Nigeria’s Households Struggle to Cope With Increasing Food Prices
Nigeria’s Rising Food Prices Could Trigger Country’s Poverty Rate
In Abraham Maslow’s pyramid-shaped Hierarchy of Needs, food is one of the physiological needs of humans. It dictates the actualization of other higher needs.
Since Nigeria recorded its index case of COVID-19 in late February and the implementation of lockdown in March, the prices of food items have skyrocketed. Unarguably, a sharp increase in staple foods leads to hunger and invariably poverty. Nigeria with its growing population is categorised as one of the poverty capitals of the world.
In the Nigeria COVID-19 National Longitudinal Phone Survey (COVID-19 NLPS), the National Bureau of Statistics (NBS) sampled 1,950 Households to monitor the impact of Novel Coronavirus.
The outcome of the survey showed that households struggled to purchase staple foods like yam, rice, and beans during the pandemic lockdown. It also revealed that 85% of Nigerian households faced price shock. According to the survey, many households struggled to cope with these widespread shocks, with 51% resorting to reducing food consumption.
The Continuous Rise in Food Prices
In its Consumer Price Index May 2020, the National Bureau of Statistics (NBS) said food inflation rose to 15.04 percent on an annual basis. On a monthly basis, food prices increased to 1.42% from 1.18 percent recorded in April 2020. Overall, the consumer price index (CPI), which measures inflation, increased by 12.40 percent (year-on-year) in May 2020. This is 0.06 percent points higher than the rate recorded in April 2020 (12.34) percent. The increase is the highest surge recorded since March 2018.
According to the Bureau, high prices of bread & cereals, potatoes, yam, and other tubers, oils and fats, fruits, fish, and meat were contributing factors. The lingering rise in food prices continues to cause a heavy burden on households, leading to hunger, malnutrition, and an increase in the poverty line. The effect of an earlier closed border against smuggling and the lingering effects of the pandemic crisis resulted in the continuous rise. During the height of the lockdown, traders also exploited buyers by indiscriminately increasing prices of food items.
Effect on Minimum Wage
Nigeria’s new minimum wage is pegged at N30,000. The wage was raised from N18,000 to the new rate last year, after years of battle between the labour union and the government. The payment is still a contending issue at state levels, where most of them depend on FG allocation to survive. Compounding the effect is the current COVID-19 pandemic which has weakened economic activities. This has also resulted in a dire situation where the new take-home pay cannot take care of thousands of families.
While food prices are increasing, purchasing power dip and hamper savings. The effect will crisscross economic development activities, including the banking sector. Presently, governments are faced with either to lockdown or not to lockdown. The case scenario of a surge in pandemic rates or rising food prices – inflation.
Ways to ameliorate the conundrum
Food is essential to households. In 2019, Nigerians spent N22.8 trillion on food expenditure, 56.7% of the total household consumption, according to recent household consumption data by NBS.
To tame the implication of pandemic on the struggling health sector and poverty, the Nigerian Governments need a holistic approach to tackle the intertwin dilemma. There is a need for sound public policies and crisis response mechanisms. It also needs to strengthen its institutions and allocate more resources to critical sectors of the economy. If not, the slow economic growth over the past years and another looming recession will continue to make many vulnerable groups fall below the poverty line.
Jude Feranmi, Convener of Raising New Voices Initiative and former National Youth Leader for KOWA Party, advised the government to take a clue from India and China’s experiences on their massive investment in the agricultural food chain.
“One of the ways to drive down poverty is to drive down food prices. The average Nigerian reportedly spends about 60 percent of income on food.
“What this means is that other industries are competing for 40 percent of the income, which means only a few companies can viably compete for that income share. It also means fewer jobs for the youth, which then translates into poverty.
“The way to solve this quagmire looking at what countries like India and China have done is to invest massively in the entire agricultural food chain. Not just in fertilisers or loans for small farmers, but in mechanised agriculture that can be distributed amongst cluster farmers, in storage and preservation companies that can supply farmers with that service, in irrigation companies that can ensure farmers farm all year, in processing companies that can ensure almost half of the entire harvest isn’t going to waste.
“Not only will jobs that our youth will be willing to do will be created, but prices will also go down as well, and so will poverty.”
Providing an enabling environment for the agricultural industry to operate and thrive can also bring about the desired change. In its Economic Sustainability Plan, the Federal Government proposed to support key projects in Ministries. In the agric sector, it plans to create 5 million jobs while boosting agricultural production and guaranteeing food security. This sounds pretty on paper for a sector that contributes more to the economy with less allocation over the past five years.
“To cushion the effect of high food prices on citizens, the Nigerian government needs to face the fact that we cannot yet produce sufficient food. So it must continue to support the agricultural sector with resources and infrastructures that will aid food production and storage,” Lanre Elufisan, the Executive Director of Ominira Initiative for Economic Advancement told Dataphyte.
“The government must also consider opening its borders and lifting import restrictions on food items we don’t have enough capacity to produce a high quantity, so as not to drive prices high and make life miserable for people already living in poverty.”
The Bill Gates Foundation had urged the government to invest more in human capital development to protect its vulnerable groups. “If you invest in their health, education, and opportunities — the “human capital” we are talking about today—then they will lay the foundation for sustained prosperity. If you don’t, however, then it is very important to recognize that there will be a sharp limit on how much the country can grow,” Bill Gates said during a visit to Nigeria in 2018.
Two years on, Gates’ words are more critical these days and this time is now for the Nigerian leaders to act.