+ How rich are You?
Do Nigerians Enjoy the Lowest Cost of Living in Africa?
Contrary to widely reported news that Nigerians enjoy the lowest cost of living in Africa, the country of 220 million has one of the highest barriers to enjoying a low cost of living there.
The misinformation or mischief that “Nigerians still enjoy the lowest cost of living in Africa” came from an incomplete reading and assessment of data from a global market analytics company, Numbeo, which reported the cost of living in 24 of 54 African countries.
The Presidency, refuting the claim by former Vice President Atiku Abubakar that the government’s policies have created intense cost of living pressures had said: “Recent comparative cost of living indices show that Nigerians still enjoy the lowest cost of living in Africa,” the Punch reported.
Several mainline media organisations reported this sentiment. Let’s see how factual this is.
First, Numbeo never claimed that the 24 countries it reported were a normal and representative sample of Africa’s 54 countries. The data did not mean that the cost of living in Nigeria is cheaper than in the other 30 African countries that were not reported.
So, it is incorrect to say: “Nigeria has the lowest cost of living in Africa,” relying on the Numbeo data.
Numbeo clarified that the Cost of Living Index (Excluding. Rent) “indicates the relative prices of consumer goods like groceries, restaurants, transportation, and utilities. It excludes accommodation expenses such as rent or mortgage. For instance, a city with a Cost of Living Index of 120 is estimated to be 20% more expensive than New York City (excluding rent).”
Nigeria’s average cost of living index of 19.3 means the cost of goods and services (minus rent) is about 80.7% less expensive than in New York. City
Secondly, and most importantly, while Numbeo estimated Nigeria’s cost of living (without rent) at 19.3, the least among the 24 countries reported, it made things clear by adding the local purchasing power index for each country too.
Here, it is clear that Nigeria has the 3rd weakest purchasing power index (of 9.4) among the selected countries, weaker than Cameroon and Ivory Coast alone.
According to Numbeo, the Local Purchasing Power Index “indicates the relative purchasing power in a given city based on the average net salary. A domestic purchasing power of 40 means that residents with an average salary can afford, on average, 60% less goods and services compared to residents of New York City with an average salary.”
This means that while the general prices of things in Nigeria are 81% cheaper than in New York City, due to their extremely low average incomes, Nigerians cannot afford 91% of the same goods and services in the same New York City.
In short, the Nigerian who earns the average income in the country cannot afford 91% of things that are 81% cheaper in Nigeria than in New York.
Nigeria’s weak purchasing power index shows that an average Nigerian cannot purchase and enjoy their low cost of living because their average income, relative to price levels, is relatively lower than that of people in 21 of the 24 reported African countries.
That is, when low incomes are confronted with high food costs, rising inflation, and a general increase in the cost of basic social services, Nigerians’ power to purchase proves to be weak.
Furthermore, the widening disparity between incomes and the cost of living may exacerbate existing socioeconomic challenges, placing an additional burden on households and communities already struggling to make ends meet.
Anyway, the question returns: Do Nigerians enjoy the lowest cost of living in Africa?
No. Nigerians do not enjoy the lowest cost of living among the 24 countries in question because they don’t have sufficient means to purchase and enjoy those relatively cheap goods and services. And as far as the Numbeo Report is concerned, the data never said or meant so.
This situation appears to be more pathetic.
How Rich are you?
Everyone is rich!
It’s just like being old. Everyone is old – a day old, a year old, a hundred years old.
Sound pocket science too is all about planning and living according to your level of wealth where you are.
That is, wealth is relative to the cost of living where you are.
People only become poor when their wealth, from their income or inheritance, cannot pay for the basic necessities of life at the prevailing costs where they live.
Well, when 125 million Nigerians above 15 years old are ranked from the most rich to the least rich, the total wealth (cash and assets) of the individual in the middle is $1,474 or N2.2 million (N2,234,983 at N1,515.592 per Dollar as of February 12, 2024).
At this median wealth level in Nigeria, mid-rich folks in Ghana and Senegal are richer than their Nigerian counterparts, data from the Global Wealth Table indicates.
Yet, when confronted with the prevailing cost of living in Senegal, for example, the mid-rich Nigerian can still afford more expenditures, savings, and investment to cope due to the lower cost of living in Nigeria.
An understanding of how rich you are relative to the wealth of people around you (in your locality and country) could also inform the kind of business you want to set up in your area, or the price to set on your little farm produce that will attract high effective demand.
Selling too cheap or too expensive can reduce demand for one’s goods and services.
This is as important as spending on food, rent, and clothing in an area that’s more suitable to your wealth or income level.
So, how rich are you?