Nigeria’s transport and storage industry shrank for two consecutive quarters, entering a recession for the first time in 30 months. Data from the latest Gross Domestic Product report by the Nigerian Bureau of Statistics (NBS) showed that the sector became 36% smaller in Q3 after losing over 50% in the previous quarter.
“This rate represents a decrease of 77.4% points relative to the same quarter of the previous year and an increase of 14.8 percentage points relative to the preceding quarter,” the report said. It also said the sector contributed 0.84% to real GDP in Q3, down from last year’s 1.34%. Road transport, the busiest sub-sector, contracted by 43.65%.
Since May 29th, when Bola Tinubu scrapped Nigeria’s costly petrol subsidies, prices have stayed at an all-time high of N617. The Federal Government claimed it was saving billions of dollars from that move. However, this subsidy has allegedly made a quiet return, as petrol prices have stopped changing with oil prices since July.
Data from the NBS shows that the average retail price paid by consumers for petrol in May was N238.1, an increase of 162.9% in September (N626.2). The average retail price of diesel also rose from N844.28 per litre to N890.8 in September. Intra-city journeys by bus have become costlier, rising by 105.9% to N1,337.8 in September from N649.6 in May, while inter-city travels became 47% more expensive.
Nigerians tried adapting to this price shock by seeking alternatives. In July, the country witnessed a surge in gas-powered vehicles and generators. However, that wave subsided after gas prices soared 26% and 14% in September and October, respectively. High energy and food prices have driven Nigeria’s inflation to a two-decade high of 27.3%.
More so, alternative energy couldn’t move the needle because most Nigerians don’t own cars. No recent data exists, but as of 2018, 94% of Nigerians did not own vehicles. Most cars on Nigerian roads (95%) are purchased second-hand. And thanks to rising import costs, there isn’t any solid reason to believe that number has improved. According to the National Bureau of Statistics, Nigeria spent N140 billion importing used vehicles in the first quarter of 2021 and N150 billion in the fourth quarter of 2020. But this year alone, the naira has lost more than half its value against the dollar. This same reason is why EV adoption has not picked up steam in Nigeria. Even though they want alternatives to fuel, their earnings are generally too low to afford these cars.
Notably, Nigeria’s government has been seeking ways to revive the transport sector through fuel alternatives in the last few months. For instance, the Federal Government announced rolling out 11,500 CNG buses in October. And Ogun State’s government also said it would convert 2000 buses to CNG for free.