To curb escalation of food prices
The frightening spiralling of food inflation in the country is, no doubt a consequence of the deteriorating state of the Nigerian economy. Considering the significance of food security, and the multiple causative factors including inappropriate policies as well as insecurity in the land, the rising cost of food items is a serious cause for concern. In addressing this complex issue, it is obvious that the Federal Government appears to have a little room for manoeuvring, given that fiscal sustainability has been compromised with the current heavy public debt burden and growing fiscal deficits. Nevertheless, and to keep hope of recovery alive, government has no choice but to regularly re-evaluate its policies, fiscal and monetary; and to drastically re-organise security measures for much greater effect country-wide.
The current release by the National Bureau of Statistics (NBS) on the state of the economy indicates negative growth in gross domestic product, GDP, recorded for the second quarter of 2020. It became obvious that the inflation figures year-on-year, has been worsening, increasing from 12.22 per cent in February 2020 to 12.82 per cent in July and then 13.22 per cent in August. By these, life is generally becoming unbearable for the ordinary Nigerian with the real income of the average income earner falling consistently, implying that they can only afford fewer baskets of commodities for their livelihood and sustenance than hitherto.
Overall, for seven months consecutively, inflation has been on the upward trend, a clear case of stagflation where the economy is experiencing slow or decreasing economic growth and high levels of unemployment at the same time. In apparent response, the Central Bank of Nigeria (CBN) through its September 2020 Monetary Policy Committee meeting had tried to address the situation by reducing the monetary policy rate by 100 basis points to 11.5 per cent in order to stimulate production and economic growth though at the risk of exacerbating the inflationary spiral as well as the instability of the exchange rate. Irrespective of what the focus of economic policy would be, one thing is certain, that the economy is not in a good shape. The trade-offs in economic policy are inevitable in this regard.
Worsening prices for food items as captured in the latest NBS report indicate that year-on-year, food inflation increased by 0.52 per cent to 16 per cent in August from 15.48 per cent in July 2020. According to the report, the rising composite food index which reflects the movement of prices of food items, was caused by increases in prices of food items such as bread, cereals, potatoes, yam and other tubers, meat, fish, fruits, oils and fats and vegetables. These are the items the average Nigerian consumes on a daily basis, particularly bread, yam and other tubers which include cassava used for producing garri and fufu widely consumed across the length and breadth of the country. Indications from the NBS are that the food inflation situation may worsen with the CBN stopping the sales of foreign exchange to food importers, unless government policy to strengthen local production is sustained and strengthened.
Certainly, government needs to address the seemingly perennial invasion of farmlands by herdsmen who appear emboldened by the authorities to continue with their age-long practice of roaming around with their cattle to the detriment of the local farmers and the general populace.
That implicit approval by the authorities has invariably made these herders adamant in rejecting the ranching of their cattle, contrary to the global best practice in this regard. This has negative effects on the level of food production in the country with many farmers scared of going to farm to avoid being killed or being raped, in the case of women. Government has to address this vexatious matter in the interest of the economy and meaningful co-existence of all ethnic nationalities in the country.
The reopening of borders, closed for about a year, may serve as a positive signal to boost economic activities and thereby reduce inflation rate. Closure of borders without control of greed as graft of customs and immigration officers has been a causative factor in the rising trend of food prices. So also is the recent approval by government for an increase in the price of premium motor spirit, PMS and the over 200 per cent increase in the tariff for electricity. All these have cost-push effects on the rising trend of food inflation with consequences which include mass suffering, malnutrition and health hazards.
Political leaders can frontally address this perennial issue of herdsmen harassment and the growing insecurity in the land. Proper farm production cannot take place under such a situation. Moreover, Police checkpoints on the roads, meant to enhance security, have become points of extortion on traders and middlemen who transport these food items to the markets. The illegal tolls paid by these transporters are invariably passed on to the final consumer through increased food prices. Government needs to re-examine its economic policy framework and identify issues stifling progress or encouraging food inflation. Nigerians must eat. In the absence of palliatives from the government to cushion the effects of COVID-19, prices of food items need to be made affordable so that the ordinary man can be saved from starvation.