Nigeria, Africa’s largest country by population, is experiencing a food crisis, with food inflation rates reaching 40.66% in May 2024. The surge in food prices strains household budgets, forcing Nigerians to allocate 97.4% of their income to food. Persistent factors contributing to this trend include poor infrastructure, resulting in supply disruptions and insecurity in farming communities, thus reducing domestic agricultural production.
In response, the Nigerian government introduced a 150-day duty-free window in July, 2024 for essential food imports, including maize, husked brown rice, and wheat, as part of the Presidential Accelerated Stabilisation Advancement Plan . This policy was introduced to alleviate pressure on food prices by replenishing national grain reserves and supporting small-scale processors facing high costs and limited supplies.
Source: NBS, StatsSA, KNBS, GSS
Despite these efforts, inflation rates stayed high at 37.77% in September. Food prices remain a major portion of Nigerian disposable income spending, and government officials have signalled that the policy will not be renewed, raising concerns over its potential discontinuation without effective alternatives. The import policy highlighted the government’s recognition of the crisis but emphasised the need for a more sustainable approach to food security.
This report argues for the continuation of Nigeria's temporary food import policy introduced in 2024, beginning with an analysis of import and export per capita trade between Nigeria and its African peers, exploring its nutritional implication of restrictive trade policies, alongside high energy prices in Nigeria and its relation to food production and opportunities for improving state capacity in local agricultural efficiency. Sustaining the policy while boosting agricultural domestic output to stabilise food prices mitigates requires a balance between imports for supply and regional production and is essential for addressing Nigeria’s food and economic productivity challenges.
FG’s Efforts and Policy discontinuation
The Ministry of Agriculture and Food Security emphasised that the temporary food import initiative was introduced to reduce the pressure on food prices by temporarily allowing the importation of 250,000 metric tonnes of wheat and maize and permitting private sector participation. The measure was critical for restocking the national grain reserves and supporting small-scale processors and millers struggling with supplies and high costs.
To ensure implementation, the Nigeria Customs Service (NCS) outlined requirements for companies wishing to participate in the duty-free import program stating that eligible firms must adhere to regulations, including providing detailed documentation and ensuring the imported goods met regulatory standards. This was done to maintain transparency and prevent abuse.
Beyond importation, the government pursued other strategies to tackle the food inflation crisis, including establishing a Guaranteed Minimum Price (GMP) system to stabilise the market, mopping up surplus food from local producers to replenish the strategic food reserve and enhancing domestic agricultural production for the 2024/2025 farming season. The Economic Management Team (EMT) and the Presidential Food Systems Coordinating Unit were also tasked with overseeing these initiatives to ensure they delivered results.
However, food inflation rates remain high. A recent report revealed that the policy had not yielded the expected results. Government officials said the duty-free window would not be renewed after price pressures eased slightly in September and because of optimism related to the domestic harvest. This comes as 40,000 Nigerian farmers projected corn prices will rise by 48%, while rice is projected to increase by 55%.
The United Nations estimated in September that flooding destroyed crops and livestock that would have fed 8.5 million Nigerians for six months. Based on an average yield of 1.5 tons of food grown per hectare, 856,000 tons of crops were destroyed. The UN noted that the flooding exacerbated Nigeria’s already deteriorating food security situation.
The importation and accompanying measures have fallen short of substantially alleviating the food inflation crisis, raising concerns about the potential fallout if the temporary import policy were to end without effective, alternative measures in place. Sustaining and reinforcing this policy and boosting domestic agricultural initiatives are vital for mitigating hunger and stabilising the economy, reflecting a clear path toward long-term solutions.
Impact of Trade Policies on Food
Nigeria's import per capita is notably lower than its peers, standing at $309 compared to $580 for Ghana and $1,800 for South Africa. The low level of imports reflects inadequate access to external food supplies, highlighting challenges in sourcing and infrastructure that hinder the country's ability to supplement its domestic food production. Coupled with Nigeria’s severe food inflation, this exacerbates the economic burden on households. Limited import volumes contribute to constrained market supply, keeping prices elevated.
Nigeria's food crisis is also compounded by excessive logistical costs at its ports, particularly Apapa Port in Lagos. As of 2020, local transport costs in Lagos were ten times higher than in Durban, South Africa, and Tema, Ghana. This significant disparity in logistics expenses inflates the final cost of imported goods, hindering access to essential food products and placing additional stress on an already strained food supply chain.
Beyond the food crisis, Nigeria’s low import and export per capita figures highlight broader economic challenges. With an export per capita of just $324, compared to $2,450 in South Africa, the data reflects that Nigerians are not sufficiently engaged in global trade and economic activities. This limited participation stunts economic growth and reduces income opportunities. Addressing these issues requires aligning government reforms to reduce trade costs, as Nigeria must extend the food import policy alongside broader economic reforms which addresses the cost burdens that impede the stable flow of necessary supply.
Nutrition and Food Security
Trade plays a significant role in ensuring a steady and diverse supply of goods, including essential foodstuffs, which are critical for improving nutrition. Compared to Nigeria, the examples of South Africa and Ghana highlight the positive impact of trade on food security and nutrition outcomes. Compared to Nigeria, South Africa demonstrates a high level of trade activity, facilitating the import of high-quality products and ensuring a stable and affordable food supply. This contributes to lower rates of food insecurity (20.3% in 2021), supporting better overall nutrition. As food supply becomes more reliable through imports, it reduces the impact of local agricultural shortcomings or seasonal fluctuations, allowing for more consistent access to vital nutrients.
Similarly, Ghana shows how trade can positively influence food availability. Ghana’s more balanced trade dynamics, effective port management and fewer logistical bottlenecks than Nigeria, contribute to lower food insecurity (39.4% in 2021). Ghana’s higher import per capita enables the country to secure critical raw material supplies. Furthermore, Ghana’s export per capita indicates a healthy trade balance that supports a more stable economy, ensuring that food prices remain lower and more accessible to a more significant portion of the population. Compared to Nigeria, Ghana’s trade advantages alleviate its nutrition-related issues associated with food scarcity and high prices.
In contrast, Nigeria’s lower trade numbers per capita mean less access to raw materials, including items required by food processors, contributing to higher levels of food insecurity (69.7% in 2021). Nigeria’s trade inefficiency and infrastructure issues limit her ability to optimise nutrition levels. As seen in South Africa and Ghana, improving trade systems is essential towards reducing food insecurity by ensuring consistent, affordable access to raw materials.
Energy and Reality
Source: NBS
Rising fuel prices in Nigeria, particularly in the commercial capital, Lagos, have significant implications for the broader economy, notably impacting the cost of food distribution and prices nationwide. The substantial increase in petrol prices from ₦602.55 in April 2024 to ₦1000.48 by September 2024 affects logistics and supply chain operations. Transportation costs, a major component of food distribution, rise with fuel prices, pushing the final cost of goods such as beef. This goes alongside the concurrent increase in the national average price of 1kg of beef, which went from ₦4,711.64 in April 2024 to ₦5,633.60 by October 2024. Higher transport expenses make moving livestock to urban centres more expensive, inflating retail prices and straining consumer purchasing power.
The relationship between fuel prices and food costs underscores the critical need for a multifaceted approach to ensure food security and price stability in Nigeria. Addressing Nigeria’s energy issues requires integrating long-term strategies of local refining with sustainable food production. Trade can play a crucial role in bridging immediate supply gaps. By boosting imports of necessary agricultural inputs and food products, the country can stabilise prices and mitigate the impact of fuel price surges. South Africa's and Ghana's relatively lower food insecurity rates suggest that nations with diversified supply chains and stronger trade policies are better positioned to handle internal cost pressures, including those linked to energy and food supply.
Aligning government policies to enhance local food production and improve local energy capacity, from improved daily crude production to secure local refining, is essential. Additionally, policies that support local agriculture—such as improved access to modern equipment and the development of efficient transport networks—reduce production and distribution costs. By aligning food import strategies with robust support for local agriculture, Nigeria can create a resilient food supply chain that protects against future price shocks, promotes economic stability, and ultimately contributes to improved nutrition and food security.
Source: NBS
Opportunity and Flexibility
Nigeria is pursuing tax reforms to increase government revenue and address fiscal challenges. The proposed changes aim to centralise tax collection and simplify the current system, reducing over 60 taxes and levies to just six. The reforms aim to increase the value-added tax (VAT) to 15% over six years, reducing corporate tax rates from 30% to 25% and double tax revenue as a percentage of GDP from 9% to 18% within the next two to three years, providing the fiscal space needed to manage debt and invest in critical infrastructure. While the reforms face resistance from state governors, they are necessary to ensure the country’s long-term economic stability.
Alongside these tax reforms, Nigeria must focus on boosting local agricultural production while maintaining a flexible approach to food imports. Imports remain crucial in bridging the food security gaps. Instead, Nigeria should enhance domestic agricultural capacity, invest in local food infrastructure, and develop refining capabilities, ensuring that imports are strategically used to support local supply chains. This balanced approach will allow the country to address immediate food security needs while nurturing long-term sustainability.
Also, the Nigerian government revealed it has set up ₦5.4 trillion in savings from subsidy removal in 2024 to be directed towards infrastructure and social intervention programs. These strategic investments could be tied with other projects that could boost the grassroots economy. For example, Nigeria-Saudi Arabia’s $5 billion agricultural initiative could be vital in strengthening local food production and supply chains. These foreign investments complement Nigeria's efforts to improve infrastructure and increase agricultural output, enabling Nigeria to create a resilient agricultural sector. This dynamic strategy offers the flexibility to ensure food security while supporting local production and necessary imports.
Alongside this, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) expects a 30% rise in crude and condensate production by the end of the year 2024, which will generate additional revenues. If the government can effectively leverage these increased revenues from taxes and oil output, there is the potential to address food insecurity. A portion of these revenues could be allocated to improving agricultural infrastructure and promoting domestic food production, ensuring policy flexibility.
To ensure policy success, the Nigerian government must adopt clear, policy-driven solutions that promote free trade and support the growth of local agriculture. By tying government policies to incentives for local and foreign investments in food production, Nigeria can create a robust agricultural sector capable of meeting domestic demand. This clean slate approach and innovative governance can significantly improve Nigeria's food security and reduce the impact of external factors like global food price fluctuations.
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