Hoteliers in Nigeria, Africa’s largest country by population, are suffering from the effects of high inflation and its new government’s abandonment of fuel subsidy and currency control.

Some expected the new Nigerian administration — which took office in May 2023 — would reverse some onerous economic woes, but any honeymoon period the new president hoped for was quickly quashed.

“The exchange rate is out of control and inflation is surging,” said Trevor Ward, owner of Lagos-based business consultancy W Hospitality Group and head of consultancy services at Hotel Partners Africa.

Upon taking office 10 months ago, Nigerian President Bola Ahmed Tinubu almost immediately removed the notable gasoline subsidy and allowed the country’s currency, the naira, to float.

The Nigerian people were not pleased to say the least, Ward said.

“The removal of fuel subsidy impacts everything. The price of petrol and diesel have tripled from the price this time last year. Diesel is important because the country runs on generators,” he said.

Prices have gone up, but salaries have not, Ward said.

“Also, the government is broke. … In 2003, 2.4 million barrels of oil a day were produced, but now it is approximately 1.3 million, and the government is massively dependent on oil for its income. That is half what it was 20 years ago,” he said. The remedy has been to borrow and print more money, but with that comes debt that's very hard to service, Ward said.read more.

Source: Costar blog. Mar 6, 2024