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Unravelling the costs of holiday in Lagos and Barcelona 04 Sep 2025

In Nigeria today, distorted pricing is not an abstract economic terminology. It is a phenomenon that is eating away incomes, trapping families in poverty, and narrowing the path to opportunity. At its core, “distorted pricing” describes a persistent deviation of market prices from their natural equilibrium – the point where supply and demand meet without interference.

In functioning markets, prices settle where buyers and sellers, responding to real signals, agree on value. But in Nigeria, that natural process is repeatedly undermined by policy interventions, monopolistic behaviour, and speculation. This results in a marketplace in which goods and services often cost wildly more than they should.

A viral Instagram video, which captured national attention at the start of August, described a Nigerian family’s “no expense spared” summer holiday. For three weeks over the summer, the family rented a three-bedroom Airbnb in the exclusive district of Ikoyi, Lagos at N330,000 a night. Over the course of their three-week stay, the family spent over N6.9 million on accommodation. They engaged a private chef for N620,000, bought food ingredients worth N2,000,000, and topped up supplies with groceries averaging N150,000 each. Additional expenses – ranging from transportation and fuel to driver tips, personal grooming, and paid leisure activities – brought their total spend to a staggering N18.92 million, approximately $12,000. The cost of travel air travel to Lagos was not included.

To understand how striking these numbers are, it is useful to place them beside the account of another trip: a Nigerian family of four living in the UK who spent Christmas 2024 in Barcelona, Spain. The holiday lasted one week – one-third the duration of the Lagos vacation. Yet, the total bill, covering everything including airfare, came to about £2,000. The return flights from Manchester to Barcelona for four people were £384. A one-week Airbnb stay cost £980 and included daily breakfast. A single £100 grocery shop at Lidl provided food for the entire week, with enough leftovers to take back home. Daily sightseeing, entry fees, and local transport in Barcelona totalled around £500.

At the August 2025 exchange rate of N2,027.84/£1, the Barcelona trip cost approximately N4 million in all. By contrast, the Lagos staycation’s N18.9 million – before adding travel costs – was about 4.7 times more expensive. A three-week holiday in Nigeria consumed nearly five times the budget of a one-week international break in a major European tourist city, even when the latter included airfare and Christmas-season pricing.

That a trip in a much lower-income country could carry a price tag so far above an overseas holiday in Western Europe is emblematic of just how deeply distorted Nigerian pricing has become. The roots of this problem lie in the erosion of natural price-setting mechanisms. In principle, competitive markets move towards an equilibrium where prices reflect real supply and demand. In reality, Nigeria’s markets are regularly disrupted. Government-imposed price controls and subsidies can suppress or inflate prices artificially, creating long-term imbalances. The removal of fuel subsidies, for instance, while aimed at freeing resources for other uses, has driven transport and food prices sharply upward.

Instability in the value of the naira contributes to upward price changes. “Replacement cost pricing” adds to the role of speculation in fixing prices. In anticipation of currency devaluation or higher import costs, businesses raise prices on existing stock before their own costs have changed. This is a self-protective strategy for sellers that accelerates inflation, often without a corresponding change in production or procurement expenses.

Price distortions are rife in Nigeria’s food markets. For instance, between May and July 2025, the price of a 50kg bag of local parboiled rice in Lagos jumped from N53,000 to N77,000. In Abuja, the same product sold for about N65,000, while imported rice reached N85,000. These price increases don’t always follow a supply shortage – in many cases, speculation and opportunistic mark-ups were the culprits.

The SBM Jollof Index, a widely recognised measure of food inflation, strips away all abstraction. In June 2025, the cost of cooking a single pot of jollof rice had reached N28,066 – up 153 percent compared with March 2023. That is more than 40 percent of Nigeria’s national minimum (monthly) wage, which, at the official exchange rate, now barely buys $46 worth of goods. For families living on these wages, cooking a decent pot of stew amid other needs is a challenge.

When it comes to the luxury end of the market, where the Ikoyi holiday sits, prices are more distorted. N330,000 a night equates to roughly £162 – a rate comparable to that charged at well-reviewed central Barcelona apartments, but without the same surrounding infrastructure, amenities, or competitive accommodation market. High-end Nigerian properties and services are priced in global luxury terms despite being delivered in a local economic context with far lower average incomes.

Yet, distorted pricing is not a problem isolated to the market's top tier. It affects every income group, consuming disposable income that could otherwise be saved, invested, or used to improve quality of life. For a middle-income family, when a grocery run in Lagos can cost five times more than a full week’s shop in Barcelona’s Lidl – without matching quality or variety – the distortion is immediate and tangible. People are spending more and getting less, not because the goods inherently cost so much to produce, but because market inefficiencies and speculative behaviour have pushed prices far beyond reason.

The social consequences are severe. Families strip away non-essential spending as essentials like food and housing consume ever-larger shares of household budgets. Savings vanish, investment in education or home repairs is postponed indefinitely, and health needs go unmet. Nutrition suffers – cheaper, less healthy foods replace balanced diets, leading to malnutrition and long-term health problems, particularly among children.

Inequality also widens. Those with access to foreign exchange, political patronage, or monopolistic market positions can continue accumulating wealth and enjoying privileges – like three-week, multi-million-naira staycations – while the majority see their standards of living falling. The holiday in Ikoyi is, thus, not just an example of personal extravagance; it is a potent symbol of a society split between those who can navigate or even benefit from the distortions and those who must live with their consequences.

Addressing distorted pricing requires coherent, sustained action. The first step is to unify the exchange rate system so that all participants operate under the same transparent, market-driven rate. This would reduce the scope for arbitrage and help rebuild trust in price signals.

Trade and fiscal reforms are also critical. Protectionist policies – including blanket import bans and onerous restrictions – have repeatedly failed to protect domestic industry. Instead, they constrict supply and inflate prices. Gradual dismantling of these barriers, alongside support for efficient cross-border trade, would widen availability of goods and drive down prices through competition. Targeted subsidies or direct support programmes could cushion the impact on the most vulnerable without freezing distortions into the entire market.

Stronger consumer protection measures are also essential. Regulatory bodies must have the authority and capacity to act quickly against price gouging, false scarcity, and monopolistic practices. Companies should be required to justify price increases with clear evidence of higher costs, rather than speculative fears.

Nigeria can draw lessons from elsewhere. Ghana, though grappling with its own inflation and currency challenges, has adopted more proactive measures to improve market efficiency, such as streamlining port operations to reduce import delays and directly challenging large companies over excessive pricing. While far from perfect, these approaches demonstrate that active governance can at least limit the scope of distortion.

The juxtaposition of the two holidays makes the stakes clear. Here is a family who could fly from the UK to Barcelona, spend a week in prime tourist season, eat well, visit sights, and return home – all for N4 million. And here is a family who could spend three weeks in Lagos, no travel included, at a cost of nearly N19 million. One price reflects an entire international experience; the other reflects a distorted domestic market in which prices have drifted far from production costs, local earning power, or global comparatives.

The viral Lagos holiday video was intended to send shockwaves in the system, and it did. But until Nigeria confronts the policies, practices, and market structures that allow such distortions to flourish, the absurdity of paying far more to holiday at home than abroad will remain a reality – and an abiding symptom of deeper economic malaise.

Cheta Nwanze is Lead Partner at SBM Intelligence.