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One liter of petrol does not represent the full scope 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 is lost when the worker buys the same amount of fuel. Economics becomes warped when nominal prices are separated from wages, productivity, household expenses, and real purchasing power, so 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 a car uses 40 liters of petrol every week, it will cost around ₦48,000 in Nigeria at ₦1,200 per litre. In California, the same 40 liters is roughly the same as 10 gallons, and at $6 a gallon, that’s about $60. On paper, one might rush to compare the two prices via exchange rates or liters to gallons conversion alone, but such comparisons miss the point because affordability is not the same as price.
This becomes clearer when income is added to the comparison. A California minimum wage worker earning $15 an hour earns $120 in an eight-hour workday before taxes. The worker could buy a week’s worth of gas for $60 and still have $60 left over from one day’s pay. In Nigeria, a worker earning a monthly minimum wage of ₦70,000 would spend ₦48,000 on the same weekly fuel needs, leaving only ₦22,000 for the rest of the month.
It’s not just a question of fuel prices. This is a crisis of income, productivity and purchasing power. Nominal income is the amount a person earns on paper, while real income is the amount that money can actually buy. A worker in Nigeria may be told that fuel prices are still cheaper than in some developed countries, but that argument collapses when one weekly tank nearly eats up his monthly salary. This is where real income theory comes in handy.
The actual load is not measured on the pump alone. This is measured by the sacrifices a household must make after paying for fuel. This is why purchasing power parity, or PPP, must be handled carefully, not simply to defend against adversity. PPP is useful when comparing what money can buy between countries, but it becomes an empty analysis when people use it to pretend that prices alone can explain economic reality.
Some people will say that rents are higher in America, food is higher in London, or gas is higher in Europe, as if these alone settle the debate. No. A $2,000 rent in America should be examined along with America’s wages, mortgage system, access to credit, utilities, public transportation, consumer protections, and job opportunities. A ₦700,000 rent in Lagos or Abuja must also be examined along with Nigerian wages, unstable electricity, private security, water supply, transportation costs, school fees and weak public support, which is why PPPs must be linked to the prevailing economic conditions.
The theory of household budget constraints explains this better. Each family has a limited income and must divide it between food, rent, transportation, health services, school fees, electricity and savings. In developed countries, although rents are high, wages are usually higher, credit markets are deeper, and the public system absorbs some of the pressure. In Nigeria, families often pay for everything twice, first through government revenues that are supposed to provide services and then through generators, boreholes, private schools, private hospitals, private security, and vehicle repairs caused by damaged roads.
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So when someone says renting abroad is also expensive, the honest question is what is left after rent, fuel, food, transportation and basic bills are paid. Cost of living analysis does not just ask how much an item costs. It asks how the item fits into the overall structure of survival. A worker in California may complain about high rents, and those complaints are valid, but that worker is operating in an economy where hourly wages, labor protections, the unemployment system, public infrastructure, credit histories, and consumer protections are at a different level.
A worker in Nigeria faces high prices in a low-wage country due to a weaker safety net and more self-sufficiency. That is why copying comparisons of developed countries without context is not sophistication, but economic dishonesty. Higher wages in developed countries are not a coincidence as they are linked to stronger productivity, infrastructure, technology, investment, rule of law and institutions. When a worker produces more value per hour, the economy can support higher wages and a better standard of living, and this is where productivity theory becomes important.
The tragedy in Nigeria is that many people work hard but remain trapped in a system of low productivity caused by poor electricity supply, weak logistics, insecurity, corruption and policy inconsistencies. Comparing prices in Nigeria with prices in America while ignoring productivity is like comparing two cars based on their paint while pretending the engine is not important. This is why bad advice can become a national development problem. In economics, the principal-agent problem helps explain the danger.
Leaders are principals, and advisors are agents who are expected to provide honest guidance. But when advisers are more concerned with protecting access to power than conveying the truth, they distort information. They package adversity as progress, confuse leaders with selective data, and use economic grammar to defend policies they know harm society. Such a culture of advice is dangerous because it turns access into private gain and public policy into national risk.
Leaders surrounded by advisers who only protect their access to their superiors, rather than convey the truth, are dangerous to national development. Some may be educated, but education without honesty is a public responsibility. Some educated people know the difference between nominal prices, real income, PPP, productivity, and affordability, but they still mislead the public and may mislead presidents and governors into adopting bad policies. When this happens, bad advice becomes bad policy, and bad policy becomes national suffering.
President Tinubu’s message about economic discipline may be correct in principle. However, its implementation requires advisors who can speak clearly about the suffering felt by the community. Nations will thrive when those in power are competent enough to understand reality and brave enough to report it honestly. A leader who is surrounded by truth tellers has a chance of success. A leader surrounded by access shields may fail silently while everyone around him continues to applaud.
By Abidemi Adebamiwa
