A Thisday report says President Muhammadu Buhari at a virtual meeting of the Presidential Economic Advisory Council (PEAC) assured the council of his intention to alleviate high costs of food items. He further reiterated the directive to the Central Bank of Nigeria (CBN) not to allocate foreign exchange to importers of food and fertilizers. Recently, the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced the immediate reopening of the country's four major land borders. This, many interpreted as the government's effort to address the anticipated increase in demand during the festive period.
Based on the selected food price watch data for November 2020 released by the National Bureau of Statistics (NBS), major consumer staples showed substantial increases in price between November 2019 and November 2020. The steep price increases across the food items is consistent with the increase in food inflation from 14.48% in November 2019 to 18.30% in November 2020. Of more concern is the fact that the two variants of garri, a major staple among the low income earners in the country has shown substantial increase in price; white sold loose (up 50.7% y/y) and yellow sold loose (up 51.7% y/y). This has been attributed to bad weather for cassava products, thereby resulting in limited supply.
In our opinion, the recent reopening of the country's borders is a big step towards reducing the surge in the price of major items in the country but may be bad for local production if smuggling is not actively addressed. The government will also need to address various structural challenges faced by farmers in the country if food security is to be achieved. That said, the insecurity in food processing regions, if not swiftly addressed, will remain a major drag to achieving food security. There are reports that many farmers in those regions no longer go to their farms for fear of being killed or kidnapped.