Economists and policymakers alike are becoming increasingly concerned about Nigeria’s fight against rising Inflation in recent years. With inflation hovering around 28–30%, President Bola Tinubu’s ambitious goal of bringing inflation down to 15% by 2024 appears increasingly unattainable. An economist and former World Bank consultant, Dr. Phillips Nto, weighed in on the issue during an interview with Sunday Sun, stressing that the problem is not only with budget allocation but also with budget implementation. He contends that inflation is largely driven by low productivity, especially in the agricultural sector, a sector that once thrived as the backbone of Nigeria’s Economy but has since deteriorated.
He asserts that unless Nigeria gets back to farming, hitting the 15% inflation target will remain a pipe dream. Nigerian inflation is mostly caused by food prices, as food accounts for a major amount of family spending. Due to decreased agricultural output, food shortages are often frequent, which drives up costs. In the past, Nigeria used to produce enough food to feed its people and even Export excess agricultural goods. However, the nation now imports staple foods like rice, wheat, and maize, despite having a sizable arable land and a favorable climate.
Current situation of the sector against the past prosperity.
Over-reliance on imports has put a great deal of strain on the country’s foreign exchange market and increased its susceptibility to external shocks. The cost of imported goods has increased dramatically due to global supply chain disruptions and volatile currency rates, which has further fueled inflation. He contends that rather than relying solely on direct agricultural finance, Food Security necessitates comprehensive support from sectors like infrastructure, education, and security. Prices of locally grown food have also increased since large-scale farming has been deterred by Insecurity in farming areas, especially in the North.
Farming has become more dangerous due to threats from banditry, attacks by herders, and kidnapping. Furthermore, many farmers are unable to maximize production due to inadequate Infrastructure and a lack of government support, which exacerbates food shortages and prices. Nigeria’s agricultural downturn began in the 1960s and early 1970s, when Agriculture was the mainstay of the Economy and accounted for more than 60% of GDP. The nation was a significant exporter of cotton, groundnuts, cocoa, palm oil, and rubber. But the commercial finding of crude oil caused the government to turn its attention away from agriculture.
Downturn from past abundance to current import dependency.
Compared to the past, Nigeria’s Agricultural Productivity is currently low due to antiquated farming methods, a lack of machinery, limited financial availability, and insecurity in farming areas. Today, agriculture only makes up around 25% of Nigeria’s GDP. Insecurity, urban migration, and bad government policies have all contributed to a sharp decline in the proportion of Nigerians who farm. More than 80% of farmers are smallholders, and they face issues including flooding and deserts brought on by climate change, inadequate infrastructure, and growing fertilizer costs.
Regardless of initiatives like the Agricultural Credit Scheme and the Anchor Borrowers’ Program, there has been little progress in reviving the sector, with production still falling short of demand. The country currently imports more than $10 billion worth of food yearly, even though it has the capacity to be self-sufficient. Food inflation has continued to rise as the nation’s agricultural output persists in falling well short of demand. For the incumbent administration to achieve Economic Stability and meet its 15% inflation target, the country needs to revitalize its agriculture industry. This calls for significant investments in rural infrastructure, Irrigation projects, and mechanized farming.
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Security issues must also be resolved to ensure that farmers may go back to farming and cultivate their land without fear. The government may also lessen reliance on imports by promoting domestic production of staple grains like rice, maize, and wheat. Furthermore, policies should be put in place to encourage young people to pursue farming, considering that the aging Farmer population poses a long-term risk to food security. As noted by the economist, inflation will inevitably decrease if Nigeria can resume Economic Growth driven by agriculture, as higher food production will lower prices and strengthen the naira.