Nigeria declares a case of emergency as food and transportation prices soar

BY MICHAEL THOMAS

Student’s stay at home and some adults are walking for miles to get to their destination all because of a hike in transportation fees. This comes as the Nigerian government claws back much-needed subsidizing money that goes to assist its citizens.

Africa’s most populous nation has seen a hike in the cost of food and transportation since the fuel subsidies ended. These subsidies cost approximately $10 billion dollars a year and made the country’s gasoline prices the cheapest globally.

The government has since declared a case of emergency countrywide. This state of emergency will allow the government to take exceptional steps to improve food security and supply, as skyrocketing prices are causing widespread hardship.

“The move will trigger a range of measures, including clearing forests for farmland to increase agricultural output and ease food inflation,” Dele Alake, a spokesman for President Bola Tinubu told reporters.

Following President Bola Tinubu’s removal of fuel subsidies and exchange-rate reform, the naira fell by 40% after its peg to the dollar was removed. Even before Tinubu cut subsidies, consumer-price growth had accelerated to an almost 18-year high of 22.4% in May in Nigeria.

Even though these cutbacks are causing problems in the streets, the stock prices have risen to their highest level in 15 years, and investors see the government’s decision on the currency as crucial when it comes to elevating economic growth.

Food takes up a huge part of the Nigerian household budget and currency weakness still adds pressure to the cost of living in the country. The World Bank forecasts economic growth could quicken to 4% by 2024 from an average of 2% since 2015, yet Nigeria’s financial forecast does not look bright.

According to the International Monetary Fund, the price of food went up by more than 20% in sub-Saharan Africa between 2020 and 2022, partly reflecting global trends and the fact that the region imports many of its top staples.

The spokesman for the President said, “This has led to a significant drop in demand, thereby undermining the viability of the entire agriculture and food value chain.”  

Ayo Teriba, the Chief Executive Officer of Economic Associates Ltd., a Lagos-based advisory firm revealed that cutting the subsidies might not be enough.

He believes the new government should declare an emergency in all sectors of the economy including power, security, and petroleum, as well as food, because they all need urgent attention.

A National Commodity Board will be created to continually review food costs, maintain a strategic reserve, and moderate spikes and dips in prices while the central bank will continue its funding of the farming sector.

The Nigerian government plans to release 500,000 hectares from land banks, which includes clearing forested areas to increase available farmland and boost the food supply.

Long periods of insecurity and recent floods in the country’s north-central region (which is very instrumental in food production) have reduced farming outputs, which in turn have led to a spike in food prices nationwide.

According to a report by Mercy Corps (a humanitarian organization operating in the area) price hikes can be seen in food costs in Borno State in Northern Nigeria, where prices jumped 36% and transportation fares 78%, just one week after the subsidies were cut. This has led to an increase in hunger and petty theft at the community level.

After reading the report and assessing the situation I am left to wonder how much of this is natural, and how much is planned?