Nigerians should be prepared for a gloomy Xmas as the prices of commodities especially food items have gone above their expected levels at this period of the year. And with the no sign of reopening the land borders so soon, the inflation trend will certainly persist into the first quarter of 2020
By Anayo Ezugwu
THE month of December in Nigeria is always associated with celebrations, relaxation and entertainment for Nigerians. It brings a seemingly limitless fun with many people travelling from east, west, north and south to be with their loved ones and celebrate the festive period with them. It is also a month of giving to the less privileged in the society.
But this year seems to be different. With Christmas around the corner, the usual mode and excitement that normally greet this period of the year is lacking. This may not be unconnected with the economic situation and high prices of commodities in the market across the country. A survey conducted in some markets in Lagos showed that Nigerians will have a gloomy Christmas as a result of high prices of goods and services.
The prices of food commodities like rice, chicken, groundnut oil, yam, beans, among others, which ordinarily make the celebration memorable, have increased beyond expectations. This is because of the border closure since August.
Agboluaje Sholalu, a trader at Ojuwoye Market in Lagos suburb, said her business has not been as brisk as she anticipated. “People have not been coming to buy things as much as one would have expected, just a few weeks to Christmas. And you can’t blame them. Prices of foodstuffs have gone up. The border closure has had a negative effect on sales, particularly rice. Not only has the price of imported rice gone up, the local ones are also out of the reach of the masses.
“Nigerian rice comes in grades. If you want to buy good Nigerian rice without stones, then you’ll be talking in the region of N21, 500. The ones you have to remove the stones yourself are sold for N19, 500. I have been selling rice for a while, and no one has ever complained of my rice having stones. But this year, I have received a lot of complaints from the customers.
“The government should have ensured that there is surplus of local rice before closing the border. We have not reached the stage. If there is surplus of local rice and the price far less than the imported ones, then nobody will complain. However, it is not only rice that the border closure has affected, pepper, groundnut oil and chicken, among others have also witnessed increases in price,” she said.
Similarly, Iya Kudirat, another trader in the market, said the high cost of foodstuffs had affected their profit margin and the quality of sales. “By this time last year and previous years, we know how much we had made. But this year is different. The situation in the country is affecting sales so badly. We are only battling to make a little profit.”
At Aswani Market, a trader who gave her name as Madam Adedayo, said she was looking forward to a merry Christmas, just that sales were not forthcoming, which would affect the money she would make at the end of the day. “I’m facing a lot of challenges with my market, due to the fact that things are so expensive. The customers are complaining. To make matters worse, egusi, which is the main stuff I deal in is now scarce. I don’t know the reason for the scarcity. Another challenge is the cost of transporting the goods from the farms, which are located in the villages, far away from Lagos.
“Last year, I sold a small bucket of egusi for between N400 and N500. But this year, the same bucket goes for as much as N800. Last year, a hand of yam tubers was sold for N35, 000, but this year, it has increased to N55, 000. I don’t know the reason for such increase,” she said.
The story is not different from the consumers at the market, Segun Sunday, who came to the market to buy rice for Christmas, said he loves eating rice a lot. And so, he doesn’t mind any rice, so long as it is good and tastes nice. “Personally, I don’t see anything wrong with Nigerian rice, just that it is too expensive,” he said.
Tayo Ojo, a customer at Oshodi Market, who came to buy pepper and tomato, said the prices are simply too high this year. “Sometimes, you feel discouraged when coming to market to buy things. As Christmas approaches, things are even costlier. The other day, I wanted to buy a bag of imported rice for Christmas, and they told me to pay N30, 000. The local rice goes for N23, 000 for high grade. Is it only food one is buying for Christmas?
To lay credence to what Nigerians are passing through in preparing for the festive period, data from the National Bureau of Statistics, NBS, showed that Nigeria’s annual inflation stood at 11.61 percent in October, its highest point since May 2018, and a 0.37 percent rise on 11.24 percent in September. The food price index showed inflation at 14.09 percent in October, compared with 13.51 percent in September.
Meanwhile, core inflation dropped to 8.88 percent from 8.94 percent recorded in September. The rise in the food index, according to the NBS, was caused by increase in the prices of meat, oils and fats, bread and cereal, potatoes, yam, and other tubers, fish and vegetables. Costs have risen as the border closure ordered by President Buhari in order to curb smuggling of commodities.
The October inflation is the worst for food inflation since 2009 in Nigeria. Traditionally, inflation flattens in the tenth month of the year as a result of harvest season and preparation for the Christmas festivities. It is clear to any dispassionate observer that the culprit for the rise in food inflation is the border closure, and since there is no sign of change from the government, the trend will persist. What remains unknown is by how much. Rice, which constitutes about nine percent of the country’s inflation basket, is a commodity which sees a demand spike during the festive period.
But a separate food price index showed inflation at 14.09 percent in October, compared with 13.51 percent a month earlier. “This rise in the food index was caused by increases in prices of meat, oils and fats, bread and cereals, potatoes, ham and other tubers, fish and vegetables,” the statistics office said in its report. The rise in food inflation does suggest that border closures may have played a part in temporarily pressuring prices higher,” said Razia Khan, chief economist for Africa and the Middle East at Standard Chartered.
As the inflation figures continue to go up, the federal government has admitted that the closure of borders is contributing to rising inflation. Zainab Ahmed, minister of finance and budget, said inflation rose due to hikes in food prices arising from border closure.
“Now headline inflation is at about 11:61 percent as of the end of October. The slight increase in inflation between September and October is due to food inflation. And part of the reason is the border closure, but the border closure is very short and temporary and the increase is just about two basis point,” she said.
Despite admitting the effect of the border closure on Nigerians and goods and services, Lai Mohammed, minister of information and culture, said apart from the economic gains of the border closure, it also has reduced the incidents of cattle rustling, kidnapping, armed banditry and other forms of insecurity in the north-west zone of the country.
“The drill has drastically curtailed the inflow of arms and ammunition. Bandits and terrorists are finding it hard to procure arms and ammunition, hence we have recorded a reduction in cases of cattle rustling, kidnapping and armed banditry, which were predominant in the North-West region,” he said.
The minister disclosed that the arms and ammunition being used by violent extremists and criminal elements no longer make their way into the country through the land borders. He said the smuggling of petroleum products, which has also been prominent through the borders in the North-West, had been curtailed due to the closure of filling stations along the border.
“There are hundreds of filling stations along the border. We counted many as we drove to the border this morning. They were set up purposely for smuggling. They don’t sell the fuel consignment they receive to the public, plus 50% of them are owned by foreigners. Now that they are closed, we have recorded over 30% reduction in domestic fuel consumption,” he said.
Sheriffdeen Tella, a professor of economics at the Olabisi Onabanjo University Ago-Iwoye, Ogun State, said while border closure had spiked inflation, prices would adjust to their original state. He said despite the rise in inflation rate, the government should not rush to reopen the borders until the strategic objectives behind the closure were achieved.
“You will recall that the border was closed by the government and that action will affect the price of other commodities. If you look at the data that were released, the increase would likely be from food items followed by manufactured goods. We have yet to reach harvesting period; therefore, the price of other food items will also rise until when we start harvesting what has been produced,” he said.
– Dec. 6, 2019 @ 18:55 GMT |