The experts who were reacting to the June 2024 inflation rate released yesterday by the National Bureau of Statistics (NBS), said the problem is not that there is no food in the country but that the cost of transportation and the dwindling value of the naira have eroded the purchasing power of the people.
The experts say the persistent rise in inflation is as a result of the ongoing structural challenges in agriculture, including insecurity in food-producing regions, high transportation costs, and the continuous depreciation of the naira.
The NBS had reported that the headline inflation rose from 33.95 per cent in May 2024 to 34.19 per cent in June while food inflation increased from 40.66 per cent in May to 40.87 per cent in June.
Nigerians have been facing serious challenges in recent times as the high cost of living occasioned by soaring inflation has made life unbearable.
In its effort to tame the stubborn inflation, the monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) has since the beginning of this year, raised the MPR by 650 basis points, bringing the rate to 26.25 per cent as of May 2024.
The CBN governor, Dr Olayemi Cardoso, has maintained that the members of the MPC will keep the rates high to tackle inflation as long as is necessary but also confirmed that the main drivers of inflation, which is food prices, are out of the control of the monetary authorities.
The federal government on its part has been making frantic efforts to force down prices adopting different strategies including the recent order by the President allowing a 150-Day window for duty-free import of Wheat, maize and rice.
But the experts in separate interviews said the measures adopted by the government in its fight against inflation can only yield minimal results.
Senior Special Adviser to the President of the African Development Bank (AFDB) on industrialisation, Professor Oyebanji Oyelaran-Oyeyinka, said while he understands the pressure the President is going through because of the high cost of living in the country, opening the doors for food import is not a good idea.
Reacting to the recent approval by the President for 150-Day import duty waiver on some food items, Prof. Oyelaran-Oyeyinka said the only people that will gain will be unscrupulous businessmen and their bankers.
According to him, “The AfDB supported Nigeria to cultivate 270,000 hectares of wheat across the Northern States. We just need to do more of this with Rice, Maize, Soybeans and Cassava.
“If we focus our minds on this we can crash food prices before the end of 2024!”
He noted that the recent approval for the importation of food will scare away investors who want to invest in the agricultural sector once they perceive policy inconsistencies. “Nigerian investors who are gearing up to invest will become emergency importers of sub-standard food products,” he said, adding that it will also put more pressure on FX and make worse the nation’s Balance of Payment crisis.
In his reaction, Prof. Jonathan Aremu, an economic analyst, said a combination of an effective monetary and exchange rate polices plus efforts to enhance domestic production of food must accompany the import duty free initiative to bring down inflation rate.
He said if the price of imported food goes up due to the exchange rate of naira nose diving, the price of food items may not come down.
“However, if the production of domestic substitutes increases, the increasing supply of food in the economy may lead to reduction in prices even if the exchange rate against naira worsens,” he said.
On his part, a former President of the Association of National Accountants of Nigeria (ANAN) Prof. Muhammad Akaro Mainoma, said the government seems not to have come to terms with what is responsible for high inflation rate.
According to him, “The recent action of the government to allow food imports is an honest mistake and will bring down the inflation rate.
They seem not to have come to terms with what is responsible for the high inflation rate. It is not scarcity of commodities, but effectively reduced income.”
He said that the cost of fuel, cost of transportation are making prices go high. “Effective income of consumers has gone down so it appears as if so much money is buying few goods. The prices are so much that they buy very few. The goods are available but people can not buy. Even if you bring more goods to the market by way of increasing supply so long as income is effectively low, there is no much influence on prices of commodities.
“What they should address is fuel price which will affect transportation costs which might affect employment which will certainly reduce insecurity. That way you can address the rising prices,” Prof Mainoma said.