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Food inflation may be Nigeria’s biggest hit from Covid-19

By David Whitehouse
Posted on Friday, 26 March 2021 10:46

Bags of flour are loaded onto a wheelbarrow at Utako market in Abuja, August 17, 2020. REUTERS/Afolabi Sotunde

Supply-chain disruption caused by Covid-19 has laid bare Nigeria’s structural inability to produce and distribute enough food.

Overall annual consumer price inflation climbed to 17.3% in February, from 16.5% in January, the highest level in four years. That was driven by food inflation, which at 21.8% in February was at its highest for more than a decade.

Covid-19 is “a black swan event” and Nigeria’s import restrictions and naira weakness have worsened the situation, says Wale Okunrinboye, an investment analyst at Sigma Pensions in Lagos.

“Given the absence of active commodity exchanges and significant food reserve storage systems, supply-side vulnerabilities ensure that any disruptions to crop production rapidly translate into high food prices,” he says. The country will need to allow imports of key food items to help contain prices, he adds.

Food distribution is “marred with supply chain issues such as bad roads and poor storage facilities,” says Abdulazeez Kuranga, an economist at Cordros in Lagos. A lot of food is spoilt before it reaches the final consumer, he says. “It is safe to say Nigeria finds itself in a food crisis.”