Food inflation

Nigeria’s accelerating food inflation shows failure of border closure

The continuous rise in the prices of food in Africa’s most populous country since 18 months ago is an indication that the border closure policy implemented by the Nigerian government failed to serve its purpose.

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Food prices in Nigeria have been making rapid climbs since August 2019 – when the policy was introduced and have shown no sign of receding despite the reopening of the country’s land borders for the African Continental Free Trade Area (AfCFTA) agreement.

It has caused headline inflation to accelerate to a 4-year high of 17.3 percent in February 2021, mainly driven by food inflation that has quickened to 20.6 percent – highest in 13 years.

“The policy brought hardship to Nigerians which we are still experiencing despite the reopening of the borders. It was the policy that triggered an upsurge in food prices,” said a CEO who does not want his name mentioned on print.

“The policy did not increase local production but only enriched few who benefitted at the expense of majority Nigerians,” he said.

Nigeria had in August 2019 closed its land borders with neighbouring West African countries to stem the smuggling of goods – rice in particular, and encourage local agricultural production.

However, the policy failed to stem smuggling as foreign rice and other key staples made entry into the Nigerian markets through new routes at higher costs, thus raising questions about the effectiveness of the policy.

A report by the Institute for Security Studies states that the border closure policy only resulted in creating new smuggling routes as illicit dealers were determined to move their goods across borders.

Nigeria still has an increasing demand-supply gap in most of its staple foods, as the country’s population of 2.6 percent per annum is growing faster than its food production.

According to experts, it was the shortfall in food supply that resulted in surging prices.

“We are yet to bridge our huge demand-supply gaps in most staples, so when we introduced the border closure policy, prices started escalating because of these gaps,” said Abiodun Olorundenro, manager, AquaShoots, said in a telephone response to questions.

“The demand-supply gaps and cheaper imported products are what is constantly fuelling smuggling of agricultural produce. What we need to do is to make our agricultural commodities competitive,” Olorundenro said.

He noted that Nigerians were worse off than they were before the introduction of the protectionist policy owing to the upsurge of food prices.

Similarly, differences in policies across West African countries, prices of goods, and preference for imported commodities by Nigerians also shore up smuggling in the region.

Nigerians prefer to source certain products from Benin Republic because the prices are cheaper compared to the locally-produced ones.