The cost of preparing a pot of Jollof rice, a popular delicacy among Nigerians, is now N7,167, which is almost twice what it used to be four years ago, no thanks to the country’s protectionist policies and higher energy cost following the removal of subsidies.
SBM Intelligence, Africa-focused geopolitical research firm, in its October 2020 Jollof index, estimates that, on the average, the cost of making Jollof rice in the country has increased by 75.4 percent in the last four years to N7,167 in September 2020 from N4,087 in July 2016.
This means households on the country’s new minimum wage (N30,000) will spend 24 percent of their monthly income on just one pot of Jollof rice, up from 23 percent of the previous N18,000 minimum wage four years ago.
“In the period under review from July to September 2020, two key policy changes (forex restriction on importation and increase in energy prices driven by the removal of petrol subsidies and the raising of electricity tariffs) in addition to the continued border policy have forced the prices of food commodities to begin to rise sharply again,” the report states.
The SBM Jollof Index is a composite index that tracks how much it costs to make a pot of Jollof rice across 13 markets in the six geopolitical zones for a family of five or six, the average rural and urban family size in Nigeria.
The Jollof meal, a mixture of rice, tomatoes and spices, is practically a national dish in Nigeria and one meal that is enjoyed in every part of the country. While the Jollof index has treaded close to food inflation since collection began, it has provided a simple way of communicating the realities of inflation to the Nigerian public.
The commodities that make up the index are rice, groundnut oil, chicken or turkey, beef, seasoning, pepper, tomatoes, salt and onions.
In all the states survey, there has been a significant increase in the cost of making Jollof rice since the last report. Across the 13 markets surveyed around the country, a pot of Jollof rice for a family of six is cheapest in Awka, Anambra State costing N5,620 and most expensive in Wuse II, Abuja, costing N9,600.
“Perhaps the reason behind this is that operational costs are more for the former than for the latter. Furthermore, people in Awka are more easily able to substitute buying some of the commodities with products from their subsistence agriculture,” the report states.
The more expensive Jollof rice mirrors the trajectory of food inflation in Africa’s biggest economy. The National Bureau of Statistics (NBS) said food inflation printed at 16.7 percent in September 2020, the highest in almost three years.
Before the closure of land borders in August last year, a bag of imported rice costs N14,500-N15,000, while a bag of locally produced rice cost N16,000-N17,000. But after the closure, a bag of imported rice cost N26,000 and a locally produced bag of rice cost N18,000 to N19,500.
Also, the price of a kilo of imported turkey increased to N1,700 from N1,300, while a kilo of imported chicken increased to N1,500 from N1,100.
And now with the forex restriction on importation and energy subsidy removal, the price of these commodities keeps increasing. Currently, a bag of foreign rice now cost about N35,000, a kilo of turkey costs around N1,800-N1,900 and a kilo of chicken costs N1, 600-N1,700.
President Muhammadu Buhari, in September, removed subsidies on petrol in a sweeping reform to manage the country’s finance better. A recent review of electricity tariff was put on hold but there were reports of higher monthly electricity bills by some Nigerians.
The pass-through effect of resultant higher transportation and energy costs to food consumers is shrinking real purchasing power.
For example, a 65-year old, when interviewed complained about how food prices had increased in an exorbitant manner in a way she had never seen before.
Also, increased cost of electricity affected the cost of one of the commodities (poultry) as sellers of that now have to pay more to keep their produce frozen, and pass the increased cost to buyers, in addition to the increased cost caused by the border closure.
The stubborn inflation combined with the impact of the COVID-19 pandemic is forcing many Nigerians to take out loans to feed. Last month, the NBS reported that 51.3 percent of Nigerians had to borrow in order to buy food since March 2020. In the same report, 68 percent of households in Nigeria experienced food insecurity in August 2020.
