June 20, 2021

RISING POVERTY: No end in sight to high food prices— MAN, others

File photo

*Cite disruption of raw materials to food manufacturing segment by insecurity as a problem

*‘Huge losses suffered as a result of borders’ closure’

By Tunde Oso

There is no end in sight to high food prices as long as the conflict between crop growers and northern cattle herders seeking grazing pasture in the South continues, economic experts have said.

Costs started increasing in 2019 when the Federal Government shut Nigeria’s borders to curb the smuggling of rice and other products.

Food prices rose 17.4 percent in October from a year earlier, the biggest increase in three years.

As prices rose, the United Nations, in late 2000, warned that violence had compounded food production challenges arising from factors such as climate change and the coronavirus pandemic that placed Nigerians at risk of famine.

The World Bank, in a report, had said, last week, that high food prices had pushed about seven million Nigerians into poverty in 2020.

“Food prices accounted for over 60% of the total increase in inflation. Rising prices have pushed an estimated 7 million Nigerians below the poverty line in 2020 alone,” its report published last Tuesday said.

The World Poverty Clock, which uses UN, IMF and World Bank data to monitor progress against poverty, reports Nigeria had 41 percent of its population or nearly 87 million people living in extreme poverty on less than $1.90 per day.

READ ALSO: World Bank Report: CSOs urge FG on proactive measures to salvage 7m Nigerians pushed below poverty line

“Nigeria faces interlinked challenges in relation to inflation, limited job opportunities, and insecurity,” said Shubham Chaudhuri, the World Bank Country Director for Nigeria.

“While the government has made efforts to reduce the effect of these by advancing long-delayed policy reforms, it is clear that these reforms will have to be sustained and deepened.”

Nigeria needs urgently to reduce inflation by promoting inclusive growth and job creation and helping small and medium businesses gain access to finance, Chaudhuri said.

The Covid-19 pandemic and the oil price crash have hammered Nigeria’s economy, which gets 90 percent of foreign exchange earnings from petroleum exports, pushing it into its second recession in four years.

As well as inflation, a rise in joblessness has left a third of Nigeria’s workforce unemployed at the end of 2020, according to the statistics office.

Sunday Vanguard spoke to economic experts on the way forward.

Food inflation not surprising – Ajayi-Kadir, MAN D-G

Segun Ajayi-Kadir, Director General of the Manufacturers Association of Nigeria MAN, said the association is not surprised that inflation, especially in the food sector, continues to spiral upwards.

“The manufacturing sector has remained in recession even after the technical exit of the country’s economy”, Ajayi-Kadiri said.

“As you are probably aware, the manufacturing sector posted a growth rate of  -1.51 percent in the Q4 2020 from -1.52 percent in Q3 of the same year.

“The current inflationary condition is a major contributor to the low-export penetration of goods manufactured in the country, some of which are largely in the agricultural sector of the economy into the international market.

“Note too, the disruption by insecurity of the feeder i.e. supply of raw materials to the food manufacturing segment of our association”.

The MAN boss urged government to, among others, pursue consumer price stabilization measures that will stimulate growth in agricultural output; deliberately support the manufacturing sector to guarantee improved output that can engender the reduced intensity of too much money chasing after fewer goods; further diversify the country’s revenue sources; action a CBN sustainable plan to improve the external reserves to a defensive capacity that will raise the months of imports of Nigeria to a dependable level.

These, he said, can be achieved by deliberately and sincerely partnering the productive sector to grow non-oil exports.

Ajayi-Kadir said: “In particular, the Export Group of the association clearly suffered huge losses due to logistics issues occasioned by the closure of the borders as it takes an average of eight weeks for the carriers to ship and move goods within countries in the same region vis-à-vis moving the goods through the land border, which takes an average of seven to 10 days.

“Nigeria, as the largest economy in West Africa and one of the largest in Africa, needs to step up in engaging her neighbors meaningfully in order to improve our trade balance, curb smuggling and stop the trend where other countries are having free lunch at the expense of the Nigerian economy.

“Government should sensitise citizens to patronise and consume locally produced goods, imbibe the benefit of consuming local goods and government should set a good example by patronising local products in all government purchases”.

Food trucks & items should be tax-free – John Isemede, ex-DG, NACCIMA

Dr. John Isemede, a former Director General of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said what is fuelling inflation are weak production base, lack of value addition, lack of export culture; more money in circulation and fewer goods /perishable goods without storage silos and cold room etc.

Isemede, a United Nations Industrial Development Organization (UNIDO) consultant on value chains, added that if government is saying it is diversifying into agriculture, there ought to be substantial government interventions to move the farming community away from the old worn-out and archaic subsistence farming to commercial and large scale agriculture.

He went on, “Subsistence farming is what we have been relying upon. We are a country that doesn’t have commodity boards compared to what we have in Cote d’Ivoire and some other West African countries; how can we feed ourselves? Where are the silos for storage?

“Government should also look at centralizing the taxation system. You can imagine the number of taxes a food truck coming from Jos, Maiduguri, Makurdi – the North – will pay to revenue agencies before arriving in the southern market.

“This is part of the reason food prices are escalating. Government should find a way of harmonizing and centralizing tax collection by these revenue collecting organs of government.

“In fact, government should completely exempt food trucks or locally-grown, produced food items from tax or levies.

“Government interventions have been wrong-headed: like the closure of borders. It breached ECOWAS Agreements.

“Government ought to have used tariffs to discourage Nigerians’ unbridled appetite for imported goods and re-invest the gains in its diversification efforts into agriculture.

“Before the ban too, government ought to have taken the organized private sector into confidence so as to prepare them for the policy whereby they can fully look at reaping the gains: growing local capacity and production.

“Any time government bans any product, it should discuss with private sector concerns that could maximize and reap from such a policy.

“Ban here and there without local capacity, no plans in place /trend to be self-sufficient unknown – is dangerous.

“Low production of such goods after ban would automatically jerk up both price and lead to hoarding.

“We are a nation that is import-based not export-thinking”.

Funds can never be enough for agripreneurs – Gimba

Ahmad Suleiman Gimba, lecturer at College of Administration, Management, & Technology, (CAMTECH) Potiskum, Yobe State, said the report released by the World Bank is alarming and most disturbing to realize that additional seven million “Nigerians have plunged into poverty. Therefore this is an indication that the poverty ratio has risen once more”, Gimba said.

“Both the private and public sectors need to take agricultural business as a priority and inject funds substantially”, he added.

“The agric products, whose production has collapsed in the last two years, are the consequences of the agric products that have vanished perhaps ten or more years ago.

“Because of successive governments neglect, food crops first like wheat, maize, cassava and some few have suffered with consequential low output. “Mostly, farmers view their expenses, other challenges and difficulties; then they migrate to a more profitable farming venture with higher yields.

“Cash crops have suffered a similar issue. Nigeria has lost wheat, barley, cotton among others.

“Farming output has diminished and has completely changed the agricultural environment. Therefore, the Nigeria society has to reflect the changes.

“Some of the effects that can be seen generally are the cumulative rise in prices attached with increase in the cultivation of rice, soya, sweet potato, millet and few other crops.

“This clearly attributes the practical increase of their quantities with their respective prices.

“But all these are caused by the systematic high prices of fertilizer, farm inputs, implements and tools, surrounded by very poor agric mechanization.

“Food prices in Nigeria have been rising every day without control, regulation or soft pedaling because government cannot stop spending on the critical agricultural sector.

“In fact, governments in advanced countries have continued to provide subsidies to farmers and agripreneurs.

“Furthermore, those perishable food items cannot be given clear explanations because of its poor, local and unimproved methods of storage, transportation and handling. Their prices vary depending on the everyday market, i.e. daily price effect.

“When the market becomes uncontrolled in manner and attributes, it is government that can dominate it and bring it to under control; otherwise it may take longer than expected for it to stabilize.

“As a follow-up, the Federal Government needs to ensure that local governments are functional especially in agricultural services.

“As a matter of fact, the National Assembly needs to amend the local government services and make them fifty percent agricultural. This will indeed help Nigeria out of food crises in the medium and long term”.

Vanguard News Nigeria