Cash Scarcity Lingers, Food Scarcity Follows

 By Dele Sobowale

“Why is cash scarce again?” — Lekan Sote, January 10, 2024.

Lekan, one of the most perceptive columnists in Nigeria today astonished me when he asked that question. Vanguard readers knew as far back as March 2023 that another round of cash scarcity was coming. It occurred in December. It will linger for a while – as long as the Federal Government and the Central Bank of Nigeria, CBN, continue to miss the point. 

Nigerians should actually be asking two questions regarding cash scarcity: will it end? How? The answer to the first is “Yes”; but not next month or perhaps even March. It will certainly not end before a great deal of damage would have been done to the economy. The answer to “How?” will be left untouched for now. The FG and CBN will be shocked to know the major cause of the lingering scarcity. The stranglehold on cash supply is now assuming the characteristics of a plot. 

For some reasons known to them, Governors of the Central Bank, from as far back as 1987, have always stubbornly refused to listen to alternative views – other than those dictated by conventional wisdom. I was here when Abdulkadir Ahmed, 1982-1993, the longest serving CBN Governor, introduced two exchange rates – SFEM – to support Babangida administration’s Structural Adjustment Programme, SAP. I was rash enough to publish an article titled CONFUSED BANK OF NIGERIA – which landed me in detention. I was convinced that the objectives of SAP would be defeated by SFEM; and they were in the end.

Soludo’s Banking Consolidation Policy would have been a success if he didn’t rush it and listened more to critics. Today, the CBN is holding the bag of toxic loans – over N5 trillion – left by the banks we were told were solid. I will leave most comments about the immediate past Governor except one. Right from the start, the Anchor Borrowers Programme, ABP, was a tragedy waiting to happen. It was an incestuous relationship between fiscal and monetary policy makers; which would end in recriminations. Today, we are in trouble on account of ABP.

 The first major cash scarcity, last February and March, was a blunder – for which only an economic illiterate, like Buhari can take credit. Unknown to the general, the unprecedented episode had unleashed saboteurs – who are now behind the current cash scarcity. I stop now; wait and watch as events unfold.

 However, the cash crunch is already combining with other factors to make food scarcity inevitable. Here’s why. 

Buhari’s currency change and consequences

“When an old man dies, you lose a library,” said a sage. When this old man dies, several libraries might go down the grave with him. Like most Sales/Marketing Managers in 1984/5, I was caught in the upheaval caused by the sudden change of currency. Incidentally, no biography of Buhari can ever be true if it fails to mention that the fellow, as Head of State, was involved in two episodes of currency change which proved disastrous for Nigeria. The first also brought the nation’s first recession – as well as scarcity of everything. This second one is trending the same way.

 One incident, which occurred 40 years ago, was branded into my memory for ever. I was travelling from Jos to Kaduna; I passed the famous Saminaka and from there started to observe something strange. It was not my first time on the road. Perishable items – especially tomatoes, vegetables and peppers – were being thrown on the highway for lack of patronage. 

Traffic came to a halt at Pambeguwa, a major trading post, when the pile of discarded food blocked the road completely. Farmers had brought their food stuff to the market, but, there were few buyers. There were few buyers, because of cash scarcity. Having paid transporters to bring the stuff to market, there was no money to take them back. At any rate, the tomatoes would have perished by the next day. So, everything was dumped on the roads. Anybody thinking that nothing like that can happen now is wrong.

Information reaching me from some Northern bread baskets of Nigeria indicates that food is being dumped again for two cardinal reasons—cash scarcity and insecurity. It is difficult at the moment to determine which is predominant. One thing is certain. Food scarcity and attendant famine are inevitable in 2024. Let me draw attention, from my experience travelling every corner of the North for over 30 years, to a few determinants of the food situation nationwide; and its likely outcomes this year. My regular sources are virtually all united about what we should expect in 2024.

President Tinubu has two options. He can. like his predecessors, believe only what the Minister of Agriculture tells him. In that case he will have to live with the lies Ministers tell when the truth is bad news. On the other hand he could avail himself of inputs from others – who might be asked to tell him the truth. Buhari’s rice pyramids were symptomatic of the falsehood subordinates of Presidents promote; only to embarrass the government later. Of one thing I am certain. Nigerians fake many things; but not hunger. That was why people in Lagos shouted “We are hungry”.

Below is a starting point.

“ECOWAS sanctions against Niger: Nigeria is losing a lot – Onion merchant.” — DAILY TRUST, January 14, 2023.

If your business depends on raw food materials, the best source of information is the DAILY TRUST ON SUNDAY. And, if you are a Federal Government official charged with the responsibility of advising President Tinubu and the CBN Governor, then, more than ever, you should never miss the paper. The lives of millions of Nigerians depend on getting it right on food supply. Hungry people are always angry people; and angry people create havoc. The DAILY TRUST story is actually about onions – which stands proxy for other food crops.

“The demand stands at 2.5 million metric tonnes…we can only produce two million metric tonnes….because of our geographical position…to Niger, Benin, Cameroun etc, we export onions…It is also inside that two million that you have post-harvest losses…we cannot meet up with domestic demand…we can place our deficit to be around one million metric tonnes.” —  Malam Aliyu Isa, President of Onion Producers, Processors and Marketers Association of Nigeria.

The factors influencing scarcity of onions are also affecting several food crops. Food scarcity is a certainty this year – unless the government is prepared to take some preemptive steps to minimise the losses. It is estimated that post-harvest losses can be as high as 30 per cent of total production or 600,000 tonnes. Reducing this monumental loss by half will go a long way towards ameliorating the impact of scarcity. Believe me, there are ways…

Exporting for FOREX

“A grain merchant at Dawanau International Grain Market, Alhaji Uba Abdullahi Bello revealed that massive exportation of agro-commodities to neighbouring countries due to the mad rush to earn forex and the massive demand by mega companies are the main reasons behind the hike in food prices in Kano.” — DAILY TRUST, January 21, 2024.

It is not only in Kano, but also other Northern States. Nigerians need to be reminded that dollar is not the only international currency in circulation in ECOWAS; francs are still legal tender in most nations.

*Dr. Sobowale is a syndicated columnist