By Abidemi Adebamiwa
A litre of petrol does not tell the full story of economic hardship. The real issue is not whether petrol is cheaper in Nigeria or more expensive in California. The real issue is how much of a worker’s income disappears when that worker buys the same amount of fuel. Economics becomes misleading when nominal prices are separated from wages, productivity, household burden, and real purchasing power, which is why the first issue is affordability.
Take a simple comparison involving the same Toyota Camry, the same weekly movement, and the same amount of fuel. If the car uses 40 litres of petrol weekly, that would cost about ₦48,000 in Nigeria at ₦1,200 per litre. In California, the same 40 litres is roughly 10 gallons, and at $6 per gallon, that comes to about $60. On paper, someone may rush to compare both prices through exchange rates or litre-to-gallon conversion alone, but that kind of comparison misses the point because affordability is not the same as price.
That becomes clearer when income is added to the comparison. A California minimum wage worker earning $15 per hour makes $120 in an eight-hour workday before tax. That worker can buy the week’s fuel for $60 and still have about $60 left from one day’s wages. In Nigeria, a worker earning ₦70,000 monthly minimum wage would spend ₦48,000 on that same weekly fuel need, leaving only ₦22,000 for the rest of the month.
That is not merely a petrol price problem. It is an income, productivity, and purchasing power crisis. Nominal income is the amount a person earns on paper, while real income is what that money can actually buy. A Nigerian worker may be told that petrol is still cheaper than in some developed countries, but that argument collapses when one weekly tank nearly wipes out a monthly salary. This is where real income theory becomes useful.
The real burden is not measured at the pump alone. It is measured by the sacrifice a household must make after paying for fuel. This is why purchasing power parity, or PPP, must be handled with care rather than thrown around as a lazy defence of hardship. PPP is useful when it compares what money can buy across countries, but it becomes empty analysis when people use it to pretend that price alone explains economic reality.
Some people will say rent is higher in America, food is higher in London, or petrol is higher in Europe, as if that alone settles the debate. It does not. A $2,000 rent in America must be examined alongside American wages, mortgage systems, credit access, utilities, public transport, consumer protection, and job opportunities. A ₦700,000 rent in Lagos or Abuja must also be examined alongside Nigerian wages, unstable electricity, private security, water supply, transport costs, school fees, and weak public support, which is why PPP must be connected to lived economic conditions.
The theory of household budget constraint explains this better. Every family has limited income and must divide it among food, rent, transport, health care, school fees, electricity, and savings. In a developed country, even where rent is high, wages are usually higher, credit markets are deeper, and public systems absorb part of the pressure. In Nigeria, families often pay for everything twice, first through public revenue that should provide services and then again through generators, boreholes, private schools, private hospitals, private security, and vehicle repairs caused by bad roads.
So when someone says rent is also expensive abroad, the honest question is what remains after rent, fuel, food, transport, and basic bills have been paid. Cost-of-living analysis does not simply ask what an item costs. It asks how that item fits into the total structure of survival. A worker in California may complain about high rent, and that complaint is valid, but that worker operates in an economy where hourly wages, labour protections, unemployment systems, public infrastructure, credit history, and consumer safeguards exist at a different level.
A Nigerian worker faces high prices inside a low-wage economy with weaker safety nets and more self-provision. That is why copying developed-country comparisons without context is not sophistication but economic dishonesty. Higher wages in developed economies are not accidental because they are connected to productivity, infrastructure, technology, investment, rule of law, and stronger institutions. When a worker produces more value per hour, the economy can support higher pay and better living standards, which is where productivity theory becomes important.
Nigeria’s tragedy is that many people work hard but remain trapped in a low-productivity system created by poor power supply, weak logistics, insecurity, corruption, and policy inconsistency. Comparing Nigeria’s prices with America’s prices while ignoring productivity is like comparing two cars by their paint while pretending the engines do not matter. This is why bad advice can become a national development problem. In economics, the principal-agent problem helps explain the danger.
The leader is the principal, and the adviser is the agent expected to provide honest guidance. But when advisers care more about protecting access to power than telling the truth, they distort information. They package hardship as progress, confuse leaders with selective data, and use economic grammar to defend policies they know are hurting ordinary people. That kind of advisory culture is dangerous because it turns access into a private benefit and public policy into a national risk.
Leaders surrounded by advisers who are only there to protect their access to their bosses, rather than tell them the truth, are dangerous to national development. Some may be educated, but education without honesty becomes a public liability. Some learned people know the difference between nominal price, real income, PPP, productivity, and affordability, yet they still mislead the public and perhaps mislead presidents and governors into bad policies. When that happens, bad advice becomes bad policy, and bad policy becomes national suffering.
President Tinubu’s message on economic discipline may be right in principle. But implementation requires advisers who can speak plainly about the pain people feel. Nations develop when those close to power are competent enough to understand reality and courageous enough to report it honestly. A leader surrounded by truth-tellers has a chance to succeed. A leader surrounded by access-protectors may fail quietly while everyone around him keeps clapping.
Abidemi is the Managing Editor @ Newspot Nigeria
