Despite the billions of naira spent by the Central Bank of Nigeria (CBN) to control inflation over the past years, its efforts have been frustrated by rising insecurity which continues to push food prices beyond the reach of Nigerians.
Under the CBN’s development finance initiatives, the apex bank granted N756.51 billion to 3,734,938 smallholder farmers cultivating 4.6 million hectares of land, of which N120.24 billion was extended for the 2021 Wet Season to 627,051 farmers for 847,484 hectares of land, under the Anchor Borrowers’ Programme (ABP).
For the Agribusiness/Small and Medium Enterprise Investment Scheme (AGSMEIS), the sum of N121.57 billion was disbursed to 32,617 beneficiaries; and for the Targeted Credit Facility (TCF), N318.17 billion was released to 679,422 beneficiaries, comprising 572,189 households and 107,233 Small and Medium Scale Enterprises (SMEs).
With all these interventions, Nigerians are yet to feel the impact in food and gas prices even though inflation has declined for five straight months, a signal that the country is yet to fix the real issues driving inflation.
According to the National Bureau of Statistics (NBS), Nigeria’s inflation rate declined to 17.01 percent in August 2021 compared to 13.22 percent in the same period last year.
Food inflation hit 20.30 percent in August 2021 compared to 16 percent in the same period of 2020. This rise in the food index was caused by increases in prices of bread and cereals, milk, cheese and egg, oils and fats, potatoes, yam and other tuber, food product n.e.c, meat and coffee, tea and cocoa,
Cooking gas prices have also sent Nigerians on the search for cheaper alternatives as the price of 12.5kg is now gas has risen to N6000 from about N3900 as at December 2020 in some parts of Nigeria.
Godwin Emefiele, governor of the CBN, noted the optimism of the Monetary Policy Committee (MPC) at last meeting in July 2021, that though, headline inflation remained well above the ceiling of the central bank’s 6-9 percent corridor, interventions by the bank in various sectors of the economy will further depress inflationary pressure as output growth improves and the negative output gap closes.
However, Emefiele recently raised an alarm over the food crisis being experienced in the country and warned that this could worsen if urgent and sustainable steps are not taken to address the situation.
“The CBN is trying to help, thinking the problem is financing but the problem is not exactly financing alone, it is multiple,” Uju Ogubunka, president, Bank Customer Association of Nigeria (BCAN) said.
“We have been having a lot of insecurity in the system, which is weighing against productivity especially from the farmland and the primary thing we demand in the country is food because of the population. If we are not producing so much, no matter how much money you pump, it would not yield fruit because people are being prevented from going to the farm,” he said.
He also said harvest is yielding below expectation; and that the hunger in the land has not come down. “It means we have shortages of supply while demand is still high. That’s the case, prices of goods will increase”.
Ogubunka recommended that Nigeria must find a way to make sure that people are productive in the economy. “There are multiple issues, if we want to start from the basis, provide necessities for our teaming population. The CBN may need to find where the gaps/leakages are so they can plug them.”
For African farmer Mogaji, CEO FarmCredit.Ng, the CBN made a fundamental mistake in handling Nigeria’s food crisis.
“The CBN is not experienced in food production, it is experienced in financing but somehow it has taken over the management, and distribution of food in Nigeria. They don’t have access to the farmers; they don’t know the psychology of the farmers. Instead of the CBN working with the ministry of agriculture, ministry of water resources, it has taken over their role,” Mogaji said.
“What we are finding now is as a result of not understanding the system. Although they spend a lot, another problem is that the money does not get to the farmers in a good time.
The only thing that can be done now is for the CBN to provide resources and work through smaller organisations – smaller cooperatives, cooperatives of 60 or 100 that can quickly access and disburse through banks. The Anchor Borrower is a good project but it needs to be reviewed,” he said.