Food Insecurity: Threat to Nigeria’s Economic Recovery And Growth?

According to the report, the state of insecurity in northern Nigeria plays a major role in the projected rate of food insecurity in the entire country. “Acute food insecurity is mostly driven by the deterioration of security conditions and conflicts in (Nigeria’s) northern states, which as of March 2022 (latest data available) have led to the displacement of about 3.17 million people and are constraining farmers’ access to their lands,” the report said.

The FAO recalls that in 2015, President Muhammadu Buhari administration launched the Anchor Borrowers Program (ABP) with the goal to boost food production, create jobs, and reduce food import bills for the conservation of the foreign exchange reserves. However, the initiative, FAO noted, has been “marred by reports of poor allocation of resources and related issues.” The report noted that widespread flooding in 2022, affecting about 4.5 million people across the country, has further compounded conditions, particularly in areas already facing high levels of insecurity. “High food prices and the expected slowdown in economic growth in 2023 are additional drivers of acute food insecurity,” the report said. It added that this year’s situation would be a “significant deterioration” as the projection is bringing additional 5.85 million people to the 19.45 million estimated to face food insecurity earlier in 2022.

Specifically, a detailed review of Nigeria’s import data (by NBS) indicates a consistent increase in the value of agricultural imports during the period under review. In 2018, the value of agricultural imports was N851.6 billion; it increased to N959.5 billion in 2019, representing a 12.6 per cent increase; and further shot up in 2020 to N1.145 trillion, representing a 19.4 per cent increase from the previous year. Still, in 2021, there was a significant increase in agricultural imports to N1.96 trillion representing a 71.6 per cent increase from the previous year; and total imports in 2022 were N1.86 trillion representing 7.9 per cent of total imports, a slight drop from an average of nine per cent reported in 2021 and 2020.

BY MARCEL OKEKE

Regrettably, for the umpteenth time, a critical driver of the hyper-inflationary trend in Nigeria has been identified as the ever-rising price and shortage of food. Year after year the consumer price index (CPI) records an uptick mainly due to the high cost of food and food-related items.

Even in its latest MPC report, the Central Bank of Nigeria (CBN) still attributed the soaring inflation essentially to the impact of high food prices. In its communique (147) on March 21, 2023, the Monetary Policy Committee (MPC) “observed with concern, the increase in headline inflation (year-on-year) in February 2023 to 21.91 per cent, from 21.82 per cent in January 2023”, stressing that “this…rise was largely due to rise in the food component.”

According to the National Bureau of Statistics (NBS), food inflation surged to 24.32 per cent in January 2023 from the 23.75 per cent recorded in December 2022, the highest in the last four years. The MPC said,“The shocks to the food component (of CPI) were driven by high cost of transportation of food items, lingering security challenges in major food producing areas and legacy infrastructural problems, which continue to hamper food supply logistics.”

All these vividly underline the pervasive impact of food scarcity with its attendant high prices on the quality and cost of living of the Nigerian populace. This persistent ugly trend is despite the best efforts of Government and its agencies to achieve ‘food security’ and sufficiency through several agricultural (or food) production initiatives.

Surprisingly, the more these policies and initiatives are implemented and funded, the more (seemingly) food and related items gulp in terms of importation from other countries. Thus, highlights of the latest report by the National Bureau of Statistics (NBS) show that in the past five years (from 2018), Nigeria spent a humongous sum of N6.7 trillion on agricultural imports, accounting for 7.6 per cent of total imports of N89.2 trillion recorded during the period. According to the NBS, this shows that the country’s reliance on agricultural/food imports has doubled since 2019.

This also unfortunately affirms that despite years of shifts in government policy towards agriculture, the country still relies heavily on imports to meet its local food demand/consumption. The NBS data reveals that rather than drop, reliance on agricultural imports has kept rising in the past five years.

Meanwhile, the Food and Agriculture Organisation (FAO) has projected that about 25.3 million people in Nigeria would face acute food insecurity during the June to August 2023 lean season. A quarterly report released by the UN agency shows that the figure projected is higher than the 19.45 million forecast in 2022. The FAO report, titled “Crop Prospect and Food Situation”, assessed 45 countries to provide insight into the food situation with particular attention on LowIncome Food Deficit Countries such as Nigeria.

Over all, a comparison of Nigeria’s agricultural products imports with the exports clearly show it imported much more than it exported in all the five years under review. This implies that there is a consistent trade deficit in the agricultural sector, which usually translates to an adverse effect on the country’s balance of payments. This trade deficit means that there is usually a net outflow of currency from Nigeria to other countries, as Nigeria is paying more for imports than it is earning from exports.

This has unleashed several adverse effects on the country’s economy. For instance, it has contributed to a decrease in Nigeria’s foreign exchange reserves, as more currency is leaving the country than is coming in. This has also in part made it difficult for Nigeria to finance its other imports and pay its foreign debts. Nigeria is already experiencing this with severe currency depreciation occurring over the last five years: the exchange rate has depreciated to N750/$1 on the black market from about N360/$1 five years ago.

Of course, the consistent trade deficit has also led to, and sustained rising inflation rate, as the increase in demand for imported (agric.) goods keeps driving up prices. This has obviously led to a decrease in the purchasing power of the Naira, a development that has been hurting the country’s consumers and businesses to no end. Nigeria’s inflation rate is currently (endFebruary 2023) at a 17-year high of 21.91 per cent—a whopping 100 per cent rise in prices, compared to the CPI level in 2017.

Furthermore, the persisting trade deficit has left the Nigerian economy more vulnerable to external shocks, such as changes in global commodity prices (occasioned by the Russia-Ukraine war) and/or currency fluctuations. For instance, the sudden increase in the price of agricultural products in the international market since the onset of the war early in 2022, has forced Nigeria to spend more money to import those products (e.g. wheat); and this has worsened the trade deficit. This extant reality has seen imported inflation rising by as much as 120 per cent between December 2017 and December 2022.

•Continues online at www.thewillnigeria.com

Cbn Intervention In Adamawa And Taraba States

The real sector development initiatives of the Central Bank of Nigeria (CBN) were introduced to stimulate and sustain growth in key sectors of the economy, revive moribund sectors, empower the youth population, explore the untapped potential in various economic landscapes, and enhance foreign exchange inflow.

These interventions have significantly contributed to the overall growth of the Nigerian economy, as shown by available data. In response to the COVID-19 pandemic, the Central Bank of Nigeria also granted loans to households and small businesses to cushion the adverse effects of the pandemic across the country.

In recognition of the importance of access to finance as a key factor to innovation and development, the CBN’s development finance interventions are targeted at priority segments, which include the following:

1. Agriculture

2. Manufacturing

3. Infrastructure

4. HealthCare

5. Youth and Entrepreneurship Development

6. Export

7. Micro, Small and Medium Enterprises (MSMEs)