The raging insecurity, an exponential increase in the unemployment rate and the recent rise in food inflation signal tough times ahead for Africa’s most populous country, Nigeria.
Nigeria’s food inflation jumped to almost 22 percent according to the Consumer Price Index/Inflation data published on Tuesday by the National Bureau of Statistics (NBS).
The report, seen by BusinessDay indicates that food inflation rose to 21.79 percent in February 2021 compared to 20.57 percent in January 2021.
The data showed that the inflation was caused by increases in the prices of bread and cereals, potatoes, yam and other tubers, meat, food products, fruits, vegetables, fish, and oils and fats.
Observers say it is not unconnected to the resultant effect of unbridled clashes between farmers and herders, as well as the strike action by the Amalgamated Union of Foodstuff and Cattle Dealers of Nigeria (AUFCDN) that hindered food transportation from the North to the Southern part of the country.
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Analysing the implications of the NBS report, Osifo Agharese, a professor of agricultural economics at Ambrose Alli University, Ekpoma, said with the price surge in staple foods and the purported increase in the pump price of petrol, food inflation will continue to climb up because transportation is a vital part of the market cost of food items.
Agharese, a consultant agricultural finance and marketing practitioner to Bank of Agriculture and Central Bank of Nigeria (CBN), said food security is sine qua non to human security, and if the prices of food items continue to rise, there may be socioeconomic chaos.
He urged the government to watch out for more violent crimes as Nigerians, particularly low income earners will become agitated because they can no longer afford the price increase in basic food items.
“Food inflation is very difficult to control and it has brought down elected governments. Food inflation is a component of general inflation. In developing countries, the low and middle-income earners spend more than 50 percent of their income on food.
“The rise in food inflation simply means a reduction of income to the low and middle-income earners. Their disposable income automatically shifts downward by the same margin of the rise in food inflation”, Agharese opined.
Recommending ways to mitigate the effect of food inflation and food price volatility, the lecturer urged state and local governments to sensitise the people about the existing fiscal and monetary policies of the CBN.
Food inflation affects everybody and no one individual can handle it. It has a negative effect on the people, and the governments have to control food inflation, which they are doing through an institution which is the CBN.
“There are many Macro-Economic policies for combating food inflation. Essentially, these involve both fiscal and monetary policy instruments. The annual budget for example is a way to moderate general inflation.
The CBN already have in place numerous monetary policy instruments such as the Anchor Borrowers’ Programme, the commercial agricultural credit fund, Agricultural Credit Guarantee Scheme, Nigeria Incentive-Based Risk Sharing system for Agricultural Lending (NIRSAL), agents banking, cashless policy and a lot more.
“Unfortunately, the majority of our local farmers are either not aware of them or cannot meet up with the requirements for accessing these facilities. If farmers can be sensitised on the Federal Government’s existing grants, then they will be able to produce at a lower cost,” he added.
