Nigeria’s food inflation among world’s highest

Food prices in Nigeria have not only risen to record high but are also among the highest in the world.

Africa’s biggest economy, home to some of the world’s poor, is currently in one of its worst food crisis in history, with its populace spending today, on average, double the amount they spent on food five years ago.

For the 17th consecutive months, food prices have crept higher, accelerating to 21.97 percent in February, according to data from state-funded statistical agency, the National Bureau of Statistics (NBS).

That puts the oil-rich West African nation as the country with the 11th highest food inflation rate among 169 counties in the world, BusinessDay data show.

Thus, Nigeria now ranks alongside war trodden and economically mismanaged countries like Lebanon, Venezuela, Zimbabwe, and Haiti faced with increasing food prices.

Although the rate of food prices in Nigeria is not too alarming compared with what is seen in the aforementioned country, Nigeria’s case appears unique.

The country is not only battling with increasing food prices that are fast going out of reach for its populace, but it is also experiencing a jobless rate that is second highest on the global scale.

Some 23.2 million Nigerians, equivalent to the entire population of Taiwan, are without jobs, while an additional 15.9 million, similar to the population size of Somalia, are underemployed.

Unemployment has got so bad to the extent that attaining some of the highest school qualifications in the country does not guarantee you a job.

About 17 percent of the total 73,000 Nigerians with a doctorate degree are unemployed, while about 21 percent of the figure is underemployed.

Even countries that are known to have some of the highest inflation rates do not have unemployment rates as high as Nigeria.

For instance, Venezuela known for having the worst food crisis in the world, with a food inflation rate of 2,430 percent, has an unemployment rate that is as low as 6 percent.

Same with Middle Eastern country Lebanon, with the rate of increase in food prices at 402 percent but with an unemployment rate at 6.2 percent.

Although items such as transportation and medical services have continued to push general commodity prices up, the rise in food price has been the main driver of the rising inflationary pressure.

Food prices have headed north due to supply chain disruptions caused by the incessant attacks on farmers by herdsmen in the food processing regions, high input costs such as fertilizers, continual devaluation of the naira, which has resulted in imported inflation, and a protectionist policy shutting the country’s borders against both imports and exports.

That has been a major reason why the growth of the agricultural sector has remained weak despite various interventions pulled by the Central Bank. The unresolved underlying structural issues around the food supply chain has continued to outweigh the expected results from these interventions

Zainab Ahmed, Nigeria’s minister of finance, said late in February that the country planned to cut import duty on tractors and mass transit vehicles to cut transportation costs and reduce food prices. While that appears plausible, analysts argue that the elephant in the room pushing up food prices has been the insurgency in the Northern region, and if not checked, there will be no respite for food prices anytime soon.

“Nigeria must fix the insecurity situation in various parts of the country if it wants to drive down food prices,” Gloria Fadipe, head of research at securities trading firm, CSL Stockbrokers, said. “It will also need to manage FX issues properly to allow for cheap imports as opposed to manufacturers going to the black market to get dollars costly,” she explained.

Data on food prices watch published by NBS show that prices of nearly all food items from egg to rice staples down to garri and maize have all risen.

Specifically, a tuber of yam increased significantly by 128.30 percent while the price of maize has increased by as much as 73 percent all in one year, NBS data show. Also, rice which is the most widely consumed food staple, showed a substantial increase in the two variants; local sold loose (up 22.15% and imported high quality sold loose up 29.67%) from where they were last year.

Nigeria’s fast increasing food prices vis-a-vis inflation, alongside a high unemployment rate, describes a term economists refer to as stagflation.

The rise in commodity prices has continued at a time when the incomes of Nigerians have been badly affected by the economic impact of the pandemic.

The resultant effect of this has continued to worsen the number of the country’s poor, widen the inequality gap, and in turn deter economic growth.

Before the pandemic struck last year, Africa’s biggest economy was wallowing in multidimensional poverty. Data from the World Poverty Clock reveal that six people fall into extreme poverty in Nigeria every minute. More so, a 2018 report by the Brookings Institution situated the country as the poverty capital of the world with 87 million people or roughly 40 percent of Nigeria’s 200 million population living below $1.9 a day.

To put it in perspective, this total number of poor people in Nigeria exceeds the entire German population. The United Nations expects Nigeria’s population to double to 410 million by 2050, potentially swelling the ranks of the poor.

With inflation soaring to 17.33 percent alongside the high rate of unemployment, Nigeria’s misery index, an index that helps to determine how the average citizen is doing economically, worsened to 50 percent, the highest among peers.

More Nigerians have been forced to reduce food consumption as prices skyrocket in the wake of falling income.