By Adefolarin A. Olamilekan
Food, food and food remain the most constant nutritional and vitamin value humans cannot do without. Our existence depends on it or else humanity will go into extinction. We cannot dare joke about the lack of food. Nobody has made food its enemy.
These are the reasons why serious nations make deliberate efforts toward not just having food security, but making it strategically abundant, available, and affordable for the people. In other words, there is greater attention to government policy direction that defines food, essentially, as the number one priority on the scale of preference. In this regard, the policy to make food available all year round and affordable is not toiled with no matter how the economic technical conundrum calls it inflation or food inflation.
Food must be
on the table for every household
Recently, there were soaring energy and food prices, with inflation of over 7.5
per cent in the USA and above five per cent in Europe and the UK. Their
governments are not sleeping over the situation. Taming food inflation headlong
through pragmatic efforts has been deployed, because they grasp deeply the
social cost of food inflation beyond just the economic technicality of it.
What then is
Inflation?
With hindsight, a simplistic definition of inflation is the general rise in the
prices of goods and services in a particular country, at a particular period,
which results in a fall in the value of money. In this way, inflation simply
devalues and weakens a country’s currency, as well as erodes the purchasing
power of income and wages available for workers to spend on food and other
desired needs.
Significantly, food inflation if let loose, would affect mostly
the poor who are greatly vulnerable. Nigerians are asking what is fuelling food
inflation in the country? Specifically, they want to know how the government
policies failed to tame food inflation. Yet Governments present or past have
one or more projects in this direction.
Nigerians
will never forget how the military government truncated the 1st, 2nd, 3rd, 4th
and Rolling Development Plans. A sizeable segment of these development plans
focuses on food self-sufficiency and economic self-reliance through local
resource development. Moreso, that they are laudable economic frameworks with
multi-sectoral approaches, they were jettisoned due to a lack of government
policy continuity.
Meanwhile, a modest history of how our nation’s policy economics
has been formulated and implemented since 1999 when civil democratic government
returned, showed nothing significant has been achieved to address the economic
challenges. And, for us, one of such troubling issues is the rising food
inflation.
Noticeably, the aftermath of successive Governments in Nigeria’s
failure on policy economics always gets every concerned citizen thinking and
one would wonder how we got so deep in the mess we found ourselves in, even
though we are a resources-blessed nation.
Surprisingly we are not lacking in policies or policy formulation
and development ideas as a point of departure in our clime. This, in fact,
demonstrates why a lot is expected from us as African most populous people with
brilliant minds and skills.
Sadly, Nigerians are looked down upon as our green passport on any
immigration desk outside our shore is scrutinised and interrogated under heavy
suspicion. Why? Because we by ourselves are careless about dignity. What the
outside has come to know about us is the ‘corruption’ and ‘looting’ of public
funds that permeated our government structures as exhibited by people who are
lucky to have been elected or appointed.
Some of us as political economists or economists are ashamed and
disappointed because the government over time would always create the
impression of walking the talk of many of its policy economics. Alas! To the
greatest surprise of Nigerians, it is always media hype and shows that have
never translated the economy better to lift citizens out of poverty.
Nevertheless, for the period under review, many Nigerians can
never forget in a hurry the following policies; National Economic Empowerment
Development Strategy (NEEDs), State Economic Empowerment Development Strategy
(SEEDs), Local Government Economic Empowerment Development Strategy (LEEDs),
were jealously guarded policies of the Olusegun Obasanjo administration (1999-2007).
However, the Obasanjo dead-on-arrival third-term agenda made a
mess of those brilliantly coined policies with massive input from the World
Bank experts and others. We would not also fail to mention how this same policy
was linked to the New Partnership for African Development (NEPAD).
Another is the 7-Points Agenda of Umaru Musa Yar’Adua (2007-
2010), with a deliberate focus on Electricity, the Rule of Law, Health, and
Transportation while Agriculture was tailored to reduce food importation.
Similarly, to the above, was the Transformation Agenda of Goodluck
Jonathan (2010 -2015), which even produced Transformation Ambassadors across
the country and outside the nation. Ushering in a new lexicon called economic
diversification and a clear approach toward agro-produce export orientation and
cassava bread made famous by the then Dr. Akinwumi Adesina minister of
agriculture.
Then came the Economy Recovery
Growth Plan (ERGPs) of Muhammadu Buhari’s administration (2015- 2023), stepping
the policy economics forward with so much funding for agriculture in the name
of economic diversification, a whooping N1 trillion went into rice, wheat,
cassava and others under the Central Bank of Nigeria’s Anchor Borrowers
Schemes. And many other fundings through the National Agricultural Land
Development Agency (NALDA).
Today,
we are being harassed by the government of President Tinubu left, right,
centre, back and front, depending on which side the harassment is coming on
you. With his ‘Renewed Hope Agenda’ and policy directive of making food and
water resources as National Security Council sphere of decisions. Critically,
all of the above-mentioned policies are trackable to tackling food inflation or
food-related problems being faced in the country. Hence, in the wisdom of the Government,
food and agricultural elements are of national security importance.
Whether they understood the import of food inflation in all their
policy action is another issue. However, food inflation is scary, dreadful, and
dangerous, it reduces the nutritional and vitamins of the poor, denying them
the necessary health benefits that are gotten through food consumption.
This now brings us to the recently released August 2023 general
inflation of 25.8 per cent by the National Bureau of Statistics (NBS). As
usual, it draws attention to the flipping floppy economic situation. NBS in its
Consumer Price Index (CPI) report for the month of August 2023, the NBS’
headline inflation rate increased to 25.80 per cent is relative to the July
2023 headline inflation rate which was 24.08 per cent.
According to the NBS, it showed a 1.72 percentage point increase
when compared to the July 2023 headline inflation rate. On a year-on-year
basis, the headline inflation rate was 5.27% points higher compared to the rate
recorded in August 2022, which was 20.52%.
However, the sad reality was the damaging figure of food inflation
of 29.34% which was more fearful. The NBS noted that food inflation for August
rose to 29.34 per cent in August 2023, representing a 2.35 percentage point
increase from 26.98 per cent recorded in the previous month, on a year-on-year
basis, which was 6.22% points higher compared to the rate recorded in August
2022 (23.12%).
Our
fear about this double-digit food inflation has persisted for many years untamed.
And we are very sure that this latest figure is linked not just to the
distortion of fiscal and monetary policy of today’s Government but also to past
ones are to be blamed also. Major food commodities that are daily consumed by
Nigerians such as bread, cereals, milk, meat, fish, potatoes, yam, and other
tubers, soft drinks, and fruits are not without government policy intervention.
Meanwhile, the rise in food inflation is seen in ‘wheat flour with
a price increase of 43 per cent to N38,000, rice with 91 per cent increase to
N61,000, palm oil with 55 per cent increase to N31,000, sugar with 75 per cent
to N42,000 and tomatoes with 82 per cent increase to N40,000.”
Fundamentally, economists would always attribute demand and supply
paradigms as factors that drive inflation, and most especially food price
inflation. Consequently, one may not be surprised at the report going by the
many years of structural decay and successive government poverty of economic
governance, both in fiscal and monetary policy deployment to address the
country’s food inflation woes.
For instance, the Central Bank of Nigeria (CBN) promising from its
projection that the country’s inflation rate would drop to a single-digit range
of 6–9 per cent has failed, using its interest rate currently standing at
18.75% as a monetary measure to fight inflation. However, we acknowledge the
relationship between interest rate and inflation, nevertheless, one cannot
become a threat to the other, in this case, stiffing the supply of money and
credit to businesses. Lack of understanding in this regard mess up the Apex
Bank’s strategic policies that cut across multi-sectorial macroeconomics and
microeconomic variable that are failing to tame inflation.
Another is the poverty of fiscal policy through government
spending to address poor infrastructural facilities to aid farming activities
across the country with the Federal Government throwing money on cosmetic and
ad hoc agricultural projects, leaving out the core needed project in terms of
electricity, storage facility, roads and better transport logistics for rural
farming communities and others that are at the base station of food supply.
Similarly,
fiscal policy failure is the multiple taxation of Government at the federal (9
tax items) and sub-national levels (46 tax items). The entire Government fiscal
mandates are all about revenue drive without balancing how this would go back
efficiently to tackle inflation. A case in point is the huge operational cost
manufacturing sector that is more in the food commodities sub-sector which
bears together with taxes and fees being paid.
Lastly is the failure of our national security architecture to
arrest the persistent insecurity that is increasingly affecting farming
communities and wreaking havoc on the food chain and commodity supply in the
country. The reality of the foregoing cannot be overemphasised with its burden
fuelling the food inflation rate. Sadly, despite trillions of naira being spent
as intervention in agriculture, security, and infrastructure amongst others,
the increase in the food inflation rate and the surge in prices of bread and
cereals, protein foods like fish, meat, egg and beverages as reported by the
NBS food price index are unbearable. Arguably, the centrality of this piece is
that the failure of the Government policies to address food inflation in
reverse fuels or aggravates it in our country.
What can be done to address food inflation in Nigeria? Seriously
is to remind the Federal and State Governments that poverty of infrastructure
is the bane of food inflation in the country. There is also the poor state of
our roads, poor storage of food facilities, multiple taxes, and high cost of
transportation. We believe it is appropriate that the Government across
boards gets involved directly in collaboration to tackle food inflation
headlong. This can help us drive down negatively the impact of food inflation
resulting from disjointed policy direction.
In addition, it is not a bad idea for the Government to put in
place a price control board to tackle the menace of middlemen and women taking
undue advantages at this time. On the other hand, we acknowledge the fact that
to deal with inflation, the Central Bank Of Nigeria (CBN) must have a grip on
the supply of money, and credit must not be let loose. In this way, CBN’s
stance in creating new money must be justified through a steady interest rate
rise while this must go with a target to boost investment and employment
generation.
For
us, CBN using interest rates to fight inflation tends not to be working, rather
it devastates the poor. Poignantly, it will be a great service if the CBN
focuses on curing inflation that tends to foster economic inequality and divide
our society. Ours also is for a monetary policy that prioritises the
prevention of inflation with decisive action to remove more Nigerians from
poverty and hunger.
Another is a moderation breaker from the central bank tightening
its monetary stance. Although the last Monetary Policy Committee (MPC) for 2023
retains the 18.75% interest rate and projections of over 3% economic growth for
the country. We are expecting a paradigm shift from Dr. Olayemi Cardoso
lead CBN MPC and its brand new four deputy governors. To put out strong
measures to reduce unabating FX pressure on the naira in the currency market is
enormous because FX market unification has brought problems, with the I&E
Window creating its currency round tripling and speculators.
Our take is that whatever measures to stop every factor
responsible for eroding the purchasing power of Nigerians and the naira is
welcome.
Given we all agree that the fear of farmers returning to the farmlands due to
clashes with the herders in the Northern Region as well as in some Southern
parts of the country demands stronger security action against farmers-herders
conflict and banditry phenomenon affecting farm produce segment across rural
and urban food supply chain. We should not forget how misappropriation of
funds and corruption wreaks havoc as well.
Ultimately, we need to reason around the ugly role of unscrupulous
individuals’ proclivity in food inflation. Consequently, it is time for the
Nigerian Government to fight inflation with a tripod of monetary, fiscal and
trade policies in collaboration with the sub-national government.
*Olamilekan
is a Political Economist. He can be reached via: adefolarin77@gmail.com
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