More than ever, Nigerians are struggling to buy groceries as the country battles a record rise in inflation, signaling what experts warn is a “food crisis”.
Commodity prices have risen for the third straight year as Africa’s biggest economy’s performance falters under the weight of a barrage of factors that push more of its estimated 200 million people into poverty .
Commodity prices over time
Nigeria, a major crude producer, is heavily dependent on oil imports, leaving its economy extremely vulnerable to oil price volatility.
Like an economist said so, when the oil market sneezes, Nigeria catches a cold. But worsening insecurity and the effect of climate change, along with aftershocks from COVID-19, have further shaken the economy, plunging the naira to frightening new lows against the dollar in recent months.
As a result, almost half of the population remains in poverty. Millions of people are already facing food insecurity, and more are expected to join this year, according to the UN food agency.
At present, Nigeria is home to the largest population of poor people in the world. Up to four in 10 people live on less than a dollar a day – below the poverty line.
The cost of meals has risen sharply. The cost of making a pot of jollof, for example – a rice dish beloved by many tribes in Nigeria – has doubled in the past six years.
A pot for a family of five – the national average – rose from around 4,000 naira (naira), or $9.6, in 2016 to more than 8,500 naira ($20.5) in March this year , which is just over 100%. increase.
In some parts of the country, these prices have reached 10,000 naira ($24.1), according to Nigerian socio-political firm SBM Intelligence.
Food costs at the end of March were even higher than in 2020 when COVID shutdown shocks hit Nigeria and caused a frenzied rise. The latest prices reflect the biggest increases ever.
Soaring food prices
The price of rice, a staple food consumed almost daily by Nigerian families, has risen several times in recent years. In 2016, before low oil prices dragged Nigeria into recession, a 50kg bag of rice cost around 14,000 to 15,000 naira.
Today, these prices have almost doubled, reaching 25,000 to 28,000 naira.
Tomatoes were also affected, along with meat and poultry products. Many shoppers are reducing consumption, traders say. While some choose to have smaller pieces of meat in their meals – such as going from a bun-sized piece to sugar cubes – others are swapping meat for eggs, a source cheaper protein.
Other staples like garri – a locally produced cassava by-product – have also seen dramatic price swings, with a small bowl now costing 1,000 naira ($2.4), compared to 350 naira ($0.84). dollars) in 2016.
Bean costs jumped by more than 100 percent in the last year alone, an unprecedented increase. A 50 kg bag costing N41,500 ($100.2) in 2020 sold for N100,000 ($241.5) in 2021.
Loaf has been a bit more stable, with loaf dropping from N300 ($0.72) in 2019 to N400 ($0.96) this year, although many are complaining about noticeable reductions in sizes. The Bakers of Nigeria said in april that a price increase is probably due to higher flour prices.
Exchange rate: official market vs black market
Nigeria’s current woes stem largely from severe foreign exchange shortages due to its overreliance on fuel exports. Crude oil accounts for up to 90 percent exports.
But the fall in oil prices in 2020 amid the pandemic hammered the country’s foreign exchange reserves and dragged Nigeria into a second recession in four years. The naira is still struggling to recover despite multiple central bank devaluations and severe restrictions on the supply of dollars for imports.
Although oil prices have risen since 2020, Nigeria is not benefiting from the new returns. There is less crude oil to export due to infrastructure deficits and huge oil thefts in the Niger Delta, its crude oil heartland.
Crude oil production slipped from 1.42 million barrels per day in 2021 to 1.2 million barrels per day in 2022. Shell and Exxon Mobil have announced exit plans due to myriad issues ranging from oil theft to insecurity , in the oil industry.
Then there is the multiple exchange rate regime which makes it difficult to track the real value of the naira. In the official market, the naira is peg at 414 to the dollar but on the black market where many companies source their supplies, the peg is at 593.
Source: Official rates;
Rising energy prices
Despite being Africa’s largest oil producer, Nigeria often experiences shortages.
The country’s four refineries are barely functional after years of corruption and neglect, forcing Abuja to spend $7 billion each year on the importation of fuel and the maintenance of artificially low prices, which strains the national coffers.
President Muhammadu Buhari’s government tried to scrap the subsidies but failed, fearing a repeat of the furious nationwide protests that rocked the country in 2012 after a brutal cut sent prices soaring to N141 ($0.38) per liter from N65 ($0.15).
In March, scenes of motorists queuing at petrol stations became common after a sharp rise in fuel prices at the pump due to disruptions in global supplies as the war in Ukraine unfolded harshly.
Amid the crisis, Nigeria imported fuel containing high levels of unsafe methanol to use, leading to a prolonged shortage. At the same time, the national grid collapsed, plunging Nigeria’s already dismal electricity production to almost nothing.
The country’s poor electricity supply – 4,000 megawatts compared to South Africa’s 58,000 megawatts – has plagued individuals and businesses who have to rely on petrol and diesel generators for electricity.
Petrol stations sold a liter of gasoline between N162 ($0.39) and N200 ($0.48). But many people have turned to the less crowded black markets where prices were as high as N400 ($0.96). In 2019a liter of petrol sold for about N145 ($0.35).
Meanwhile, diesel prices have increased by 129.1% compared to March 2021.
Nigeria’s economy has been hitting hard since 2016, when it recorded the worst food price inflation in four decades following a global drop in oil prices to 13-year lows. The country has barely recovered from this recession, according to the World Bank.
Things got worse when the Buhari administration restricted imports of certain products like rice and poultry in a bid to boost local production and consumption but inadvertently drive up food prices.
The government closed land borders in 2019 to stem the smuggling of goods from the neighboring Republic of Benin.
Just as many have adjusted to rising prices, the coronavirus pandemic hit in March 2020, plunging the economy into a recession again. Nigeria’s inflation levels were among the highest in the world This year.
A slight increase in local rice production shows that the government’s plan has partially worked, but there is still wide gaps to meet local demand.
Insecurity is currently the main driver of rising food prices, Ayodeji Ebo, director of Afrinvest Securities, told Al Jazeera.
Rising levels of violence in some of Nigeria’s food producing states in the North West, North East and Middle Belt areas has sent farmers on the run and led to an increased scramble for scarce food .
The perpetrators are factions of the terrorist group Boko Haram and armed bandits. Many farmers have been injured or killed in attacks. The insecurity crisis has also affected the transport of food as kidnappers prowl Nigeria’s highways.
The combined challenges of weak exports, insecurity and infrastructure gaps could push 19.4 million Nigerians into a food crisis by August, the UN food agency said. The agency warned in March that 14.5 million Nigerians are already food insecure, many of whom are internally displaced people in the North East, North West and Central regions. .
Although the International Monetary Fund forecasts gross domestic product growth of 3.4% by 2023 (from -1.8 in 2020), experts say food inflation trends are likely to continue without significant security intervention.
“To bring food prices down, insecurity must improve,” says Ebo. “If drastic measures are not taken, there will be less investment in the country.”
Additional reporting was provided by Festus Iyorah of Lagos, Nigeria.
- Nigerian Bureau of Statistics (NBS)
- SBM intelligence
- Investigation by Al Jazeera journalists in a Lagos market