Consistent drop in the value of Nigeria’s local currency, the Naira, coupled with rising inflation has eroded the take home pay of many employed Nigerians in the last two years.
According to analysis, the Dollar value of Nigerian workers salary shows a drop of 24.5 percent since N30, 000 National Minimum Wage took effect.
Recall that on Thursday April 18, 2019 when the minimum wage law was signed by President Muhammadu Buhari, the naira closed the month of April at the Bureau de Change forex market with an average exchange rate of N359 to the dollar, data from the Central Bank of Nigeria shows.
Two years later, the Naira has dropped in value by N117.05 (32.60 percent) to N476.05 against the dollar as at February 2021 monthly average, thus indicating the dollar value of N30,000 is now $63 compared to $82 in 2019.
In the same period, also at the Inter-bank Foreign Exchange Market, Naira lost its value to dollar by N20.
In February 2021, Naira exchanged to the dollar on an average rate of N381 from N361 average exchange rate in April 2019. This shows $78.7 as the monthly salary from $83.10 in April 2019.
For a Nigerian whose salary has not improved since April 2019, he or she will also have to find a way to deal with the rising inflation during the same period under review.
According to data from the National Bureau of Statistics, the price of goods in the country has risen from 11.31 percent in April 2019 to 17.33 percent in February 2021. This means that an item bought with N5000 in April 2019 is now sold for N6,469 in February 2021.
Food inflation as at the time the N30,000 minimum wage was signed was at 13.34 percent. As at February 2021 it has increased to 21.79 percent.
NBS consumer’s price index also indicated that the average monthly index price of food was 353.6 as at April 2019 but this has increased to 421.6 in February 2021.
The pain is even made clear if illustrated with an employee who had N1 million as savings as at April 2019, with a return of 1.5 percent as interest. Computed, he will have at least N1,102,500 to withdraw in February 2021, representing an additional N102,500.
However, when the N1,102,500 is converted to dollars, whatever supposed gains accruable would have basically been wiped out due to the depreciation in the Naira.
In dollar terms, the value of the N1 million in February 2021 is $2,100.61 when compared to the value of N1 million as at April 2019 which was $2,785.51, meaning that over 32.60 percent or N326,046 had been lost.