An economist and former Senior Special Adviser to the President of the African Development Bank on Industrialisation, Banji Oyelaran-Oyeyinka, has said comparisons suggesting that petrol is cheap in Nigeria are misleading, describing them as a “fallacy of one price petrol comparison.”
Oyelaran-Oyeyinka said the global economy was currently facing a major shock, noting that “the world is experiencing a huge macroeconomic shock,” adding that “according to the S&P 500 Index, $5 trillion has been lost in these two weeks of the war,” excluding “other measurable and unmeasurable factors.”
In a statement on Saturday, he said the assumption that Nigerians were insulated because of supposedly cheap petrol was flawed.
“The backdrop here is that Nigerians are somehow insulated from this crisis because we do or should enjoy, likely the ‘cheapest’ petrol in the world. The price of petrol is $1.4–$1.8 per litre across French West Africa. I lived in Abidjan for seven years so I know,” he said.
However, he stressed that “low nominal petrol prices in Nigeria do not translate to affordability,” explaining that “a resource-dependent non-manufacturing nation is as a rule severely punished by natural and economic disasters and shocks.”
According to him, Nigeria’s structural challenges — low wages, relatively high inflation, and inevitably low purchasing power — made citizens more vulnerable to global oil shocks than those in countries paying higher prices for fuel.
Explaining further, he said purchasing power should be measured by labour time rather than currency conversion.
“Purchasing power parity is made clearer not by direct currency conversion, but by how long a worker must labour to earn a given sum,” he said.
He noted that “for a Nigerian minimum-wage worker, earning $2 takes approximately 460 minutes, or nearly 7.7 hours,” compared to “about 16.5 minutes” in the United States and “roughly 7 minutes” in the United Kingdom.
“This metric directly links global commodity prices to the daily reality and experience of the workforce,” he added.
The economist also described direct comparisons of petrol prices across countries as misleading.
“A nominal comparison of petrol prices per litre shows Nigeria among the lowest globally, but this is a fallacy,” he said, adding that such comparisons must be viewed alongside labour productivity.
“This is the true measure of development and underemployment. We are a low-income fragile economy which fragility throws households into a tailspin once you have an external shock,” he stated.
He emphasised that economic resilience depended on building a strong domestic manufacturing base and diversifying exports.
“Productivity or time-to-earn a wage is the metric that reveals the true cost of labour and exposes the fallacy of a single price comparison,” he said.
Oyelaran-Oyeyinka further noted that Nigeria should not be compared with advanced economies.
“An underdeveloped country like us should not be compared with a superpower USA, UK or any other OECD country because of the simple reason that we have not earned that distinction,” he said.
He added that petrol affordability should be assessed relative to income, not just price.
“The price per litre in Nigeria of N1,300… is just one variable in a complex set of development equations,” he said, noting that “citizens of low-income nations earn low income and for the most part at subsistence levels, so petrol to be realistic becomes a luxury item.”
He explained that “the ‘effective cost of petrol’ is relatively higher for a Nigerian worker than for a worker in any industrial nation,” stressing that this held true both in normal times and during economic shocks.
Speaking further on broader structural issues, he said Nigeria remained trapped in a “low-level income equilibrium,” with about 70 per cent of the population in subsistence agriculture and persistent infrastructure challenges, especially power supply.
“To get a true picture you must measure petrol cost in ‘hours of labour.’ With this measure it will manifest among the most expensive in the world because a Nigerian wage earner operates in a low-productivity system,” he said.
He concluded that currency conversion alone created a misleading picture.
“When you do a direct conversion of this Naira to dollars/pound you generate an economic fallacy, it confuses and misleads folks,” he said.
“Done this way, yes, Nigeria’s petrol is relatively not cheap. Food and housing prices are also not cheap. We remain so until we achieve structural transformation of the Nigerian economy.”