The Pacesetter Frontier Magazine

Tag: food inflation

  • Food Insecurity, Food Inflation and a Dwindling Manufacturing Sector in Nigeria: A National Threat to Sustainable Development

    Food Insecurity, Food Inflation and a Dwindling Manufacturing Sector in Nigeria: A National Threat to Sustainable Development

    By Ikenna Igwe

    The issue of food inflation and food insecurity have continued making the news headline in today’s Nigeria. To be fair, the issue of food insecurity is not something that is alien to Nigerians but with the current administration of President Tinubu, things seem to be going south.

    According to the National Bureau of Statistics (NBS) reports, food inflation rates stand at 33.93% on a year on year basis, that is 10.18% higher compared to the rate recorded one year prior. According to the bureau, the rise of food inflation on a year on year basis was caused by an increase in the price of common household food items like beans and cereals, milk, eggs, yam and other tubers. The headline inflation rates increased in January 2024 when compared to the same ones in the preceding year.

    Furthermore the report shows that on a month on month basis, the inflation rate in January 2024 was 2.64% which was 0.35 higher than the rate recorded in December of 2023 (2.29%). Still on the report, the food inflation rate in January 2024 quickened to 35.41% on a year on year basis, which was 11.10% higher compared to the rate recorded in January 2023 (24.32%).

    This whole state of affairs became more complex after the announcements of the removal of fuel subsidy. These brought about an upward trend in the price of basic commodities as well as other products which have played a major role in weakening the naira and in the reduction of the purchasing power of many citizens.

    Forex scarcity orchestrated by exponential demand for Dollar by Nigerians, as well as unremitted Forex backlog by the Central Bank of Nigeria have further mounted pressure on the naira.

    As the inflation rate clocked a 28 year high when it rose to 29.90% in January, so many sectors of the economy were deeply affected and one of those sectors was the manufacturing industry.

    The Manufacturing Association of Nigeria (MAN) has released a disturbing trend within the industry revealing that about 765 manufacturing companies have shut down while 335 experienced distress in 2023. This development is attributed to various economic difficulties including exchange rate volatility, rising inflation and a general worsening of the investment climate. These advertises have taken a toll on the manufacturing industries, significantly impacting its performance and sustainability. 

    Downturn in Capital Utilization

    The manufacturing industry, as reported by MAN stated on their report: “Capital utilization in the sector have declined to 56%, interest rate is effectively above 30%, foreign exchange to import raw material has dried up and production machinery inventory of unsold finished products have increased to N350 billion and the real growth has dropped to 2.4%. Expatriates in Nigeria currently pay more than $2,000 for CERPAC. The sector cannot afford another disincentive to increased investment and portfolio expansion”.

    A country that has a shrinking manufacturing industry, Forex scarcity to import, rising inflation, growing population and a worsening food crisis and poverty, is. Country urgent need of a reform. 

    Bold Step in the Right Direction

    Senator Abubakar Kyari, the Minister of Agriculture and Food Security on the 11th March, 2024 released a statement in which he said that the Federal Government had secured a €995 million deal between the Brazilian government and the German Deutsch bank group to finance a green imperative program in Nigeria.

    The program aims to create Mechanization Hubs in each of the 774 local government areas in Nigeria as part of its implementation plan. This comes as the administration of President Tinubu remains committed to ensuring food sufficiency and protecting local industry for sustainable economic growth. Part of the memorandum of understanding between the Federal Government and the John Deer group, a subsidiary of Tata Equipment clearly states: “The manufacturers have signed to deliver 10,000 units of tractors and implement in tranches of 2,000 units per annum for the next five years”.

    This is a welcomed development given the fact that the Nigerian agricultural sector recorded just a miniature 0.50% of the total foreign capital import of 2023. Amidst soaring food inflation and complaints of food shortage being experienced across the country, the need to quadruple investment and efforts as regards to agricultural output can’t be overemphasized.

    As we are preparing for the second quarter of the year, we are optimistic that more investments, programs, interventions and empowerments will be pushed into the agricultural sector and the manufacturing sector in order to have a sustainable economy. 

  • Food Insecurity Ravaging Nigerians (A Country at the Verge of Starvation)

    Food Insecurity Ravaging Nigerians (A Country at the Verge of Starvation)

    By Ikenna Igwe

    Nigeria is Africa’s biggest economy and its largest population with over 200 million people. One of the world’s largest youth population is at risk of running out of food and facing a possible economic collapse.

    Recent reports from the Food and Agriculture Organization (FAO), a UN specialized organization on food, estimates that approximately 25 million Nigerians are experiencing a hunger epidemic. This is a projected increase from the estimated 17 million people currently at the risk of food insecurity. Food access has been affected by the persistent violence in the Northeast states of Borno, Adamawa and Yobe and armed banditry in states such as Katsina, Sokoto and Niger. Also a detailed report from the National Emergency Management Agency (NEMA) stated that widespread flooding in the 2022 raining season resulted to the destruction of 676,000 acres of farmland, with the accompanying diminished harvest and increased food insecurity for families across the country.

    Major Causes of Food Insecurity

    -Armed violence and banditry: Top of the list would have to be the relentless wave of attacks against farmers in Nigeria by armed groups. This has hindered critical food supplies and has threatened to push the country deeper into a devastating hunger crisis.

    Report from “Save the Children” stated that the increasing attack against farmers across parts of the country is leading to displacement, market disruption and loss of livelihood. According to the “Nigerian Security Tracker”, armed groups have killed more than 128 farmers and kidnapped 37 others across Nigeria between January and June 2023. In addition, an estimated 2 million children under five across the northern Nigerian states of Borno, Adamawa and Yobe are likely to be pushed into acute malnutrition in 2023 with about 700 children on the brink of death.

    As many farmers are fleeing their farmlands and leaving acres of arable land to lay waste because of these attacks, the whole country’s economic framework is not just threatened but at risk of total collapse because a country which can’t feed majority of its population is doomed to fail. On a scale of preference base, the issue of food security should be on the frontline of all government policies.

    -Climate change: As weather fluctuations are causing harsh weather patterns, droughts, extreme temperature and flood, agricultural productivity and food production are being affected not only in Nigeria but also globally.

    Data from the Nigerian Meteorological Agency (NiMet) shows that the duration and intensity of rainfall has changed from normal across some states over the years with devastating impact on agricultural practices. Last year, Nigeria witnessed one of its worst flood as hundreds of villages and urban centers were submerged in water which displaced over 2.4 million people.

    According to NiMet official statistics, over 600 Nigerians died in the disaster while expansive acres of farmland were destroyed with ripple effect on the country’s food availability, affordability and safety.

    Optimistic Approach to Combating Our Current Plight

    In response to the food insecurity plus soaring inflation rates and the removal of the fuel subsidy, on the 13th of July 2023, the Federal Government declared a state of emergency on the food insecurity in the country. It unveiled a comprehensive intervention plan to create available, affordable and safe food for the nation. Some of the intervention plans stated were:

    * Immediate release of fertilizer and grains to farmers and households. 

    * Increased security measures for farmers and farms. 

    * Activation of 500,000 acres of land for farming and river basins for continuous farming.

    * Improvement of transportation and storage facilities for agricultural products.

    However there are concerns that have been expressed in various quarters about the willingness of the government to deliver on these commitments and promises in a timely and organized manner. In a statement, Fisayo Kayode, a senior manager at Sahel Consulting Agriculture and Nutrition Ltd, believes that the declaration is not anything novel because Nigeria has been in a food crisis for a long time.

    Food security she said, is not only focused on affordability, it also includes accessibility and food safety. She noted that over 40% of food produced in Nigeria get wasted due to poor logistics and infrastructure for proper aggregation, storage and processing. Adding that distributing fertilizers and seeds as captured in President Tinubu’s plan for farmers every planting season will not solve the problem. 

    At the final analysis, we implore every Nigerian to try as much in their power to grow their own food especially those in the rural areas with more access to fertile lands as we hope that the implementation of the proposed plans to address the food insecurity by the government are properly executed after we have experienced repeated failure by past governments.