How can Nigeria’s food crisis be tamed?

Hunger; that is the silent crisis brewing in Nigeria, Africa’s most populous country and largest economy. Since the oil price crash of 2014 and its aftershocks, millions of families have been grappling with increasing unforgiving food shortages and unaffordability.

Food insecurity, defined as a lack of reliable access to sufficient, safe and nutritious food needed to lead a healthy and active life, is rife and rising. Between 2014 and 2022, the share of the population experiencing extreme food insecurity has risen from 11% to over 21%, according to the 2023 State of Food Security and Nutrition in the World Report. The situation today across the country remains deeply concerning. But what sets this crisis apart from global norms is a disquieting fact: food insecurity is most prevalent in urban areas, where a growing share of the country’s population lives and the lion’s share of the country’s productive economic activities take place. This prevalence of food insecurity in urban areas, which collectively represent the nucleus of the country’s socioeconomic activities, underscores the severity of the issue and the dire need for comprehensive solutions.

The Proximate Causes Unraveled
The grip of hunger tightens when people get caught between the crushing weight of unaffordable food prices and dwindling incomes. Nigeria’s minimum wage, measured in nominal dollars, has plummeted from approximately $114 per month in 2014 to less than half of that today. Despite the upward revision of the minimum wage from NGN 18,000 in 2014 to NGN 30,000 in 2019, and the recent addition of NGN 35,000 to federal government workers’ monthly salaries, the current indicative minimum wage of NGN 65,000 ($56) remains lower than 2014 levels.

Meanwhile, food inflation has surged to unprecedented levels, reaching 30.6% year-on-year in September 2023. Between August 2018 and August 2023, basic food items have more than doubled in price. Unsurprisingly, in 2019, the average Nigerian family spent a staggering 59% of their expenditures on food, a proportion higher than in many other African countries. The effects of these dual pressures are that families skip meals more often, consume less nutritious food, and reduce spending on child’s education and healthcare, all of which leaves them more vulnerable to poor health and long-term poverty.

High Food Prices: Unpacking the Crisis
High food prices have historically been driven by structural factors, including low farm-level productivity and an inefficient transport and storage system leading to food wastage. However, in recent years, the escalating food crisis can be attributed to three main culprits: agricultural production and supply shocks, foreign exchange issues, and the removal of fuel subsidies.

Globally, agricultural production has been negatively impacted by climate change, geopolitical crises, and insecurity, disrupting agricultural supply chains and food production, leading to shortages of many staple food items. In Nigeria, climate change has increased erratic weather patterns and intensified flooding, undermining subsistence farming, which accounts for 70% of food production. Communal clashes and banditry in the North-West and herder-farmer clashes across the country have displaced large populations in mostly agricultural communities, thereby hindering food production.

In a country heavily reliant on the importation of food and farming inputs, the continued depreciation of the Naira adds to the burden of consumers. Due to recurrent global oil price shocks and domestic crude oil production shortages, Nigeria’s oil exports and revenues have been declining, depleting the country’s foreign exchange reserves and creating foreign exchange market volatility. Since September 2014, the Nigerian Naira has lost over 85% of its value against the US Dollar, making imports more expensive. With net basic food imports of $4.5 billion in 2021, up from $3.6 billion in 2019, the continued depreciation of the Naira is another significant contributing factor to increased hunger for Nigerians.

The removal of fuel subsidies at the end of May 2023 has further exacerbated the situation by increasing transportation costs.

For reference, prior to the adjustment to fuel subsidy removal, the cost of moving goods domestically in Nigeria was already about 5.3 times higher than in the United States. The removal of fuel subsidies pushed up the pump prices of petrol by over 200%, significantly raising the costs that farmers incur to move their harvests from farms to warehouses and markets, and these costs are eventually passed on, partially or entirely, to consumers.

Previous Government Initiatives
The Nigerian government has participated in various continental policy commitments aimed at addressing the food crisis, including the Malabo Declaration in 2014 and the DAKAR 2 declaration in 2023. These declarations aim to transform food systems, enhance productivity, reduce hunger, create jobs, and strengthen the resilience of food systems. The country has also rolled out several fiscal and monetary policy interventions to address the growing hunger crisis, including the Agricultural Promotion Policy (2016–20), the National Agricultural Technology and Innovation Policy (2022–27), the Presidential Fertilizer Initiative, the CBN’s anchor borrower’s program, input subsidy programs, and a series of import restrictions. More recently, President Bola Tinubu declared a state of emergency on food security in Nigeria on July 13th, highlighting the severity of the issue.

However, while some progress has been made in producing more rice and fertilizers, significant challenges remain in achieving further progress towards food security. There is especially room for improvement in the areas of stronger political leadership, adequate investment in agricultural value chains, and better policy coordination and implementation. The Federal Government has constantly spent less than 3% of its annual budget on agriculture, well below the 10% required to meet its Malabo commitment. The budget implementation process has also been characterized by delays in budget releases and spending leakages that impact outcomes. Inconsistent policies like the border closure and the Central Bank of Nigeria’s currency redesign and cashless policy decimated livelihoods. Programs like the Anchor Borrowers’ Programme, in which the CBN invested over NGN1 trillion as single-digit interest loans to support rural farmers, have yet to significantly increase food production, reflecting poor targeting of beneficiaries.

A Path Forward
To effectively address Nigeria’s food crisis, the current government should consider the following six issues:

Restore Macroeconomic Stability: The government must tackle the persistent exchange rate and insecurity challenges by combatting crude oil theft, intensifying efforts to improve security, and resolving the underlying ethnic and resource-based tensions across the nation. Reducing reliance on oil revenue and diversifying the economy, particularly through investments in agriculture, should be considered a national priority.

Strengthen Policy Coordination: Strong political commitment and better policy coordination are vital. Establishing a High-Level Presidential Food System Delivery Unit to drive the implementation of key policies, coupled with data-driven decision-making, is essential for progress.

Scale, Speed, and Efficiency: Achieving food security requires substantial investments to boost agricultural productivity, develop critical infrastructure and fortify market systems. While the investments required may likely exceed the government’s capacity, the government should seek to mobilize financing from other stakeholders, including the private sector and development partners. The government should lead by example by increasing the federal budget allocated to agriculture, coming closer to the 10% target agreed under the Malabo Declaration, and by developing bankable National Agricultural Investment Plans to mobilize investment. Collaborations with development finance institutions and regulatory bodies to develop innovative funding models like Public Private Partnerships (PPP) can reduce risks associated with private sector investments.

Temporarily Suspend Import Restrictions: Reviewing import restrictions on key inputs and food items, and possibly easing them temporarily can help stabilize food prices without over-relying on imports. During this temporary period, the government could take the role of the sole importer through a dedicated food board to control supply and prices.

Incentivise State Governments: Encourage state governments to invest in developing their agricultural competitiveness through revenue-sharing programs funded by corporate income tax contributions. This approach would serve as a powerful incentive for state governors to prioritize and actively engage in agribusiness development, ultimately boosting food production.

Prioritize Resilience Building: Establish social safety nets, invest in climate adaptation and mitigation, and build food reserves to reduce vulnerability to external shocks and to ensure long-term food security.

Nigeria’s food crisis is a pressing issue with potentially far-reaching implications for the country’s social and economic development. Yet the situation, already dire, can get worse. To alleviate the current hardship and avert further suffering, it is critical for all stakeholders in the Nigerian agrifood system to prioritize efforts needed to promote food security for all Nigerians now and in the future. The government, in particular, should take the lead through urgent and well-coordinated policies and investments. With the current administration already well into its first year in office, time is of the essence.

Razaq Fatai is the Research and Advisory lead at Vestance, a data-driven intelligence company