Cash-strapped Nigerians battle pricey rice as Christmas nears

For millions of households in the country, the festive season has come at a time when the inflationary pressure is intensifying.

And Nigerians are going to be spending more buying rice – a key staple in the country.

According to the report released by the National Bureau of Statistics (NBS) on Monday, Nigeria’s inflation rate rose to 34.6 percent in November 2024, up from 33.88 percent in October, driven by high food costs.

Food inflation surged to 39.93 percent in November 2024, a sharp increase from 32.84 percent in November 2023.

A 50kg of local parboiled rice has risen by 66 percent to an average of N100, 000 in December 2024 from N60,000 in December 2023, according to BusinessDay’s market survey.

In a country where the minimum wage rate is N70,000, which is below $50 per month, the ballooning food prices have left many Nigerians stranded this Christmas as high fuel and food prices pressure their budgets amid a worsening naira scarcity.

“How do I afford to buy a bag of rice for N100,000 when I earn only N100,000 ? What will I have left to feed my children and for our upkeep,” Bola Ademosu, a teacher who was at Ketu Market to make purchases, said.

“We have been managing our lives, but how far can we go with the way prices are surging?” Ademosu asked.

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Pay is failing to keep pace with inflation in Africa’s biggest economy, with civil servants and low-income households mostly hit by inflation.

This has amplified a cost-of-living crisis that is hurting citizens’ physical and mental health and exacerbating existing poor health conditions, according to experts.

“It has been a difficult year for an average Nigerian who has constantly contended with surging food prices,” AfricanFarmer Mogaji, chief executive officer of X-Ray Consulting, told BusinessDay.

“Rice is a major staple for millions of Nigerian households and you can imagine buying a bag for N100,000 in a country where the minimum wage is N70,000,” he explained.

Foods such as jollof rice, which is a common feature on the Christmas menu, will cost a Nigerian 5.1 percent more. The average cost of preparing a pot of jollof rice, a popular Nigerian delicacy for a family of five is N21,300, according to the latest Jollof Index report.

Cash Scarcity Bites

Apart from the high cost of rice, Nigerians who rely heavily on cash for their transactions are facing significant challenges this Christmas as the country continues to grapple with an ongoing cash shortage.

Despite a substantial increase in the amount of currency in circulation and the volume of cash held outside the banking system, the demand for physical cash remains high across the nation.

“I now patronise vendors that are willing to accept bank transfers as a means of payment for goods and services, as getting cash to spend is becoming really difficult,” Tayo Odebulu, a staff member of the National Hospital, told BusinessDay on Monday.

Odebulu said she has not been able to withdraw cash from POS agents due to the cash crunch.

Speaking with BusinessDay, a POS agent who operates in the Central Business Area, Abuja, and identified himself as Usman, explained that making bank withdrawals has been difficult in the past week. He stated that banks are unwilling to disburse cash to them, blaming it on unavailability of cash.

“I have not opened my business for some days because I could not get cash. At the banks, I could only withdraw N20,000. Doing this business is becoming difficult and this is why I had to increase the charge. If you want N5,000, you will pay N300 charge,” he said.

Read also: High food prices push inflation to 34.6%, 28-year high

In a chat with BusinessDay, a staff member of a Tier-1 bank, who pleaded anonymity, said: “There is no cash in the bank for now. Even customers that come in here for withdrawals barely get enough cash. But we are hopeful that this may be resolved soon.”

Analysts attribute the high cash demand to the surge in economic activities typically seen during the yuletide season.

Ayokunle Olubunmi, head of financial institution ratings at Agusto Consulting, noted that the festive season usually brings a spike in transactions, with many Nigerians purchasing goods, travelling, and preparing for Christmas. This seasonal increase in demand is expected and typical, he said.

Olubunmi further explained that both the Central Bank of Nigeria (CBN) and deposit money banks (DMBs) usually anticipate this surge in cash demand and plan accordingly. However, he pointed out that the CBN is not printing enough currency to meet the demand, largely due to its efforts to cut costs.

He also noted that the central bank is actively promoting the use of electronic channels and a cashless policy, which is intended to reduce dependence on physical cash.

On the issue of cash hoarding, Olubunmi argued that if there were sufficient cash in circulation, there would be no need for individuals to stockpile money.

Ayodeji Ebo, managing director/CBO at Optimus by Afrinvest, said business activities typically increase during the holiday period, further driving up the demand for cash. He also observed a significant shift from traditional bank withdrawals to the use of Point of Sale (PoS) terminals due to the convenience they offer.