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Food prices rise over 100% under President Buhari

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Nigerians have been struggling for feeding as a result of over 100 per cent hike in the prices of key staple food prices since 2015 when President Muhammadu Buhari assumed office.

As shown by statistics, continuous depreciation of the macroeconomic indices of inflation, exchange and lending rates have been negatively impacting food prices.


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Federal government’s interventions in vital sectors of the economy through the Central Bank of Nigeria (CBN) have not been helpful as impeding forces interplay to push up the rates and, consequently, also push up food prices.

The interventions include the Anchor Borrowers programme, in which the CBN has been sinking billions of naira on loans to farmers with a view to integrating backward on crops like rice and tomato, and conserve dollars the country had been spending on importing the items.

Emefiele, CBN Governor: laments Anchor Borrowers beneficiaries not repaying loans

Unfortunately, attacks on farmers by bandits and Boko Haram insurgents have truncated the success level of the initiative.

The bandits have killed or kidnapped many farmers, destroyed farms and displaced the owners.

Statistics have it that in 2016 alone, bandits killed 2,500 people in Nasarawa, Kaduna, Benue and Plateau states, many of them farmers, while 62,000 were displaced. An estimate of $13.7 billion calculated on farms, crops, houses and cash was estimated to have been lost in the tragedies.

In Zamfara and Niger states, bandits’ attacks have been growing every year since 2015, with reports that many farmers are being forced by the bandits to pay regular levies to enable them cultivate and harvest their lands.

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The situation has escalated so badly that the CBN disclosed that many beneficiaries had declared they would not be able to service their Anchor Borrowers loans because of the destructive activities of bandits’ activities on their farming ventures.

Like in farming, distribution of farm produce across the country has also been hampered by the activities of bandits, mostly kidnappers. This development has been affecting prices as sellers factor their losses into prices at the retail end of the chain.

A restaurant manager in Kubwa, the Federal Capital Territory, Oluchi Nwanegbo, told TheICIR how difficult it has become to make purchases of food items for the business.

“As much as we can, we appeal to customers to keep buying as they keep complaining of the high cost of living,” Nwanegbo said.

According to Nwanegbo, price surges in food consumables had made her to lose customers, many of whom had complained of their inability to meet her charges.

Muhammadu Buhari
President Muhammadu Buhari will sign the amended Electoral Act into law

“From crayfish, gari, cooking gas, vegetables and castor oil to bitter leaf, the prices are almost 100 per cent increase; some are actually above 100 per cent over the last seven years. In the recent past, we we were serving a plate of gari and bitter leaf for N500, now we serve it for N900. Customers grumble all the time about rising prices, even when we try to give them a fairly stable price to enable us remain in the market,” she said.

Another restaurant manager in Dei-Dei, an outskirt of the Federal Capital Territory, Roselyn Okoromadu, told our reporter that food prices were on the rise with no sign of abating.

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“I have been in this business for 20 years now. The present situation on cost of food items is putting us under intense pressure. It is only vegetable that has manoeuvred inflationary pressure; prices of other food items over the past seven years have more than doubled,” she said.

What prices of staple food reflect from 2015-2022

Survey checks conducted by the ICIR team showed that a kilogramme of chicken that sold for N1000 in 2015 is now sold at N2,200, an increase of over 100 per cent.

Also, the price of a 50kg measure of white gari that went for N6,000 in 2015 has a lot more than doubled to N17,000 in 2022.

A 50kg of rice sold for N10,000 in 2015, but it is now selling for N30,000, while a 50kg measure of beans that sold for N21,500 in 2015 is now selling for N34,000.

A litre of oil  that could be purchased at N250 in 2015 now costs N800.

A big basket of fresh pepper, which sold at N11,000 in 2015 is now selling for N17,000.

Also, a big basket of tomatoes, which was sold for N10,000 in 2015, now costs N17,000.

Also up from N100 in 2015 to N170 in 2022 is 120 grammes of noodles.

A crate of egg, which sold for N600 in 2015, now sells for N2,200 in 2022, while a litre of vegetable oil which cost N300 in 2015 now goes for  N1,700.

What experts say about rise in inflation, prices of goods

An economist and Chief Executive Officer of Cowry Assets Plc, Johnson Chukwu, attributed the sharp spikes in prices of staple food to depreciation of the local currency and insecurity, among other factors.

Chukwu said, “A key concern is about destabilisation of farmers along the farming belt region of the country due to insecurity. Many of them relocated to places for the internally displaced.

“There are also other factors like the Russia invasion of Ukraine, which has led to increase in the prices of items like wheat, sun-flower oil, and grains.

“Also, the sharp depreciation of the naira from 2015 to 2022 has affected prices of imported consumables.”

He stressed that soft market interest rates and interventions by the CBN had failed to pay off.

Chukwu suggested that the federal government must restructure the petroleum industry as a matter of urgency.

“We import petroleum products, and that puts pressure on our foreign currency reserve. We are not also making enough gains in our oil sector because of theft,” he said.

An Associate Consultant for the British Department for International Development (DFID), Celestine Okeke, told TheICIR that inflationary pressures arose from government’s knee-jerk approach to policies.

Okeke, Consultant DFID: interventions are knee-jerk

Okeke said, “Most of our intervention programmes failed because they are knee-jerk. Look at our Anchor Borrowers programme and see how it was politicised and, now, we have the CBN lamenting people are not paying back.”

Issues that keep driving inflationary pressures 

Apart from insecurity and banditry in Nigeria’s food belt region, shutting down the borders was another major policy concern that analysts said impacted negatively on rising food inflation.

Nigeria recorded its highest inflation in nearly three years in September 2021 after food prices quickened on the back of the country’s land border closure and dollar squeeze.

For instance, headline inflation hit 13.7 per cent in September 2020, from 13.2 percent in August.

Food costs themselves rose over one year by 16.7 per cent in September 2020.

“The decision by the government to close the border was the catalyst that spurred the consecutive rise in inflation from August/September last year,” said Omotola Abimbola, a macroeconomist at Chapel Hill Denham.”

The Federal Government’s decision to shut land borders with neighbouring countries was intended to stimulate local production, but this move did not seem to yield much gain as consumer food prices remained on a steady rise.

In July 2019, just before the borders were shut, the inflation rate stood at 11.02 per cent, the lowest in 39 months. But the spike in prices began as soon as the borders were closed in August 2019 due to shortage of supplies, and demand became overwhelming.

The challenge of production shortage is also believed to be compounded by flood disasters in food producing states.

“Security and flood issues in Northern Nigeria have also affected food prices through lower production and supply,” an economist at Lagos-based Cordros, Abudulazeez Kuranga, said

In 2020, floods washed away, at least, two million tonnes of rice in Kebbi State, the country’s main rice-growing state. As such, planters who had a target to contribute a 2.5 million tonnes in 2020 are still, at least, 20 per cent short of that expectation.

Asides from Kebbi State, farmers in Kano, Jigawa, Nasarawa and Enugu states also reported damages from floods in 2020.

There are also other key facts that drove rising cost of food prices.

“The lack of foreign exchange liquidity, currency depreciation and reeling effects from COVID-19 have also contributed to rising inflation,” said Abimbola.

To President Muhammadu Buhari in his national broadcast in 2020, the astronomical rise in food prices in Nigeria was caused by middlemen, who he said had been buying and hoarding essential commodities.

“Unfortunately, as our food production capacity has increased, food prices continue going up due to shortages created by middlemen who have been buying and hoarding the essential commodities,” Buhari had said.

Aside these concerns, Nigeria’s peculiar challenges with power supply also pushed up cost of inputs.

“In January this year, the price of diesel was N255 per litre, but by March it had gone up to N750. This  increase would be factored into the cost of our inputs. Diesel is deregulated and has influence on cost of production,” an analyst with Chapel Hill Denham, Adesola Sumoni, said.

What NBS Consumer Price Index says

The market survey results are not remarkably different from the National Bureau of Statistics’ (NBS) releases on the Consumer Price Index (CPI).

Statistics have shown how prices of goods had been influenced by inflation.

According to the NBS, in March 2022, the CPI, which measures inflation, increased to 15.92 per cent on year-on-year basis.

This is 2.25 per cent points lower, compared to the 18.17 per cent rate recorded in March 2021. This means that the headline inflation rate slowed down in March 2022 when compared to the same month in the previous year.

On month-on-month basis, the Headline Index increased to 1.74 per cent in March 2022, 0.11 per cent points higher than the rate recorded in February 2022 (1.63 per cent).

The percentage change in the average composite CPI for the twelve months period ending March 2022 over the average previous twelve months period is 16.54 per cent. This shows a 0.19 per cent points decrease, compared to 16.73 per cent recorded in February 2022.

The urban inflation rate increased to 16.44 per cent year-on-year in March 2022, showing a decline of 2.32 per cent points from the rate recorded in March 2021 (18.76 per cent).

In the same vein, rural inflation rate increased to 15.42 per cent in March 2022, with a decrease of 2.18 per cent points from 17.60 per cent recorded in March 2021.

On a month-on-month basis, the Urban Index rose to 1.76 per cent in March 2022, up by 0.11 per cent points from the rate recorded in February 2022 (1.65 per cent).

The Rural Index rose to 1.73 per cent in March 2022, with 0.12 per cent point increase from 1.61 per cent recorded in February 2022.

Nigerians feeling the brunt

From the farmer in the northern city of Borno State to the business owner and salary worker in the south in Abia and Lagos states, households and businesses across Nigeria are weighed down by stalled income growth but rising prices of goods and services.

The accelerating inflation in Africa’s biggest economy, a consequence of the COVID-19 pandemic, the global supply chain disruptions caused by the Russian-Ukraine war, weak naira, and escalating insecurity that has put a strain on the country’s agricultural output, many Nigerians are being compelled to change their consumption patterns.

The situation is worse for most Nigerians living from hand to mouth, which means they daily spend virtually everything they earn to sustain themselves, and there’s little or no spare cash to tuck away in a savings account.

What’s worse is that some Nigerians are facing the inflation scourge without jobs.

Analysts proffer possible solutions

Many industry analysts said Nigeria’s policy makers must be intentional about addressing the rising food inflation. Beyond the single digit facility interventions, they must look into the big elephant in the room, which is insecurity.

“Our monetary authorities must ensure that policies at that level attract foreign direct investment and grow capital inflow, which has dipped over time,” Chukwu, said.

Johnson Chukwu, the CEO of Cowry Assets Investment Limited
Chukwu, CEO, Cowry Assets: interventions have failed

He suggested that Nigeria’s policy makers must also close the inter-regional price differences by setting up a more efficient transport system that connects the two major regions of the country.

“One of the ongoing railroads projects in the country, linking Nigeria’s two commercial capitals – Lagos in the south and Kano in the north – is a welcome development,” Chukwu added.

The World Bank, in its 2021 Commodity Markets Outlook report that refers to the Global Report on Food Crises, stated that COVID-19 pandemic-induced inflation pushed about 23 million Nigerians into a food crisis in 2021.

Compounding concerns, the recent interest rate hike by the CBN’s Monetary Policy Committee has put pressures on the real sector and manufacturers.

The director-general, Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, said the new MPR meant another level of increase in interest rates on loanable funds, making it tight for private businesses to access funds in the credit market.

The development, Ajayi-Kadir posited, was not “manufacturing-friendly”, considering the myriad of constraints already limiting the performance of the sector.

Ajayi-Kadir, DG, MAN: increase in lending rates not manufacturing friendly

It would be noted that due to the rising level of inflation, the apex bank had to recently deduct over N7 trillion from banks as a measure of controlling monetary flow across the banks,  which impacts adversely on the economy.

 

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