…Suggests policy options
…Says high food prices could push 6m more Nigerians into poverty
…Report contradicts NBS inflation data
…Impact of COVID-19, insecurity, floods severe
…It’s a wake-up call, says World Bank Country Director
By Emma Ujah, Abuja Bureau Chief, & Nkiruka Nnorom
The World Bank has raised alarm over the threat of insecurity and COVID-19 pandemic on Nigerian households’ food security.
In a new report, “COVID-19 in Nigeria: Frontline Data and Pathways for Policy”, released in Washington, last night, the bank said Nigeria “already faced complex development challenges, the pandemic continues to affect health outcomes, human capital accumulation, household poverty and coping strategies, and labour-market dynamics.”
The report is coming on the heels of similar concerns variously raised by prominent Nigerians, including former governor of Sokoto State, Alhaji Attahiru Bafarawa, and Minister of Defence, Major Gen Bashir Magashi, retd, investment experts, the Organised Private Sector, OPS, and other international bodies over the effect of insecurity on food security in the country.
Report contradicts NBS inflation data
The report, however, contradicted the latest inflation report released earlier in the week by the National Bureau of Statistics, NBS, which indicated that Nigeria’s inflation rate moderated for the seventh consecutive month to 15.99% YoY in October from 16.63% recorded in September 2021, while food inflation, the major driver of the headline inflation, dropped to 18.34% YoY in October from 19.57% recorded in September 2021.
Investment experts have, however, attributed the deceleration in both core and food inflation to the base effect from 2020, saying price pressures like relatively low harvest volumes, chronic supply chain bottlenecks, and limited access to FX through official channels remained significant.
Insecurity, floods drive food prices up
Speaking on the inflationary pressure, analysts at Cordros Capital, a Lagos-based investment banking firm, said: “Prices of farm produce increased by 6 base points to 1.13% m/m (September: 1.07% m/m) despite October being the primary harvest season. From our channel checks, we understand that the harvest was below average due to persistent security challenges, lower than typical access to inputs due to below-average income, and flooding.
“Indeed, Famine Early Warning Systems Network (FEWSNET) reported that prices for both staple and cash crops remain significantly above the five-year average and last year. Besides, we think consumers might have started front-loading purchases of foodstuff in anticipation of a festive-induced price increase in the last two months of the year.”
‘Impact of COVID-19, insecurity severe’
Meanwhile, the World Bank report showed both the extent of these impacts on Nigerians and promising policy options that could accelerate the nation’s recovery.
The report draws on innovative sources of high-frequency data, namely, the Nigeria COVID-19 National Longitudinal Phone Survey, NLPS, to inform the choices that Nigeria’s leaders now face.
The World Bank stated: “The report shows that the consequences of the COVID-19 crisis for human capital, livelihoods, and welfare are proving to be severe.
“While many schools have reopened across Nigeria, learning that was lost during the COVID-19 crisis still needs to be recouped and some children have not returned to school.
“Even though many Nigerians have returned to work, the jobs to which they have shifted — mainly in small-scale non-farm enterprises — may not offer income security, making it difficult for households to escape poverty.
“With the COVID-19 crisis ushering in associated shocks – especially to food prices – and social protection remaining rare, households’ food security and their welfare at large is under serious threat.
‘6 million more Nigerians going into poverty’
“The rise in prices witnessed between June 2020 and June 2021 alone could push another six million Nigerians into poverty, with urban areas being disproportionately affected. This underscores the need for short-term policies to support welfare.
“The simple simulations suggest that the share of Nigerians living below the national poverty line could have increased from 40.1 percent to 42.8 percent due to the food price inflation witnessed between June 2020 and June 2021.
“This means about 5.6 million additional Nigerians would be living in poverty. While food price inflation would decrease purchasing power and raise poverty across Nigeria, it appears that urban areas could be disproportionately affected.
“In 2018/19, about 16 percent of poor Nigerians were urban dwellers. Yet among those who would be newly impoverished by the increase in food prices between June 2020 and June 2021, around 27 percent would be from urban areas.
“Nevertheless, poverty in Nigeria is set to remain a primarily rural phenomenon, with or without rising food prices.”
The findings underscored the urgency of far-reaching reforms to strengthen Nigeria’s economy and development outcomes.
It’s a wake-up call, says World Bank Country Director
Commenting on the report, World Bank Country Director for Nigeria, Shubham Chaudhuri, said: “The COVID-19 crisis has provided a wake-up call to address the long-standing structural challenges that could constrain the government’s ambition to lift 100 million Nigerians out of poverty.
“There is no time like the present for the country to prepare for future climate and conflict shocks and seize the promise of its young population to lay strong foundations for inclusive growth.”
The report suggested rolling out vaccines quickly and equitably to reduce the direct health threat posed by the virus.
It added that it would be essential to help children remediate the learning losses incurred during the pandemic – by getting them back to school or by finding low-tech remote solutions that work for the poor; as well as an expansion of the social protection which could provide short-term relief for the welfare losses currently faced by Nigerian households. A fallout from the security issues has now led to rise in default by farmers in the Central Bank of Nigeria’s Anchor Borrowers Programme (ABP).
A recent report by the CBN showed that of N615.4 billion disbursed to farmers since November 2015 when the programme started, only N152.3 billion, representing 25 percent of the total loans, had been repaid, while N463 billion, representing 75 percent of the total loans disbursed, was still outstanding.
“For the Anchor Borrowers Programme, the sum of N615.4billion had been disbursed to 3.04 million beneficiaries, out of which, N152.3billion was repaid,” CBN stated in the report.
Insecurity heightening food distribution challenges — Bafarawa
Meanwhile, a former Governor of Sokoto State, Alhaji Attahiru Bafarawa, lamented the exacerbation in supply chain challenges, saying farm produce harvested in the North-West part of the country could not be transported to the markets due to insecurity. “This insecurity is a catastrophe that has befallen us. The situation in Sokoto and Zamfara states can only be described by those who have been there.
“The sad thing is that we all know that the security of the nation is in the hands of the Federal Government. Those people telling President Muhammadu Buhari that everything is okay, or are they telling him things are not okay? If they are telling him things are going on fine, they have cheated him and have cheated us too. Allah knows that we are in a serous calamity in our zone.
“Today, I travelled home and came back. I am an eyewitness, not that somebody told me. Our people are harvesting millet in abundance, we’ve gotten millet and rice, but people cannot convey the farm produce home. Whoever went to the farm to convey the crops home will not come back alive.”
“Whoever goes to bring his rice back home, will not return alive. Furthermore, people are in a form of incarceration, like in Zamfara. A debilitating catastrophe, a situation that phones cannot work, markets are shut and there is no palliative for the poor to cushion the effect, to get food to eat,” he said.
Need for synergy among security agencies, says Magashi
Speaking in a similar manner, the Minister of Defence, Major Gen Bashir Magashi, retd, said the the prevalence of security threats in different parts of the country was endangering not only economic growth but also food security and called for collaboration among the security agencies in order to tackle the threat.
Speaking recently at the opening of the 2021 Defence Advisers/Attaches Annual conference in Abuja, Magashi said: “The threat has made it imperative for the various security agencies in the country to collaborate to tackle the menace in order to create the enabling atmosphere for economic activities to thrive and to attract foreign direct investment, FDI.
“It also means that the security agencies must explore all avenues within their respective systems to come up with innovative ways of identifying and confronting the challenges facing us as a nation. “In the North-East, attacks by Boko Haram terrorists and ISWAP continue to pose serious security threats in Nigeria.
‘’In the North-West and North-Central zones, the activities of armed bandits, armed herders/militia attacks and kidnappers are prevalent.
“The littoral states in the South-South are plagued with illegal oil bunkering, piracy and militancy, while the South-East is challenged with secessionist activities of the Indigenous People of Biafra.”
LCCI calls for decentralisation of security ecosystem
Also raising concerns on food crisis in the country, Mrs Toki Mabogunje, President, Lagos Chamber of Commerce and Industry, LCCI, noted that destruction of farmlands across the country had continued to disrupt the agricultural sector, while piling pressure on food inflation.
She stated that the crisis had crippled many private and public investments across the nation, while several businesses and investors in affected areas are currently counting their losses.
“These have severe implications for food production and food distribution from farms to markets.
‘’We recognize insecurity as a major driver of the persistent increase in food inflation in recent years. The worsening security situation will trigger further inflationary pressure on food prices, thus exacerbating the poverty conditions in the country.
“This alarming state of insecurity in the country has hampered the movement of goods, services, and persons across the country, with implications for agriculture, agro-allied services, trade and commerce, especially in affected areas.
“The crisis projects the Nigerian economy as an unsafe investment destination, and if unaddressed, would thwart government’s efforts in encouraging private investment inflows into the economy at a time the economy is in dire need of massive investments to bolster growth recovery, create jobs and alleviate poverty,” she said.
UN World Food Programme warns
Also, the United Nations’ World Food Programme earlier in the year, warned that Nigeria among five other African countries, including Burkina Faso, Ethiopia, Madagascar, South Sudan, and Yemen have in recent months had pockets of people in Integrated Phase Classification (IPC/catastrophe) Phase 5.
WPF in a statement, had warned that about 0.5 per cent (41 million) of the global population was on the brink of famine this year, with $6 billion in funding needed to avert the crisis.
According to WFP, recent assessments showed that tragically, 584,000 are already experiencing famine-like conditions (IPC phase 5/catastrophe) in Ethiopia, Madagascar, South Sudan and Yemen.
Nigeria and Burkina Faso are also of particular concern because they have in recent months had pockets of people in IPC phase 5.
Executive Director, WFP, David Beasley, said: “I am heartbroken at what we’re facing in 2021. We now have four countries where famine-like conditions are present.
“Meanwhile 41 million people are literally knocking on famine’s door. If you look at the numbers, it’s just tragic, these are real people with real names. I am extremely concerned.”
The United Nations agency just last month, October 2021, warned that it may soon be forced to cut food rations to more than half a million women, men and children in North-Eastern Nigeria unless urgent funding is secured to continue life-saving operations in crisis-ridden Borno, Yobe and Adamawa states.
The cuts would come just as severe hunger reaches a five-year high in the country in the wake of years of conflict and insecurity – a situation that has been worsened by the socio-economic fallout from COVID-19, high food prices and limited food supply. Moreover, the number of internally-displaced surpassed two million in September 2021 – reaching another grim milestone.
“Cutting rations means choosing who gets to eat and who goes to bed hungry. We are seeing funding for our life-saving humanitarian work dry up just at the time when hunger is at its most severe,” said Chris Nikoi, WFP’s Regional Director for West Africa following a recent visit to Nigeria
Similarly, an Agriculture Industry Report 2021 powered by Sterling Bank and StearsData, showed that Nigeria’s agricultural sector is operating below its potential as inefficiencies slowed and crippled the growth of the sector.
The report examined the country’s agriculture value chain state, state of affairs post-COVID-19, the climate change challenge and opportunities for innovations and investments.
Industry experts in the report opined that continued reliance on trade restrictions as a primary tool for stimulating local production would lead to greater market instability, adding that It will undermine supply and expose consumers to significant price fluctuations, making food security elusive as population growth puts more pressure on food resources.