• Monday, July 15, 2024
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How Nigeria slipped into socio-economic mess


Nigeria’s worsening insecurity and climate change have impacted food production in the country for over a decade, leading to a shortfall in most key staples and driving up inflation.

The country’s food situation worsened after the past administration introduced the border closure policy to tame smuggling, which resulted in increasing food prices.

This, coupled with the petrol subsidy removal and naira devaluation of the present administration, has further pushed up food prices and amplified a cost-of-living crisis in Africa’s biggest economy. The rising cost of living is leading to a social-economic crisis in the economy.

Nigeria’s headline inflation rate rose for the 13th consecutive time in January to 29.90 percent from 28.92 percent in the previous month, according to the National Bureau of Statistics (NBS).

Food inflation, which constitutes 50 percent of the inflation rate, rose to 35.41 percent from 33.93 percent.

“We are here because our fiscal and economic policies are not right. And most times it is because we do not have a formidable economic team in place. The problems started when the president made the huge pronouncement that subsidy has been removed,” Femi Egbesola, national president of the Association of Small Business Owners of Nigeria, said.

He said the government should have taken measures to cushion the negative effect the subsidy removal would have caused.

Over the past few weeks, several kidnapping cases have been reported in six states and Abuja, the nation’s capital. Protests have also broken out in different parts of the country in reaction to the high cost of living, with citizens in Niger, Kano, Ogun, Osun, and other states demanding solutions to the economic crisis.

According to Picodi, an international e-commerce platform, the total cost of the ‘survival basket’, which contains 10 litres of milk, 10 loaves of bread, 1.5kg of rice, 20 pieces of eggs, 1kg of cheese, 6kg of meat, 6kg of fruits and 8kg of vegetables, rose by 33.1 percent to N64,060 in January 2024 from N48,130 in the same period of last year.

The cost of the basket increased by 17.4 percent in January 2023, 15.9 percent in 2022, 9.06 percent in 2021, and 2.80 percent in 2020.

During the sixth executive committee meeting of the Northern Traditional Rulers Council on Wednesday, Muhammad Abubakar III, the Sultan of Sokoto, said the economic hardship in Nigeria had reached a level where citizens were agitated, angry, and hungry.

He said: “To make matters worse, we are faced with the rising level of poverty amongst our people, lack of normal sources of livelihood for the common man to have, even if it is one good meal a day.

“I believe talking of insecurity and the rising level of poverty are two issues that we cannot fold our arms and think everything is okay. I have said it so many times and at so many fora that things are not okay in Nigeria and of course, things are not okay in the North.”

Since President Bola Tinubu announced petrol subsidy removal during his inauguration on May 29, pump prices have more than tripled to over N600, while the value of the naira has plunged following the floating of the currency.

Last June, the Central Bank of Nigeria merged all segments of the FX market into the Investors and Exporters window and reintroduced the willing buyer, willing seller model.

The naira has continued to depreciate against the dollar and other major foreign currencies since then.

The official exchange rate fell from N463.38/$ to N1,503.4/$ as of February 14, 2024. At the parallel market, the naira is pushing above N1,500/$ from 762/$.

“I have reduced food consumption for my family from three square meals to two,” Iyanuoluwa Fadairo, an Ogun-based trader, said.

“Even rice, a common food that we consume almost everyday, has reduced to three times in a week. At times, I prefer ‘Mama put’ to cooking at home because if you calculate how much you will spend on food like gas, oil, and other food items, it’s a lot,” she said.

Nigeria’s economy has continued to witness ups and downs due to the depreciation of the naira and high energy costs, said Muda Yusuf, chief executive officer of the Centre for Promotion of Private Enterprises (CPPE).

“The distortions caused by the previous administration added to what we are witnessing now. Look at the issue of debt which the current administration is struggling to get away from. The debt will stretch the administration’s capacity even to get resources to do some other things,” he added.

Afolabi Wasiu, president of the Nutrition Society of Nigeria, said the high cost of food, increased poverty and the rising cost of cooking fuel have made it difficult for Nigerians to afford a balanced diet.

“People are poor, and the cost of food is rising. This is a double burden that has fuelled people’s inability to afford a balanced diet. Additionally, the cost of fuel to cook is also high,” he said.

Last year, the World Bank said in its latest Nigeria Development Update report that rising inflation and sluggish growth in Africa’s biggest economy increased the number of poor people to 104 million in 2023 from 89.8 million at the start of the year.

Before the NBS adopted a new methodology for labour statistics, unemployment had quadrupled to 33.3 percent as of Q4 2020 from 8.2 percent in Q2 2015. It was put at 4.1 percent in Q2 last year, down from 4.2 percent in the previous quarter.

Despite the reforms, foreign investments into Nigeria dropped to $654.7 million, the lowest level since the statistics bureau started collating the data in 2013.