In the latest government statistics released by Nigeria on Thursday, the country's inflation rate in January jumped to 29.9%, its highest since 1996, in one of the worst economic crises in West Africa and as the local currency hits an all-time low against the US dollar.

The naira plunged to 1,524 for 1$ - representing a 230% loss of value in the last year for Africa’s most populous country and largest economy.

The challenge is that the country is also heavily dependent on imports to meet the daily needs of its citizens, so external shocks like the parallel foreign exchange market which determines the price of goods and services affect the country easily. 

Adeniyi Bisola, a trader, said: “For some when they eat in the morning, they only get to eat at night while others do not even have access to food”.

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Nigeria also relies on crude oil exports, which was witnessed when crude prices plummeted in 2014, and the country resorted to foreign reserves to stabilize the naira, subsidized fuel via scarce external reserves, and restricted dollar access in the official market for importers of certain items, which led to a rise in food prices.

Exchange rates unified

To fix the economy and attract foreign investors, President Bola Tinubu announced the end of gas subsidies, and multiple exchange rates were unified to allow the determination of the rate of the naira against the dollar.

Still, analysts see that these were not adequate measures, such as strategy consultant Dipo Oyewole who said, “This is quite unfortunate because somehow it seems like the government hasn't been able to get a handle of it, and it has been increasing, and it keeps increasing right now”.

Tinubu ordered the release of certain food items from government reserves to help soften the blow of the economic hardship and said the government plans to establish a commodity board to regulate the soaring prices.

Tinubu has initiated the most daring changes in decades, which have been well-received by investors. However, they have added to the misery of Nigerians who are already suffering from a high cost of living.

Still, Nigeria's bound to have a good few years ahead. A report issued by Nigeria’s government and the International Renewable Energy Agency (IRENA) stated last year that by 2050, energy needs will be met in Nigeria as renewable energy sources account for nearly 60% of final energy consumption, if the African nation enforces an “increased renewable uptake scenario." 

With that, fuel supply on the continent could face major transformations this year, as West Africa is already the hub of the largest refining capacity on the sub-continent, but only 23% of it is functioning.