How Nigeria Manufactures Hunger
A few days back a Facebook friend shared an experience whose variations I am hearing more and more these days: While in a local bukka, a young schoolboy of about 14 accosted him. It was in the evening and the boy pleaded with him to buy him food. The lad explained that he had not put anything in his mouth since the break of that day. Even though he is someone who pays no mind to random folks requesting for funds, it did jolt him that the boy wasn’t asking for money but food. In fact, the boy wasn’t asking him for a full meal, only that he gives him the leftover from what he was eating. Moved with compassion, he bought him a meal. As he looked at the boy lapping up his soup, he realized that sometimes the reward of the giver is in the joyful face of the receiver.
Things are hard in this country.
Another friend summed it up in the usual humorous way Nigerians couch their hardship,
“Earlier today, I saw my neighbor offloading more than 4 bunches of plantain from his truck. I mean, I won’t be surprised if EFCC and DSS trailed him because where una dey see this money!!”
Things are hard in this country.
Many times I am tempted to ask low-level workers how they are surviving the hike in food prices. A few times I asked, I got an earful. Sometimes I part with a few coins but in my heart, I know what I have given can only buy so much in the market and that they will be back to square one in a few days. It is not sustainable.
THIS GALLOPING FOOD INFLATION
The Tribune newspaper ran a piece this month about the hyperinflation in the prices of food items and household products across the country. They reported that a measure of pepper that would sell for N1,000 about three weeks back, now sells for N3,000. A big tuber of yam which sold for N1,200 weeks back, now sells for N2,500. Personally, I was shocked that a crate of egg my family used to buy for N600 now sells for N1,600.
The food inflation is so dire that with a food inflation of 22.28%, Nigeria has the 11th highest food inflation rate among 169 counties in the world, and the 5th in Africa. An NBS survey conducted in 2020 showed that 58% of Nigerians reduced their food consumption between July and December 2020. I imagine it’s worse now.
I mentioned that I was shocked when I found out that my beloved egg has jumped 169% in 4 years. Perhaps I should not have been. Those who regularly follow my economic commentary online would be surprised to read that I was shocked. This I had predicted in a widely-circulated piece I authored as soon as the National Bureau of Statistics announced that Nigeria had fallen into a recession on November 20, 2020.
HOW DID WE GET HERE?
To get at the heart of a problem it is important for the right questions to be asked. According to the World Bank (2019), the GDP per capita of Nigeria is $2,230 while that of Pakistan is $1,284. Going by these figures, an average Nigerian is 70% richer than a Pakistani.
Don’t switch off yet. Stay with me a while, please.
I could have chosen any country but I chose Pakistan because of the similarity in population. Depending on where you look and how believable you find the figures, Nigeria’s population is estimated at 210 million while Pakistan’s is estimated at 212 million; 12 million people more populated more than Nigeria. So compared to other countries, it’s about the closest.
Now, if you go to the World Poverty Clock and check out the number of people in poverty in both countries you will be in for some surprises. Nigeria has 86 million people in extreme poverty but Pakistan has 10 million people. Pakistan has 5% of its people living below $1.9 per day while Nigeria has 41%.
Look at the two data points — GDP per capita and extreme poverty population — and what do you come up with? One talks about income — Nigerians earn more than Pakistanis — the other talks about cost — Pakistanis have a much better purchasing power. It simply means that $1.9 will buy more things in Pakistan than in Nigeria.
Nigerians are poor not primarily because they are not earning enough but because what they earn is buying less and less compared to people in other countries. When you hear that Nigeria has the most people in extreme poverty in the world, it’s because their earning power is dwindling. If in 2015 you were earning N100k and you were in the habit of buying a big tuber of yam at N500, that’s 0.5% of your salary. Now that it’s N2500, if your salary stayed the same, you would need to spend 2.5% of your income to buy the same yam. Remembering that unemployment rate has jumped from 10% in 2015 to 33% in 2021 brings it further home, meaning that some who were earning 100k actually have no income right now. Looking at the former scenario, it’s either you part with more of your salary for less of yam, buy less yam with the same money, or look for an alternative.
A 2016 World Economic Forum article quoted a USDA survey saying that Nigerians spend the most on food. While the percentage of household income spent on food in Singapore is 6.7%, 9.6% in Ireland, 9.9% in Austria, 19% in South Africa, as at 2016 Nigerians spent 56% of their income on food — again, the highest in the world. On the other hand, Pakistan has its people spending 41% of their income on food.
Is it becoming clearer where our demons are coming from? Food prices is one of the major reasons why Nigeria with a higher GDP per capita than Pakistan has more than 8 times the number of people in poverty.
Now, put on your thinking cap: Faced with this data, as a policy maker in Nigeria, if asked what to do to lift Nigerians out of poverty, what would be one of the first things on your mind? Good! Reducing the percentage of household income Nigerians spend on food. Creating jobs for Nigerians is praiseworthy. Increasing the income of Nigerians is good. However, if the price of food items keeps increasing then their income will be worth less and less. To buy a tuber of yam with the same 0.5% of his salary, the person earning 100k in 2015 would need to be earning 250k today. This is a core issue that should keep government officials awake at night.
No matter what you do, you must never do things that will increase the already high food prices because it means that more and more people will be thrown into the poverty bracket.
WHAT ARE THE PRACTICAL SOLUTIONS?
Once you start from this point that food is absolutely essential to curing hunger and reducing poverty in the country, you will realize the folly of the many policies that has become a given in our country. I will list out a few:
- Banning food items
No month passes by without Nigeria banning or threatening to ban the importation of certain food items. In a piece I wrote a while back titled We Don’t Have a Rice Problem, I laid out my argument regarding why the government’s obsession with rice is misguided. Banning of food items may well be a good policy in certain circumstances but even for those situations a country has to ensure that it has put in place adequate measures to prevent the suffering of its people. If Nigeria consumes, according to PwC, 6.9 million tons of rice, you cannot blanket ban importation when production capacity is only 3.7 million tons. If we will ban, the right environment to close the supply gap has to be put in place. Thrive Agric reports that rice production is hampered by both production (low mechanization) and socioeconomic (lack of access to inputs) constraints making it difficult for the gap to be bridged.
This is evidenced by the price of the commodity. A 50kg bag of milled rice which sold around N10,000 in 2015 now sells for N23,000 on the average, according to a BusinessDay report. In fact, there are reports that foreign rice is being bagged as local brands. It’s deception galore.
- Full Border reopening
In a November 2019 piece , I argued vehemently against the border closure. In it, I predicted that as long as the border remains shut, whether fully or partially, food inflation will continue to increase. Someone contacted me after he read the article and asked for advice on what he should do for his personal economy, I asked him to stockpile food items. I am not a soothsayer. I have only through reading realized the implications of certain actions and policies. And I am saying now that unless we revisit these policies the prices of food items will continue to increase. In fact, in a few months’ time people would wish they bought more at present prices. It’s a simple case of ‘those who fail to learn from history are doomed to repeat them”.
Strangely, despite the evidence of poverty around us, the government is yet to fully open the borders. It’s gotten to such a head that only five days ago, the World Bank again advocated that Nigeria fully reopen its land borders to trade so as to help slow Nigeria’s accelerating inflation rate.
There are other solutions to the problem of food hunger including resolving the grave insecurity in the land and good management of the exchange rate, and this has to be done alongside things like facilitating imports of staple foods and medicine by removing them from the list of FX restrictions.
On June 12, when President Buhari announced that his government has lifted 10.5 million people out of poverty, many of us knew it could not be true based on the realities on ground. Again, referencing the World Poverty Clock, the number of people living in extreme poverty in Nigeria in 2019 was 77.9 million or 39 per cent of the population. By 2020, the number of people living in extreme poverty had jumped to 84.8 million, representing 41% of the population. In other words, at least 7 million Nigerians have been thrown into poverty in the last 12 months alone. And the World Bank confirmed it last Tuesday when it said that the high inflation rate caused by rise in prices of goods and services pushed seven million Nigerians below the poverty line in 2020. Data based on World Data Lab’s global poverty model indicates that 4.2 people are currently slipping into poverty every minute in Nigeria. So in the time that it has taken you to read this article, not 5, not 10, not 20 but 33 Nigerians have fallen into poverty.
When one consider that Nigeria has the second highest burden of stunted children in the world, with a national prevalence rate of 32 percent of children under five and that an estimated 2 million children in Nigeria suffer from severe acute malnutrition (SAM), then one wonders why a national emergency has not been called on the food inflation in Nigeria.
For all it’s worth, we need to start now. This is not a political issue, food availability is a survival issue.