Nigerians hungrier now, thanks to Buhari’s policy on food imports

By Ruth Olurounbi

Posted on Sunday, 18 October 2020 21:48
A man wears a protective mask as he shops for groceries at Bakan Gizo supermarket, amid the coronavirus disease (COVID-19) outbreak, in Abuja
A man wears a protective mask as he shops for groceries at Bakan Gizo supermarket, amid the coronavirus disease (COVID-19) outbreak, in Abuja, Nigeria June 11, 2020. REUTERS/Afolabi Sotunde

Since 21 August 2019, Nigeria shut its borders with Benin and effectively the main artery of trade between Accra and Abuja. What was thought to be a short-lived closure has dragged on for over a year later with unforeseen consequences coupled with the panemic.

About 15 months ago, Tunrayo Akinola spent N30,000 a month out of her N60,000 monthly salary feeding herself and her small family of two. That was before President Muhammadu Buhari ordered the closing of the Nigerian border against its neighbours to prevent smuggling of rice and other products, thereby halting trade between Nigeria and the remaining African countries with which it had signed signed the African Continental Free Trade Area (AfCTA) agreement.

READ MORE Flour Mills of Nigeria backs closure of border with Benin

More recently, Akinola, like more than 50% of Nigerians who are reeling from the impact of the  COVID-19 pandemic, has had to borrow more money to buy food, as food inflation climbed to 16.66% in September, up from 16% the previous month, according to data from Nigeria’s data agency, the National Bureau of Statistics (NBS). On a month-on-month basis, the food sub-index rose by 1.88% compared to 1.67% recorded in August 2020.

Households hit hard

The CPI and Inflation report published in September by the NBS, states that 51.3% of Nigerian households, who took out loans during the lockdown in mid-March, used them to purchase food items. About 1 in 4 of those households were already dealing with growing debt prior to the pandemic, while nearly a third took out new loans since the onset of the pandemic.

“Even before the coronavirus, many of us have been struggling to feed our families due to the high cost of food and other expenses and have been relying on loans to make ends meet. Just ask any average Nigerian and they will testify to this,” says Akinola.

“Our standard of living is increasing everyday, and yet, our take-home salary remains the same if we are lucky to be spared from job losses or pay cuts. If I am to be completely honest with you, since this administration came in, things have been exceptionally bad. We are having to borrow to survive as common people and it hurts that you are not able to provide for your family, even though you’re working really hard to,” she adds.

Precarious food security

Nigerian food security situation remains precarious, even as life goes back to some semblance of normal, post-lockdown, with the share of households experiencing moderate or severe food insecurity remaining as high 68% in August 2020, according to the NBS.

READ MORE Coronavirus: Food insecurity fallout from Nigeria’s lockdown

Analysts see the Nigerian president’s policies on food imports as unhelpful for a nation of more than 200 million people experiencing a persistent rise in inflation, driven by soaring of food prices caused by insecurity, flooding as well as trade restrictions with other African countries whose products are blocked from entering  Nigeria’s borders.

“Because food inflation remains at an elevated level, that will continue to put pressure on the core headline inflation numbers,” says Ikemesit Effiong, Head of Research at SBM Intelligence. “What is interesting though is that in its 2021 budget planning, the government is expecting inflation to be about 11.95%,” a figure that is down some what from the current inflation notes Effiong. That mean the government could be: “Factoring a change in its policy stance with respect to trade and foreign exchange controls, or it’s being wildly optimistic. But from our perspective, inflation will continue to remain at an elevated level as long as policy moves continue to put pressure on food growers and also importers.”

Inflation in Nigeria  rose to 13.71% year-on-year in September 2020, from 13.22% in August 2020; a jump from 12.13% in January to 13.71% in September, the highest recorded in 30 months, according to the NBS.

Restriction in place grows

In August 2019, President Muhammadu Buhari had ordered a ban on dollars for food imports, forcing importers to source for dollars at parallel markets. A year later, the president reissued that ban on dollars for food imports, adding fertilizers in the restricted items this year.

READ MORE The Big Debate: Is Nigeria right to close its borders?

“I am restating that nobody importing food or fertilizer should be given foreign exchange from the Central Bank. We will not pay a kobo of our foreign reserves to import food or fertilizer. We will instead empower local farmers and producers,” the President wrote in a tweet. Nigeria’s economic policy has normally centred on food and agriculture security even as food prices remain at an all-time high.

At the time when President Buhari banned food importers from accessing dollars from the Central Bank of Nigeria (CBN), a dollar sold at N379. Now, importers of food are sourcing for dollars at N462/$1 at the parallel market, driving food inflation. Last year, Nigerians spent N1.9trillion or 4.7% of their budget on rice alone, according to NBS data. That spending is expected to go higher, considering the persistent inflationary pressures driven by the devaluation of Nigeria, as well as other “legacy” factors, per CBN governor Godwin Emefiele’s assessment.

READ MORE Nigeria-Benin: Dangote mediates border fight for Buhari and Talon

Rising food prices driven by government’s policies means that Nigerians earning A N30,000 monthly minimum wage are having to pay more for the food they eat. Nigerians spend nearly 60% of their earnings on food purchases, the highest in the world, compared to Americans, who spend just 6.4% and Britons who spend 8.2%, according to data from Euromonitor, cited by the World Economic Forum.

“If you look around the markets and stores, you realise that some of the common food items are missing from the shelves. Take oats for example. I can’t remember the last time I saw the brand of oats I eat in the market and I now have to pay at 80% more for what is available,” says Tosin Adebayo, a resident in Abuja.

“Look at bread even. The price of common bread that is everywhere has gone higher. Let’s not even talk about protein. A whole frozen chicken that once sold for N3,000 per one kilogram now sells for N4,000 to N5,000 and we are still expected to live off the minimum wage,” adds Adebayo.

Bottom line

“Inflation will remain elevated for quite some time because of the combination of the border closure, the CBN’s aggressive management of the foreign exchange regime, and insecurity that is in part driven by climate change will combine to keep prices higher,” says Effiong.

And as prices of food surge, at least 22 million Nigerians are expected to face extreme hunger, says the UN’s food and agriculture agency. Floods and food shortages could very well push Nigeria into a food crisis.

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