Ways FG can address rising food prices in Nigeria

Ndubisi Nwokoma, Professor and Director, Centre for Economic Policy Analysis and Research

Some economists have suggested diverse ways in which the Federal Government (FG) can overcome the rising food prices in Nigeria.

Ndubisi Nwokoma, a professor and director, Centre for Economic Policy Analysis and Research, University of Lagos, urged the government to put a squeeze on credit to the economy by raising rates.

“One of the factors driving inflation is the depreciating value of the Naira vis-a-vis other foreign currencies; that is the exchange rate. This can be curtailed by putting a squeeze on credit to the economy by raising rates. The high cost of foreign exchange enhances cost-push inflation,” Nwokeoma said.

He adds, “Second, the level of uncertainty in the economy hampers the production of goods and services. This is fuelled by insecurity and election year effects.”

Similarly, Sheriffdeen Tella, a professor of economics at the Olabisi Onabanjo University, Ago-Ago-Iwoye, Ogun, advised the government to review the macroeconomic policies to promote economic growth through domestic production.

According to him, the current inflation is bad policies induced.

“From the monetary policy side, the financing of budget deficits, particularly financing subsidies by the central bank through the printing of money, while from the fiscal side is rising cost of diesel, electricity and rising consumption taxes.

“These affect the cost of production, reduction in demand and output. Reduced output means high unit cost which is passed on to the selling price.

“Government has to review the macroeconomic policies to promote economic growth through domestic production,” he said.

Data from the National Bureau of Statistics (NBS) shows that food inflation rose to 19.50 percent in May 2022, the highest in eight months when compared to 18.37 percent in the previous month, due to the Ukraine-Russia crisis.

On his part, Akpan Ekpo, a professor of economics and public policy at the University of Uyo, Akwa Ibom, said there was a need to take advantage of the war between Russia and Ukraine and encourage farmers to produce grains going forward.

“Inflation adversely affects the poor and pensioners since they cannot draw on savings to survive.

“Government should do its utmost best to solve the insecurity so that farmers can produce optimally; palliatives should be given to the poor including retirees who are merely above the poverty line,” he said.

Ekpo adds, “While I support a managed exchange rate regime, the gap between the official and black-market rates should be marginal to curtail inflationary pass-through.”