Food price crisis worsens misery as inflation rises by 7.48% under Tinubu
16 February 2024 |
4:15 am
Nigerians may be in for a longer period of economic sluggishness largely fueled by the headline inflation, which rose by as much 7.48 per cent in the last eight months of President Bola Ahmed Tinubu’s administration.
• Yusuf urges President to grant concessionary import duty
• Food inflation hits 35.4%, headline inflation rises to 29.9%
• Experts seek country’s departure from ‘consuming nation’ tag
• Tinubu counters VP, says no to price control board, food importation
• You’re like a quack doctor, your ‘shambolic’ policies causing hardship’, says Atiku
• Rescue Nigerian economy from imminent collapse, Reps tell FG
Nigerians may be in for a longer period of economic sluggishness largely fueled by the headline inflation, which rose by as much 7.48 per cent in the last eight months of President Bola Ahmed Tinubu’s administration.
The National Bureau of Statistics (NBS) in its consumer price index (CPI) report released yesterday, said the nation’s headline inflation rate for January 2024 is 29.90 per cent, this is 0.98 per cent higher than the 28.92 per cent it was in December 2023.
As of May 29, 2023, when this administration took over the reins of governance from the Muhammadu Buhari administration, the inflation rate was 22.41 per cent, but by June, inflation jumped to 22.79 per cent following the announcement that fuel subsidy had been removed and it has risen consistently since then.
Experts had earlier predicted that inflation would hit 30 per cent by December 2023, citing the impact of the removal of fuel subsidy and unification of the foreign exchange regimes.
Checks showed that though the figure did not hit 30 per cent as predicted, it was only kept in check because of the cash scarcity that citizens experienced at the time.
Indeed, the collapse of the Naira in the foreign exchange market has seen prices of goods and services rising astronomically with food prices being the highest. As of January 2024, food inflation rose to 35.4 per cent on a year-on-year basis, which was 11 per cent points higher than the 24.32 per cent recorded in January 2023.
Consequently, this situation has created a food crisis in the country with millions of citizens at risk of starvation.The Director/Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, admitted that measures taken so far by the government seem ineffective, saying, “the major inflation drivers are not receding, if anything, they have become even more intense.”
Speaking on food inflation, he stated that moving from 33.9 per cent in December 2023 is assuming a frightening dimension at 35.4 per cent in January.
According to him, the overall implication is that manufacturers and other investors are currently under tremendous pressure. He added: “Tackling inflation requires urgent government intervention to address the challenges bedevilling production, productivity, foreign exchange and insecurity in the economy. The real sector of the economy needs to be incentivised to ensure moderation of production costs.”
Yusuf urged the Federal Government to review its tariff policies by granting concessionary import duty on intermediate products for agro allied industries and other industrialists.
Prof. Godwin Oyedokun of Lead City University, said if Nigeria is not producing enough, inflation will continue to rise.
“We are a consuming nation and we are not even consuming right,” he said, adding that many things are passing through the informal sector, which are not captured.
He said if the government was interested in crashing the rising inflation, it must show seriousness and be deliberate about it. On his part, Eze Onyekpere, a fiscal governance expert and Lead Director, Centre for Social Justice (CSJ), who spoke on a television programme on the rising food costs, said corruption is the main cause of the food crisis in the country.
According to him, “Government has always subsidized agriculture, but corruption has not allowed it to produce the required result. Look at the Anchor Borrowers Programme, which was supposedly providing credit for farmers and matching them with off-takers so that it will be easy for them to farm, all we saw was that there were a lot of political farmers.”
To Victor Aliko, a development economist, it appeared some of the policy makers do not have a grip of what the problems are. His words: “We can’t have certain persons, who sit down somewhere making decisions without understanding the real issues of the economy, they make policies in abstraction, leading to what we call policy incoherence, you have policies that are overlapping. What the people want to see is food on their table, they don’t care about the economic policies, they just want to see food on their tables.”
Director, Obsidian Archenar Nigeria, Kelvin Emmanuel, said that the fact that Dangote Refinery has issued tenders to foreign off-takers to sell petroleum product derivatives overseas, because the lack of crude oil feedstock, as well as the fact that, the continual subsidy of premium motor spirit (PMS) does not provide a competitive environment for midstream players to maximize earnings by selling to the local markets, poses a grave threat to the energy security of Nigeria, especially as it contributes 50 per cent to the cost price index basket for calculating inflation.
He stressed that Nigeria cannot, as a nation, address inflation without focusing on decelerating the buffers that stimulate the month-on-month increase in the prices of food and energy.
“The steps taken by the monetary authorities must be complemented with a response from the fiscal authorities. And so far, the fiscal authorities are not pulling their weight,” he added.
Prof. Sheriffdeen Tella, said that it is time for the Central Bank of Nigeria (CBN) to introduce unorthodox policies that will bring sanity to the economy.
Tella, an economics professor at the Olabisi Onabanjo University, Ago-Iwoye, Ogun State, explained: “The prices of goods and services have been galloping since January and February; figures are likely to be worse unless the CBN introduces unorthodox policy to contain the inflation in the short run.”
Calling on FG to look inward, Prof. Ajayi Omo-Ogun of the University of Calabar, Cross River State, advised the government to rethink, and bring back the subsidy regime as well as reconsider the floating of the Naira.
Ajayi said: “For the economy to be back on track, fuel subsidy regime can be brought back, floating of the Naira should no longer be encouraged. Government must also go all out to tackle insecurity to enable farmers to have access to their farms, produce for local consumption and exports, the government can restore the Naira value to the dollar if concrete efforts are put in place to tackle corruption across the board.”
HOWEVER, President Bola Tinubu has said he will not establish a price control board or approve the importation of food as measures to address the hardship in the country. Tinubu spoke on Thursday after a meeting with governors of the 36 states of the federation and the Minister of the Federal Capital Territory (FCT), at the State House, Abuja.
The President said his administration is dedicated to evolving home-grown solutions to tackle food security challenges in the country. He said such measures include setting up schemes to bolster local food production and cutting out all forms of rent-seeking tied to food importation.
“I reiterated this commitment during my emergency meeting today at the State House, with all 36 state governors, the Vice-President, Kashim Shettima, the National Security Adviser, the Inspector-General of Police, the Director-General of the DSS, and some ministers,” Tinubu said.
The President noted that importation of food “enables rent seekers to perpetrate fraud and mismanagement” at the expense of many Nigerians. He said his administration would rather support farmers to cultivate more food instead of importation.
“I will not establish a price control board, nor will I approve the importation of food. We must extricate ourselves from this predicament because importation only enables rent seekers to perpetrate fraud and mismanagement at our collective expense,” Tinubu said.
But taking a jab at the president, presidential candidate of the Peoples Democratic Party (PDP) in the 2023 election, Atiku Abubakar, has accused President Tinubu of trying to decimate Nigeria with hunger, economic hardship and poverty.
Atiku, who stressed that Nigeria is in a dire situation, likened Tinubu to a quack doctor trying to treat a cancerous patient. In a statement by his media aide, Phrank Shaibu, Atiku said: “The fallout of the shambolic policies of President Tinubu-led APC administration is killing Nigerians even as there are no efforts to stem the tide. The unprecedented hunger, poverty, and hardship in Nigeria were part of Tinubu’s ultimate plan to decimate Nigerians and pauperise them until they have no shred of dignity left.
“Tinubu is like a quack doctor trying to treat a cancerous patient. But the quack doctor is likely to kill the patient even faster than the cancer itself.”
The former vice president berated Tinubu for blaming ex-President Buhari for the current hardship. “Rather than get to work, he continues to blame his predecessor for handing him an empty treasury and a weak economy and the opposition for instigating mass protests.
“He talks as if Buhari was not a member of their diseased All Progressives Congress. He also forgets that his own kabukabu policies and its fallouts are what is instigating the mass protests across the country,” he said.
Atiku insisted that the President knew little about Nigeria’s economy and nothing about security or building a national economy. Similarly, the House of Representatives has appealed to the Federal Government to rescue the Nigerian economy from imminent collapse and restore investors’ confidence in the country. In a resolution at plenary on Thursday, following a motion by Leke Abejide (ADP, Kogi), the House asked the Federal Ministry of Finance and Central Bank of Nigeria (CBN) to provide adequate notice to Nigerians, especially stakeholders in the maritime industry before altering customs exchange rates.
The House said this will ensure transparency and allow stakeholders to prepare for any changes that may affect their operations. The lawmakers also asked the CBN to maintain the stable exchange rate for Customs duty and excise duty purposes below N1,000/$1 preferably N951.94/$1 to encourage patronage in Nigerian ports and prevent galloping inflation, aiming to balance economic stability with competitiveness in the global.
The House tasked the Federal Ministry of Finance to ensure the international best practice of allowing a 90-day grace period for fiscal policy changes to facilitate the completion of ongoing transactions under existing policies.
Leading the debate on his motion, Abejide argued that conventional fiscal policies require a minimum of 90 days to manifest, in contrast to the current trend in Nigeria where immediate enforcement is prevalent, thus necessitating the need for a shift towards a collaborative approach which integrates fiscal and monetary policies with stakeholder’s engagement to prevent isolation and guarantee active stakeholders’ involvement inconsequential decisions.
He said the CBN has raised customs tariffs six times in the past six months, causing inflation and disrupting import and excise duty calculations, which businesses rely on for business planning.
According to Abejide, businesses and investors rely on a stable transactional exchange rate for import and excise duty calculations for at least two years to enable effective business planning.
He said the Central Bank of Nigeria experienced a series of exchange rate adjustments for customs duties within six months, in 24 June 2023, the rate increased from N422.30/$1 to N589/$1, followed by N770.88/$1 on July 6, 2023, N783.17/$1, on November 14, 2023, N951.94/$1 on December 7, 2023, and a double adjustment on February 2 and 3, 2024, reaching N1,356.8/$1 and NI,413.6/$1 respectively, illustrating excessive fluctuations and volatility in the currency market, raising significant concerns about business planning and economic stability.
He said due to the frequent customs exchange rate hikes, Nigerian importers are shifting towards ports in Tema, Ghana; Lome, Togo; and Cotonou, Benin Republic, causing a substantial 65 per cent decrease in cargo importation and business activities at Nigerian seaports, with daily container examinations dropping from approximately 250 to just about 80.
He expressed concern that the current system in Nigeria which relies on a market-based exchange rate for calculating customs duties causes fluctuations based on market conditions, and poses significant predictability and stability challenges for businesses, thus necessitating alternative solutions for customs duties by considering options like a fixed rate system or a hybrid system combining market-based and fixed elements to enhance predictability and stability.
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