Nigeria’s Misery Index Rises To 62.79% In July 2022, Paying Rent Gets Tougher


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Nigeria’s Misery Index rose to 62.79 in July-2022 compared to 59.4 in December 2021. This represents an almost 6% decline in our Misery Index.

In other words, in the past seven months (December 2021 and July 2022) Nigerians are experiencing a sharp worsening of the misery index by almost 81 basis points each month.

This rate of decline in Nigeria’s Misery Index is simply remarkable

What is the Misery Index?

The Misery Index is an economic indicator which aims to keep track of a combination of various economic data to help assess the degree of economic hardships for ordinary folks in an economy.

There is actually a formula (per Hanke 2011)

  • Misery Index = Unemployment rate + Inflation + Bank Lending rates – GDP growth rate).
  • Note that the higher the Misery Index, the more economic hardship that folks in an economy are experiencing.

To most economists, the importance of this metric, is that economic hardships need to be tracked and addressed specifically to avoid risk of social unrest at some point.

So what about Nigeria?

The National Bureau of Statistics and the Central Bank of Nigeria both keep a trove of essential economic data.

Thus, using the latest available reports for inflation, unemployment, Lending rate and GDP growth rate,

  • Nigeria’s latest Misery Index of 62.79 = 18.6% + 33.3% + 14%– 3.11

As previously explained, Unemployment Rate is the largest component of Nigeria’s Misery Index.

  • it is worth noting that Unemployment statistics are yet to be updated since 2020, thus the Misery Index could easily be higher once further data is received
  • Unfortunately, the other components of our Misery Index (i.e. Inflation Rate and CBN’s Lending rate) are now beginning to deteriorate rapidly.
  • Thus, we anticipate the country’s Misery index has further risk of worsening through 2022.

A summary review of the components of Nigeria’s Misery Index is below

  • Inflation – 18.6%

Nigeria’s inflation rate in June 2022, surged further to 18.6% compared to 17.71% recorded in the previous month. Nigeria’s inflation has climbed to its highest level in 65 months (over 5 years).

Nigeria’s high inflation rates can be linked to excessive money supply and weak GDP growth which has been further compounded by energy price spikes.

  • Energy price spikes can be attributed to external shocks to the economy, such as disruptions caused by the Russian-Ukraine war.

The Central bank’s failure in combating rising inflation means that Nigerians’ purchasing power has been weakened even further.

  • Unemployment 33.3% 

Nigeria’s unemployment rate which was last published by the Nigerian Bureau of Statistics (NBS) in 2020 outlined 33.3% unemployment rate

This compares to 27.1% recorded as of Q2 2020, indicating that about 23,187,389 (23.2 million) Nigerians remain unemployed, according to the last released labour force report published by the National Bureau of Statistics.

More recent data will be welcome, however, anecdotal data suggests unemployment rates remain high causing a large number of Nigerian youths to seek greener pastures overseas.

  • Lending rate 14% 

The Central Bank of Nigeria is now attempting to adopt a hawkish stance to reign-in run-away inflation. Specifically, in recent times, Nigeria’s central bank has increased rates twice in 2022 to now 14%

It’s worth noting that the last time Nigeria adopted an interest rate of 14% was February 2019.

  • Growth rate 3.11%

The Nigerian economy increased by 3.11% in real terms in Q1 2022, following a 3.98% year-on-year rise in the previous quarter, marking the sixth straight quarterly growth in the Nigerian economy since the covid-induced recession in 2020.

Although Nigeria appears to be growing, this growth is insufficient to compensate for the deficiencies of other economic indicators used in the misery index calculation.

To summarize, as inflation surges, Nigerians should expect the Central Bank to continually increase Interest Rates further.

Unfortunately for Nigerians, this trend will simply mean an ever-increasing Misery Index as economic hardship worsens for the ordinary Nigerian

This outcome of rising economic hardship is remarkable especially as Nigeria’s policymakers including the Central Bank continue to demonstrate ineffectiveness at addressing the underlying causes of Nigeria’s inflation which includes a sub-optimal GDP growth rate and an extraordinary spike in Money Supply.

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