Nigeria’s strategy to tackling higher food prices

Nigeria is currently facing a significant challenge with soaring food prices, with food inflation still above 40 per cent, according to the MBS. President Bola Tinubu's government has implemented a 150-day window to waive duties on some food items as a short-term measure to address the issue. However, Chike Nwagwu, Director at Novus Agro, expressed concerns about the effectiveness of this strategy in a recent CNBC Africa interview. During the interview, Nwagwu highlighted the complexities of the situation, pointing out that the strength or weakness of the Naira is a key factor driving inflation in the market. He explained that the current situation is exacerbated by import inflation and the fact that the CFA for the West African region is consistently outperforming the Naira, making it more cost-effective for neighboring countries to purchase goods. As a result, the highest bidders are prioritized in the market, leading to price fluctuations and supply shortages. While the government's decision to waive duties on some food items may provide some relief in the short term, Nwagwu cautioned that prices are unlikely to return to previous levels anytime soon. For example, the cost of maize has skyrocketed, with a ton now priced at about a million Naira, compared to $250,000 to $300,000 last year. The additional costs associated with transportation and other factors further contribute to the high prices, making it challenging for consumers to afford essential food items. In terms of long-term solutions, Nwagwu emphasized the importance of policies that promote increased production and address food loss and waste. He advocated for investment in processing capacity within the country to add value to agricultural products and reduce reliance on imported goods. Nwagwu also highlighted the need for improved electricity infrastructure to attract manufacturing investments and drive industrialization. The conversation also touched on the role of private sector investments in subsidizing mechanized farming and processing equipment. Nwagwu suggested that government incentives, such as affordable and reliable electricity, could encourage private sector participation in the agricultural sector. By leveraging natural resources and focusing on sustainable utilization, Nigeria has the potential to enhance food production and achieve greater food security. Overall, the interview underscored the complexity of Nigeria's food inflation crisis and the importance of implementing comprehensive strategies to address the root causes of price hikes. While short-term measures like duty waivers may provide temporary relief, sustainable solutions require a holistic approach that includes promoting local production, reducing waste, and attracting private sector investments.