Border closure, insecurity and different causes of excessive meals inflation in Nigeria

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Nigeria’s inflation price elevated by 15.75% YoY in December 2020, hitting its highest determine in 3 years.

According to the newest Consumer Price Index report, launched by the National Bureau of Statistics (NBS), the meals inflation index rose sharply by 19.56% in December, attributable to will increase in costs of bread and cereals, potatoes, yam and different tubers, meat, fruits, vegetable, fish and oils and fat.

Nigeria’s meals inflation seems to be gloomier in the event you contemplate the truth that the NBS, in its launched COVID-19 influence report for the month of August 2020, revealed that 51.3% of Nigerian households obtained loans in the course of the lockdown from mid-March to buy foodstuffs.

This signifies that Nigerians can not afford to purchase meals and the value of meals is skyrocketing each month.

Nairametrics chatted with Cheta Nwanze, Partner at SBM Intel, a Geopolitical Research and Strategic Communications consulting agency and Professor Yomi Fawehinmi, an Agric stakeholder on the causes of meals inflation and what ought to be completed to regulate it.

The border was closed for over a yr, depriving many Nigerians and companies entry to some meals gadgets and uncooked supplies which costs had been now hiked because of excessive demand and few competitors inside Nigeria. Could the closure have contributed to meals inflation?

Nwanze mentioned, “Of course it did. Simply looking at a chart of food inflation makes it clear. The curve, which was rising anyway, began to rise more steeply two months after the borders were arbitrarily closed, essentially the normal lagging effect associated with any change in policy. So yes, it is a fact that the border closure contributed to the rise in food inflation.”

Poor financial insurance policies can not nonetheless be distanced from the continual rise within the inflation price. Nwanze believes that the CBN’s mandate in regards to the importation of maize is an instance of such poor financial coverage.

“Policy inconsistencies such as what happened with maize, where imports were restricted despite 2020 being in track to be our worst year in terms of maize production in a while. Now, given that maize is an input for the poultry industry for example, as well as the pharma industry, this had an effect,” Nwanze mentioned.

Agriculture could be very central to Nigeria’s financial system, offering the primary supply of livelihood for almost all of Nigerians. The agricultural sector stays the most important employer in Nigeria, using greater than 36% of the labour force.

“Agriculture is actually a science. Without science, Agriculture is drudgery and unproductive. That’s why Netherlands is a small country but feeds the world. Netherlands is the 2nd largest food exporter in the world,” Prof Fawehinmi famous.

Water depletion and desertification have compelled herders within the northern a part of the nation to shift southwards seeking grazing fields. This downwards motion has resulted in clashes between farmers and herders in lots of states, therefore a discount within the output of meals manufacturing.

Highlighting the contribution of insecurity to poor harvest and subsequent meals inflation, Prof. Fawehinmi mentioned, “Insecurity makes farmers abandon their farms, which reduces output, leading to less market supply and more demand, thereby causing a spike in prices of food items.”

On how pressures in meals, utilities and transport are driving the rising inflation numbers, Wale Smith, a Pension Professional revealed in an article that was printed on Nairametrics acknowledged that “A combination of weaker farming activity, Naira weakness and Covid-19 lockdowns are behind the uptrend in food inflation. Looking at food inflation, the big pressures came from the farm produce component which accounts for over 90% of food inflation.”

SBM Intel lately reported that that 47% of farmers have zero entry to any sort of storage amenities throughout harvest, which might rise as much as as excessive as 60% for tubers, fruit and veggies.

“Agricultural products are easily perishable while production remains seasonal, and demand for farm produce is present throughout the year,” SBM acknowledged.

Factors like this mixed with diminished output as a result of insecurity and meals import exclusion weighs closely for the patron, who can barely afford one sq. meal.

What due to this fact should be completed to get better?

Professor Fawehinmi suggests intentional steps should be taken to develop and enhance on each facet of the agriculture worth chain. He additionally added that particular consideration should even be paid to the realm of agriculture analysis.

“We need to improve our agricultural research and innovation. That’s what will drive increased output and productivity. Also, we need to create a balance between imports of food and domestic production. Finally, we should do more about good storage and distribution,” Professor Fawehinmi mentioned.

Agreeing with Prof. Fawehinmi, Nwanze provides that opening up of all of the land borders and legally permitting the circulate of products places Nigeria at a greater likelihood of maximising commerce relations with neighbouring international locations.

“Open the borders, remove food items from the import exclusion list. When the ban on the importation of maize was announced, SBM did a report that predicted what will happen. It happened as we said four months later. Nigeria is incapable of meeting its food demand given our existing issues such as insecurity, poor farming practices, and a sharply growing population. This means increased scarcity and rising food costs. The only way we can cover the gap is by imports. It’s that simple,” Nwanze mentioned.

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