Hunger, inflation prompted Nigeria’s state of emergency in food sector –Presidential Aide

*Experts suggest the new administration  in Nigeria should declare an emergency in all other sectors of the economy, including power, security and petroleum, as they all need urgent attention

Isola Moses | ConsumerConnect

The Nigerian Government has stated the recent declaration of a state of emergency in the food industry will allow the current administration to take exceptional steps to improve food security and supply, as increasing prices have caused widespread hardship in the economy.

ConsumerConnect reports the Federal Government explained the state of emergency would include clearing forests for farmland to increase agricultural output and ease food inflation in the country.

President Bola Ahmed Tinubu, GCFR

Mr. Dele Alake, a Spokesman for President Bola Ahmed Tinubu, Thursday, July 13, 2023, said the move would trigger a range of measures, including clearing forests for farmland to increase agricultural output and ease off food inflation.

The fresh measures follow the President’s announcement of removal of fuel subsidy and exchange rate reforms.

The Naira, Nigeria’s currency, has seen a fall by over 40 percent after its peg to the Dollar was removed last month.

It is also noted that before President Tinubu announced an end to subsidy regime during his inaugural address May 29, in Abuja, FCT, consumer-price growth had accelerated to an almost 18-year high of 22.4 percent May in the West African country, with the rate of food inflation rising more than two full percentage points faster in the same month, Bloomberg report said.

While reforms are causing pain on the streets, they have led to a rally in the country’s Dollar bonds and a surge in stock prices to the highest level in 15 years as investors see the government’s decision on the currency as necessary to boost economic growth.

The World Bank forecasts economic growth could quicken to 4 percent from 2024 from an average of 2 percent since 2015.

Nigerian Eurobonds continued to rally Friday, with yields on those due in 2031 declining for a fifth day to about 10.46 percent.

Still, currency weakness has added to pressures on the cost of living in the country where spending on food is a large part of most household budgets, report stated.

The price of food surged by over 20 percent in Sub-Saharan Africa between 2020 and 2022, according to the International Monetary Fund (IMF) partly reflecting global trends and the fact the region imports many of its top staples.

For Nigerians, it is becoming unaffordable to a majority of the country, Alake was quoted to have said.

The Presidential aide: “This has led to a significant drop in demand, thereby undermining the viability of the entire agriculture and food value chain.”

Africa’s most populous nation has seen a jump in the cost of food and transportation since the fuel subsidies were ended, which were costing as much as $10billion a year but made petrol prices among the cheapest globally.

The government will use the savings from the removal of the subsidies to revamp the agriculture sector, Alake said.

The measures might not go far enough, according to Ayo Teriba, CEO of Economic Associates Limited, a Lagos-based advisory firm.

He argued the new government should declare an emergency in all sectors of the economy including power, security and petroleum, as well as food, because they all need urgent attention.

“We can’t continue to be doing it piecemeal,” Teriba said.

Under the emergency measures, a national commodity board, will be created to continually review food costs, maintain a strategic reserve and moderate spikes and dips in prices while the central bank will continue its funding of the farming sector.

In addition, the government plans to release 500,000ha from land banks, including by clearing forested areas, to increase available farmland and boost agricultural output.

The removal of fuel subsidies could lead to a further acceleration in the price index to nearly 30 percent by end of the year, according to Bank of America’s Sub-Saharan Africa economist Tatonga Rusike.

Nigeria was scheduled to release June inflation data on Saturday.

Years of insecurity and recent flooding in the country’s north central region, which is the nation’s main food-producing area, have reduced farming activities, leading to a sharp rise in prices.

An indication of the emerging price pressures can be seen in the sharp rise in food costs in Borno state in Northern Nigeria, where prices jumped 36 percent and transportation fares 78 percent, a week after the subsidies were cut, according to a report by Mercy Corps, a humanitarian organisation operating in the area.

This has led to increase in hunger and petty theft at the community level, according to report.

“More people are resorting to walking long distances instead of using motorised transport, and some students have stopped attending school due primarily to high transportation costs,” said the report.

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