NESG Raises Alarm Over Rising-Inflation And Food Prices In Nigeria

NESG Raises Alarm Over Rising-Inflation And Food Prices In Nigeria

The Nigeria Economic Summit Group (NESG) has voiced significant concerns regarding the escalating inflationary pressures within the Nigerian economy, primarily driven by rising food prices. During a quarterly briefing on the nation’s economic forecast, Dr. Tayo Aduloju, Chief Executive Officer of NESG, highlighted these issues and projected that the Central Bank of Nigeria (CBN) will likely continue its inflation-targeting policies, potentially resulting in an increase in the Monetary Policy Rate (MPR).

Recent data from the National Bureau of Statistics (NBS) indicates a worrying trend, with the headline inflation rate reaching 34.19% in June. The food inflation rate, in particular, soared to 40.87% year-on-year, marking a substantial increase from 25.25% in June 2023. This spike in food inflation has been attributed to the rising prices of essential food items such as Millet Whole Grain, Garri, Guinea Corn, Yam, Water Yam, Coco Yam, Groundnut Oil, Palm Oil, and various types of dried fish, among others.

This inflationary trend underscores the severe impact of rising food prices on the Nigerian populace, with many families struggling to afford three-square meals. Dr. Aduloju stressed that this trend is likely to persist unless significant efforts are made to address the challenges related to food security. He pointed out that Nigeria is facing the unforeseen repercussions of inadequate governance and called for enhanced transparency and accountability within the governance ecosystem to tackle these systemic issues.

Aduloju also emphasized the need for a thorough examination of outstanding foreign exchange liabilities to boost economic confidence and attract foreign direct investments. He described the federal government’s recent policy to waive the importation of food as a reactive measure to address the prevalent issue of hunger, yet insufficient to resolve the underlying problems. This policy, according to Aduloju, was necessary due to the country’s inability to produce sufficient food domestically, evidenced by low local cultivation rates.

To address these issues, Aduloju advocated for the revitalization of Nigeria’s food system through large-scale agricultural practices, leveraging states’ unique advantages. “We cannot afford not to scale the food system to respond to the demand needs of Nigerians,” he stated, urging the government to also scale up cultivation in dry season farming.

He noted that the NESG had foreseen the food crisis and raised alarms, pointing out that the situation was aggravated by the electioneering period, which saw reduced farming activities. “We have a system problem where we are cultivating far less and the agricultural contribution to the GDP is very low, and the system is not producing enough food,” Aduloju added.

Despite these challenges, Aduloju expressed a “cautious optimism” regarding economic recovery, citing his direct engagements with government officials. He acknowledged that the CBN’s efforts to combat inflation through increasing the Marginal Cost of Funds (MPR) invariably lead to higher lending rates. Nonetheless, he commended advancements in resolving foreign exchange forward contracts and called for forensic audits to validate outstanding foreign exchange claims.

Aduloju highlighted a significant shift towards transparency in monetary policy. “We went from a period of opacity in monetary policy where nobody could tell us what is in our reserve, nobody could tell you where our Ways and Means were to at least where we are now dealing with the knowns. How many of (fx) forwards have been made? There’s clarity on that,” he said.

The NESG’s concerns underscore the need for comprehensive and transparent policies to address inflation and food security challenges in Nigeria, ensuring sustainable economic growth and stability.