By John Dike, Osogbo
An economist at Obafemi Awolowo University, Prof. Abayomi Adebayo, has warned that Nigeria’s economy may experience prolonged instability as persistent increases in prices continue to disrupt markets and erode the purchasing power of citizens.
Speaking with our correspondent on the current economic realities, the Professor of Economics noted that there are no clear signs of immediate stabilisation, stressing that the ongoing surge in prices has triggered widespread adjustments across multiple sectors.
“There is no sign that the economy will stabilise soon. The disruption in prices has led to adjustments in many other prices across sectors. The economy will eventually find a new equilibrium,” he said.
According to him, the sustained rise in prices is forcing households and businesses to adapt to a new economic reality, with ripple effects evident in transportation, food, housing, and other essential services.
On policy responses, Adebayo cautioned against excessive reliance on subsidies, warning that such interventions often distort market forces and create opportunities for inefficiencies and fraud.
“The common policy to address price increases is subsidies, but that often introduces inefficiencies and fraudulent practices that the market is trying to correct,” he explained.
The economist identified salary earners and low-income households as the most vulnerable under current conditions, noting that rising inflation continues to erode real incomes and worsen living standards.
“For salary earners, every increase in price reduces their purchasing power, negatively impacting their cost of living. For the poor, the situation is even more severe—they simply become poorer,”.
As a coping strategy, he advised households to prioritise essential needs—particularly food and Healthcare while cutting back on non-essential spending until economic conditions improve.
He also called for expanded social intervention programmes to cushion the impact of economic hardship, stressing that transparency and accountability must be strengthened to ensure effectiveness.
“More social programmes will be helpful, but accountability remains a major challenge,” he said.
On the business front, particularly for small and medium-scale enterprises (SMEs), Adebayo observed that many operators are already adjusting to the harsh environment by increasing the prices of goods and services in response to market realities.
“Businesses will respond to market signals. Many SMEs will adjust their prices to stay afloat under current conditions,” he noted.
The economist further highlighted the influence of global oil prices on Nigeria’s economic performance, explaining that fluctuations in the international oil market have contributed significantly to domestic price instability.
He, however, criticised Nigeria’s approach to domestic fuel pricing, arguing that the adoption of international crude oil benchmarks for local transactions—even with domestic refining capacity has worsened economic pressures.
“We cannot fully benefit from our local refining capacity because of the blind adoption of international crude oil prices for domestic transactions. We need a more creative approach to insulate the economy from global price shocks,” he said.
Adebayo emphasised the need for innovative, homegrown economic policies that prioritise domestic realities and reduce exposure to external shocks, particularly in the energy sector.
His analysis reflects growing concern among experts over the trajectory of Nigeria’s economy, as inflationary pressures persist and households and businesses continue to grapple with rising costs, shrinking incomes, and uncertain prospects.
Analysts say that as the economy gradually adjusts toward a new equilibrium, coordinated policy actions, structural reforms, and improved governance will be crucial to restoring stability and rebuilding confidence.
