Martins Hile, Editor, Financial Nigeria magazine
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Subjects of Interest
- Social Development
Averting famine is beyond words of assurance 13 Dec 2016
Media aide to President Muhammadu Buhari, Shehu Garba, recently made a bizarre claim that Nigeria faces an imminent famine, as export of grains from the country accelerated. The administration he serves quickly made a counter-claim, as part of the uproarious reactions to the suggestion that a most unbearable fate awaits already long-suffering Nigerians, come January 2017 when they will not find food to eat.
The storm has quietened now due to words of assurance by the Minister of Agriculture and Rural Development, Audu Ogbe. He said the government was doing everything to avert the prognosticated famine. That was last month, and everybody has now moved on, rest assured. But we may not be wiser until the reality of Nigeria's food insecurity begins to bite harder.
Instead of raising concerns about the current situations with both the supply and demand sides of the food market, assurances are offered for the country's future food security. However, on the supply side, Nigeria currently produces less than half of the seven million tonnes of rice in demand locally. The wheat deficit in the country is estimated at 4.6 million tonnes. Acute food shortages have hit the North-eastern states of Borno, Yobe and Adamawa, the main theatres of the murderous Boko Haram insurgency of the last seven years. The displaced population of the Northeast has lost its mainstay agricultural economy. Famine in the region has since been a reality for which the international community has raised alarm on mass starvation.
President Buhari has provided effective military response that has weakened the murderous capabilities of Boko Haram. But the long-term weakness in the supply-chain in the region, even within Nigeria's general supply-chain inadequacy, is preventing food and medical aid to reach the displaced populations. Without good nutrition and health, the long-term outlook of food production in the vast and populous Northeast will remain negative for national food security. In the meantime, conflicts between farming communities around the country and cattle rustlers are also a potential drag on agricultural productions.
Domestic food supply is also at risk because of extreme weather events. Last year, a flash flood destroyed farmlands in the North-central states. Such adverse climate events have affected wider farming populations in recent years. They hint at the susceptibility of the country's agriculture to climate change and weather disasters. So far, early warning system for farmers against flash floods is rudimentary and ineffective. Ecological and financial frameworks to help build resilience for farmers affected by climate events have yet to gain traction. This is particularly troubling. It suggests the country's climate change actions have been little more than endorsing global agreements, with President Buhari gracing the international conferences with his appearance. Whereas, the ultimate success of the Paris Climate Agreement will be driven by nationally-determined actions.
Like everything else, agriculture reform of the current administration have been slow in formulation. While in a reform hiatus, the progress that was engineered by government policy on agriculture under the past administration suffered a setback. For a year from end of May 2015, the e-Wallet system that supplied subsidized fertiliser directly to farmers was suspended. It took 15 months to have a revival of reforms at the Ministry of Agriculture with the launch of the Agriculture Promotion Policy in August. Given this scenario, it has become critical for Nigeria's food security strategy to embody a mechanism to make agriculture less susceptible to political transition.
On the demand side, the great threat is the current macroeconomic condition of high inflation. Food inflation, which accounts for 51% of headline inflation, jumped from 10.6% in January to 17.1% in October. The balance of risk is still on the upside for the end of the year, granted that high naira exchange rate to the dollar will upwardly pressure prices of imported food, and, thanks to the panic button pushed by Shehu Garba, hoarding and panic-buying of grains are both expected ahead of the yuletide season of Christmas and the New Year.
The fable in town is that agricultural growth has been robust during the economic recession of this year. But the truth, as conveyed by data by the Nigerian Bureau of Statistics (NBS) is that nominal GDP growth of the agriculture sector dropped from 14.15% in the first quarter of this year to 7.37% in the third quarter. Slower agricultural growth in Nigeria's stagflation (recession plus high inflation) will continue to drive higher prices, thus weakening effective demand.
However, of all the economic challenges Nigeria currently faces, including low government revenue as oil prices and export plummeted, negative GDP growth, high inflation and weakening local currency, the most solvable is with agriculture. The population still employable in agriculture is vast, and the country has expansive arable land. The incentives to develop Nigeria's agriculture is also strong, including driving up non-oil exports, providing more employment, fostering a healthy and unagitated population, and providing raw materials for agro-industries.
But a clear strategy is required that balances the policy objectives. At a time the government is campaigning for a wider export base, we suddenly found that food export from Nigeria – which fits the narrative of driving foreign exchange receipts – is negative for domestic food supply. NBS data, which shows growth in agricultural production but a shrinking manufacturing sector also suggests that the agriculture value–chain development, which was robustly driven by the last administration, is now weakening. The solution to this contradiction is a coherent national strategy for economic growth and development.