Nigeria’s economic woes continue to deepen, with the latest International Monetary Fund (IMF) data painting a sobering picture. The country’s GDP per capita now stands at just $835.49 — only $17 ahead of Somalia, a nation battered by decades of conflict. Nigeria significantly lags behind Africa’s “startup Big Four”: South Africa ($6,520), Egypt ($3,160), and Kenya ($2,190). Even regional counterparts such as Ghana ($2,190) and Cameroon ($1,920) have surged ahead. Meanwhile, Seychelles, which enjoys a much smaller population, boasts a GDP per capita of $22,000, underscoring Nigeria’s economic underperformance.

The macroeconomic situation has deteriorated further in recent months. Inflation surpassed 30% in 2024, fueled by skyrocketing costs of food, fuel, and electricity. According to the National Bureau of Statistics (NBS), food insecurity has reached alarming levels, with 62.4% of households lacking sufficient nutrition in 2023, compared to 37% in 2019. An even more distressing statistic reveals that 12.3% of households reported at least one member going an entire day without food. Poor nutrition has manifested physically, as one-quarter of Nigerian children are now underweight, up from 19% four years ago.

Once hailed as the cornerstone of Nigeria’s economic diversification, the tech industry now finds itself collateral damage. The naira, which was officially pegged at ₦800 to $1 in early 2024, has depreciated sharply, trading as low as ₦1,600 on the black market. The currency’s volatility has eroded investor confidence and forced major corporations to reconsider their Nigerian operations.

Among the most notable exits is South African retailer Pick n Pay, which recently sold its 51% stake in a local joint venture. Microsoft, which invested $70 million in a cutting-edge development center in Lagos just two years ago, shut it down earlier this year. Other multinationals, including Unilever, Procter & Gamble, Sanofi-Aventis, and ShopRite, have followed suit.

Adding to the exodus, IBM announced, earlier this week, plans to exit Nigeria, Ghana, and several key African markets by April 2025, transferring its regional operations to MIBB, a subsidiary of Midis Group. The move is part of IBM’s broader restructuring strategy for select African markets.

For Nigeria’s once-thriving startup ecosystem, the news is equally grim. The country’s share of African startup funding plummeted last year, with Kenya overtaking Nigeria by attracting $638 million in investment. Nigeria’s declining purchasing power is also evident in consumer-facing businesses. South African pay-TV giant MultiChoice Nigeria lost 243,000 subscribers in the first half of 2024, attributing the decline to economic pressures. Meanwhile, MTN Nigeria reported a staggering 48.7% drop in Q3 revenue, with voice and data revenues plunging by 31.3% and 15.3%, respectively.

An Optimistic Government, a Skeptical Public

Despite the bleak indicators, the Nigerian government remains unwaveringly optimistic about its economic recovery plan. The 2025 budget pegs the naira at ₦1,400 to $1 and sets an ambitious GDP growth target of 6.4%. However, analysts remain skeptical, citing the country’s persistent fiscal deficits and ballooning debt servicing obligations. The numbers may look promising on paper, but whether they hold up in reality is another question entirely.

In what could be interpreted as a final test of consumer resilience, the Nigerian Communications Commission (NCC) approved a tariff hike across telecommunications services earlier this year. The adjustment, capped at 50% above current rates, aims to sustain an industry struggling against a depreciating naira and rising operational costs. While the NCC argues that the hike is necessary for industry survival, consumers are left wondering whether they can afford to stay connected.

Under the new pricing regime, Nigerians will pay ₦16.5 ($0.011) per minute for calls, up from ₦11, while SMS rates rise from ₦4 to ₦6. Data costs will increase to ₦431.25 ($0.28) per gigabyte. The telecom sector stands to generate an estimated ₦6.7 trillion ($4.3 billion) annually from calls alone, based on 2023 telephone traffic data, which recorded 205.3 billion minutes of outgoing calls.

While these numbers may be music to the ears of telecom operators, they sound like a funeral dirge for Nigerian startups, and consumers at large. The fundamental question remains: how can startups compete for the shrinking disposable income of Nigerian consumers while still achieving profitability? With inflation surging, incomes stagnating, and foreign investment dwindling, the startup ecosystem now faces its most severe test yet.

For years, Nigerian startup founders have built their business models around the assumption of a growing middle class. That assumption is now under siege, as consumers are increasingly forced to prioritize survival over subscription services or fintech solutions. With the purchasing power of ordinary Nigerians collapsing, startups will need more than optimism to weather the storm.