BusinessDay

Inflation and the Nigerian economy

Nigeria’s headline inflation rose to 18.60 percent in June 2022. Same month, food inflation increased to 20.60 percent even as food staples are getting more expensive in Nigeria. From north to south, households and businesses are feeling the pains of inflation.

And based on the evolving economic scenario, no end in sight as to when the rising prices of food items and raw materials will begin to moderate.

Nigeria’s inflationary problems are caused by both endogenous and exogenous factors. Therefore, it is not correct to put all the blame at the doorstep of the Russia-Ukraine crisis.

First, some of the food items Nigerians consume are grown locally, especially tuber crops, plantain, gari, eggs, palm oil, among others. Admittedly, wheat is mostly imported and this may have a direct link with the development in Ukraine.

Concerning local produce, the prices of medium size agric eggs rose by 26.31 percent year-on-year in June. Catfish increased by 22.04 percent. Prices of mudfish both fresh and dried on the average rose by 17.41 percent year-on-year. Yam tubers rose by 30.64 percent. Local rise increased by 21.6 percent year-on-year in June.

It was the realisation that Nigeria lacked the will to take the battle to these terrorists that made the Emir of Yandoton Daji, Aliyu Marafa to confer a traditional title on a wanted terrorist, Ada Aleru as Sarkin Fulani of his emirate

Both ripe and unripe plantain rose by 12.22 percent in June 2022 on a year-on-year basis. These are locally grown food items. That the prices of these produce are rising have nothing to do with the conflict in Ukraine, rather it has to do with Nigeria’s inability to resolve insecurity and plan to fully explore the abundant agricultural resources in the country.

For wheat-based and imported products, the upward trajectory movements in their prices are the same. Year-on-year, the increase in the price of chicken wings was 21.7 percent in June. Chicken feet rose by 19.8 percent. iced sardine was higher by 25.9 percent.

Regarding locally grown food, the insecurity challenge is one of the major causes of the inflationary pressures. The north east and north west geopolitical zones are among the highly productive zones when it comes to agricultural productivity. The two zones are now the hotbed of daily attacks and kidnapping by bandits, insurgents and members of the ISWAP.

Consequently, small-holder farmers have abandoned their farms as those who thought they would not fall victims are either regretting having paid their life fortunes as ransoms or they are dead by now.

It is pathetic that these unwanted non-state actors have repeatedly struck in places like southern Kaduna, Plateau, Niger, Zamfara, Borno, and Nigeria’s security apparatuses have not been able to do anything to instill fear in them.

It was the realisation that Nigeria lacked the will to take the battle to these terrorists that made the Emir of Yandoton Daji, Aliyu Marafa to confer a traditional title on a wanted terrorist, Ada Aleru as Sarkin Fulani of his emirate.

Read also: How Nigeria can fix FX crisis, tame inflation

Interestingly, Nigeria’s climatic conditions favour wheat farming. As of 2021, thirteen Nigerian states produced wheat in Nigeria based on the data provided by the National Bureau of Statistics (NBS). But the majority of these states are having security challenges.

Kebbi State cultivated 1,340 hectares of land to produce ­­4,422,000kg of wheat at the rate of 3,300 yield per hectare. Katsina produced 1,832,400kg of wheat at the rate of 3,600 per hectare from 509 hectares of land. Kaduna produced 3,078,000kg of wheat at the rate of 2,700 per hectare from 1,140 hectares. Zamfara, Borno, and Adamawa also produced wheat based on the NBS data.

The above-mentioned states are the heart of insurgency in Nigeria, indicating that the major task before Nigerian leaders and her security outfits is to reduce the level of insecurity.

If the nation is about to reduce insecurity-induced inflation, it will go a long way to reduce imported inflation. At the least, both businesses and households will have alternatives to choose from.

Flour millers in the country will not have to rely on foreign products, just as bakers will not have to continuously raise the price of bread on account of rising prices of input, especially flour.

Poverty is high in Nigeria which is why the Nigerian government will have to address the rising inflation with all the seriousness it deserves. With salaries and wages of Nigerian workers not increasing, the purchasing power of Nigerians will continue to reduce as long as inflation keeps rising.

Nigerian leaders should know that when a significant portion of the population is very poor, development will become elusive.

It is high time the Nigerian government put its house in order and address the ravaging insecurity immediately.

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