services now offer opportunities for additional income generation.
Many professionals can monetise their knowledge, experience, or talents through side engagements without compromising their primary employment. In a way, passive income opportunities such as agriculture, cooperative investments, real estate, dividend-paying stocks, mutual funds, and small-scale trading can help cushion economic shocks over time. Land acquisition, for instance, remains one of the most reliable long-term stores of value in Nigeria despite current economic challenges. Assets that appreciate over time can provide financial protection against inflation. More so, living below one’s means may no longer be a matter of choice but a practical necessity under present realities. The culture of excessive social competition and pressure to maintain appearances despite declining income can worsen financial stress. Economic survival today requires financial honesty, discipline, and strategic planning.
In conclusion, the current economic realities in Nigeria demand a shift in mindset, financial behaviour, and survival strategies. Fuel at N1,400 per litre is not merely an energy issue; it affects transportation, food prices, school fees, healthcare costs, business operations, and overall quality of life.
Inflation has redefined daily living for millions of Nigerians. Therefore, building multiple streams of income, improving financial literacy, embracing prudent spending, and investing for the future are no longer luxury ideas but necessary responses to economic realities.
The truth is simple: depending solely on salary income in today’s Nigeria may no longer be sufficient for financial stability. The earlier households adapt to this reality, the better positioned they may be to survive and thrive despite the challenges ahead. Good luck!
How may you obtain advice or further information on the article?
Dr Timi Olubiyi is an expert in Entrepreneurship and Business Management, holding a PhD in Business Administration from Babcock University in Nigeria. He is a prolific investment coach, author, columnist, and seasoned scholar. Additionally, he is a Chartered Member of the Chartered Institute for Securities and Investment (CISI) and a registered capital market operator with the Securities and Exchange Commission (SEC). He can be reached through his Twitter handle @drtimiolubiyi and via email at dr***********@***il.com for any questions, feedback, or comments. The opinions expressed in this article are solely those of the author, Dr Timi Olubiyi, and do not necessarily reflect the views of others.
By Blaise Udunze
Nigeria’s banking industry appears to be booming, largely driven by the policies of the Central Bank of Nigeria (CBN), under Governor Olayemi Cardoso, while the real economy continues to suffocate.
At a time when millions of Nigerians are sinking deeper into poverty, when inflation continues to erode household incomes, when businesses are collapsing under unbearable operating costs, and when migration has become a survival strategy for many young professionals, Nigerian banks are announcing staggering profits, stronger capital positions and unprecedented liquidity growth.
According to the bank’s financial statements, the financial system appears healthy. In reality, the economy where citizens work, trade and survive is gasping for breath.
This growing disconnect between financial sector prosperity and economic suffering now represents one of the gravest threats to Nigeria’s long-term economic stability and its ambition of building a $1 trillion economy.
The numbers are indeed impressive. Nigerian banks’ shareholders’ funds reportedly surged to about N27 trillion following the recapitalisation exercise. The top five banks now command balance sheets estimated at over N164 trillion. Tier-1 banks collectively generated trillions in profits within the first quarter of 2026 alone, while the sector-wide recapitalisation exercise raised over N4.56 trillion.
Ordinarily, such figures should inspire confidence about the future of the economy. Stronger banks are expected to translate into stronger businesses, more jobs, industrial expansion and wider economic opportunities. But Nigeria’s experience is proving otherwise.
Instead of serving as engines of productive growth, banks are increasingly becoming custodians of liquidity trapped within the financial system itself. That is the real danger.
Even as banking liquidity expands sharply, lending to the productive economy remains weak and constrained. Reports indicate that banks parked a record N24.13 trillion with the CBN, while simultaneously increasing investments in government securities and treasury bills because these avenues are safer, more profitable and less risky than lending to businesses operating within Nigeria’s harsh economic climate. This reality exposes a dangerous contradiction.
A developing economy desperately in need of industrialisation, manufacturing growth, infrastructure expansion and job creation cannot afford a banking system that prefers financial safety over productive economic risk.
A sustainable economy cannot thrive where the real sector is starved of funds. Yet this is exactly where Nigeria now stands.
Despite the massive liquidity in the banking system, growth in lending to the private sector continues to lag behind the pace of liquidity expansion. The implication is clear. Financial sector strength is no longer translating into real economic development. This is not how healthy economies function.
Ordinarily, banks in developing economies are expected to operate as catalysts for economic transformation. Across successful economies, commercial banks finance manufacturing, agriculture, innovation, infrastructure and entrepreneurship because those sectors generate jobs, productivity and national wealth.
Small and Medium Enterprises (SMEs), especially, are globally recognised as the backbone of grassroots economic development. Nigeria is no exception.
SMEs account for over 70 per cent of registered businesses, contribute nearly half of Nigeria’s GDP and generate between 84 and 90 per cent of employment opportunities. Yet despite their overwhelming importance, SMEs reportedly receive barely between 0.5 per cent and one per cent of total commercial bank lending. That is not merely a policy failure. It is an economic tragedy.
Every denied SME loan is a denied employment opportunity. Every failed business represents another frustrated entrepreneur. Every frustrated entrepreneur becomes another Nigerian contemplating migration.
This is how economic dysfunction transforms into human displacement. The so-called “Japa” phenomenon did not emerge in isolation. It is deeply connected to economic hopelessness. When productive citizens lose faith in their country’s economic future, migration stops being a lifestyle choice and becomes a survival mechanism.
Unbeknownst to the policymakers is that Nigeria cannot realistically build a $1 trillion economy while productive sectors remain financially suffocated.
A closer glance at the trend of events helps to reveal that the danger becomes even more severe when viewed against the backdrop of the recent outcome of the 305th Monetary Policy Committee (MPC) meeting, where the CBN retained the Monetary Policy Rate (MPR) at 26.5 per cent in its bid to sustain disinflation and macroeconomic stability.
It is understandable and certain that inflation control is important, but the fact is that at 15.69 per cent, inflation remains painfully high and continues to weaken purchasing power. Food prices remain elevated. Transportation costs remain unbearable. Consumer demand is weakening. The middle class is shrinking rapidly.
But maintaining elevated interest rates also comes with painful consequences. Simple arithmetic tells us that higher interest rates mean higher lending costs. Higher lending costs mean higher production costs. Higher production costs worsen inflationary pressures and weaken business survival rates.
Invariably, this also tells us that for Nigerian manufacturers and corporates already battling a weak naira, volatile exchange rates, expensive diesel, energy insecurity and declining consumer demand, access to affordable credit is becoming almost impossible.
Many businesses are no longer borrowing to expand production or employ workers. They are borrowing merely to survive. This is economic suffocation.
Meanwhile, banks continue to profit massively from high-yield government securities and treasury investments. Reports indicate that major Nigerian banks generated over N6.68 trillion from investment securities and treasury bills instead of financing productive enterprises capable of stimulating growth and employment.
The government’s appetite for borrowing itself shows no sign of slowing down. Public borrowing reportedly climbed above N39 trillion. Historically, excessive government borrowing crowds out private sector investment because banks naturally prefer lending to the government rather than exposing themselves to risks associated with businesses operating in unstable economic conditions.
The result is predictable. The real sector weakens while speculative and non-productive financial activities flourish. This explains why Nigeria increasingly resembles a financial system disconnected from the realities of ordinary citizens.
While banks celebrate rising profits, poverty and hunger worsen visibly across the country. Unemployment continues to rise. Small businesses are dying quietly. Household purchasing power is collapsing under inflationary pressure.
Yet the financial system appears more liquid than ever. That contradiction should alarm policymakers. The recapitalisation exercise itself now raises difficult questions.
What exactly is the purpose of stronger banks if stronger banks do not strengthen national productivity?
If recapitalisation merely empowers banks to deepen investments in government debt instruments while manufacturers, farmers, exporters and SMEs remain starved of affordable credit, then the exercise risks becoming financially impressive but economically hollow.
Indeed, the current monetary environment appears to reward financial conservatism over productive risk-taking.
The stringent Cash Reserve Requirement (CRR), elevated interest rates and broader macroeconomic uncertainty continue to discourage aggressive lending to the private sector. Banks understandably seek safety. But nations do not industrialise through excessive financial caution.
No economy develops when capital circulates primarily within treasury bills and government securities instead of flowing into factories, farms, logistics, housing, innovation and production.
This is the larger danger confronting Nigeria today. Economic crises rarely begin with recession statistics alone. Sometimes, they begin when financial institutions become detached from the suffering realities of the wider economy. They begin when growth exists only within banking balance sheets but disappears from households, factories and streets.
Without productive credit expansion, economic growth becomes artificial and exclusionary. Without affordable financing, businesses cannot scale. Without business expansion, jobs cannot emerge. Also, it must be noted that without jobs, insecurity, poverty and migration inevitably worsen. The implications for social stability are enormous.
One painful fact is that citizens already burdened by inflation, debt pressures and widespread distrust now face a system where economic opportunities continue shrinking despite apparent financial sector prosperity. One of the lurking dangers is that this deepens resentment, weakens confidence in institutions and threatens long-term economic cohesion.
The CBN’s inflation fight may be necessary, but monetary stability alone cannot substitute for productive economic expansion. Financial stability without inclusive growth eventually becomes unsustainable.
The real economy matters more than banking optics. Nigeria urgently needs policies that incentivise real sector lending, reduce structural risks facing manufacturers and SMEs, strengthen credit infrastructure, lower production bottlenecks and redirect liquidity toward productive economic activity.
As a matter of fact, it is high time for Nigeria to start rethinking the growing dependence on debt-driven fiscal management that continues to crowd out private investment. Development cannot occur when government borrowing consumes the financial oxygen needed by businesses.
Ultimately, banking profitability should not become an isolated island of prosperity surrounded by a collapsing productive economy.
A nation cannot celebrate trillion-naira banking profits while millions of citizens sink deeper into economic despair. No society sustains such a contradiction indefinitely.
If Nigeria truly hopes to build a resilient and inclusive economy, then the banking sector must once again become a vehicle for national development rather than merely a beneficiary of government debt and monetary tightening.
Otherwise, the country risks creating a contradictory economy where banks grow richer while citizens grow poorer and where financial prosperity exists only on paper while economic hardship defines everyday life.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: bl***********@***il.com
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