In the second quarter of 2024, the Central Bank of Nigeria (CBN) allocated $547.7 million (approximately N823.19 billion at the exchange rate of N1,503.3/$1) to support the importation of food items for the country. This figure represents a significant decline from the $689.88 million recorded during the first quarter of the year, indicating a reduction of $142.48 million or 20.6 percent. When viewed in naira, this change also reflects a drop of N80.76 billion or 8.93 percent. Notably, this brings the total amount disbursed for food imports by the CBN in the first half of 2024 to approximately N1.73 trillion, according to the data from the bank’s quarterly statistics bulletin. The monthly spending breakdown shows that Nigerians spent $164.43 million in January, $303.91 million in February, and $221.54 million in March, culminating in substantial food import expenses during the second quarter.
The Nigerian government’s previous efforts to reduce the prices of food commodities, especially through the implementation of zero duty on selected basic food items, are increasingly facing significant challenges. This is highlighted by the alarming rise in the average price of imported food items, which hit an index of 878.3 in September 2024, amid broader economic pressures affecting the country. In response to escalating food inflation, the government announced a 150-day duty-free importation window for specific food commodities, including maize, brown rice, wheat, and cowpeas, on July 8, 2024. The plan aimed to alleviate the food scarcity and rising prices by significantly lowering import duties and value-added tax to encourage food imports and stabilize consumer prices.
Despite the government’s intentions, the duty-free scheme has yet to be effectively implemented due to bureaucratic delays and the failure of the Federal Ministry of Finance to publish a qualified list of importers as mandated by customs guidelines issued previously. This setback has raised concerns about the government’s commitment to moderating food inflation, as prices continue to rise in tandem with unmet expectations from the announced policies. In a recent press briefing, Minister of Finance Wale Edun indicated that maize and wheat imports had been ordered to help stabilize the food market. However, confirmation from the Nigerian Customs Service regarding the import status remained elusive, suggesting ongoing challenges in the coordination and execution of government policy.
As the government grapples with these implementation issues, imported food prices have shown no signs of decreasing. The National Bureau of Statistics reported a month-on-month increase in food prices, with the price index rising from 847.7 in August 2024 to 878.3 in September, reflecting a 30.6-point increase in inflation or about 3.61 percent. This trend illustrates a concerning pattern where, despite the government’s duty-free initiative designed to curb prices, the average cost of imported food continues to rise due to supply shortages domestically and sustained demand for foreign products.
The rising trend in imported food inflation is alarming, as detailed in the year-to-date analysis that reveals a 185.7-point increase in the price index from January 2024’s 692.6 to 878.3 in September. Monthly breakdowns of imported inflation rates show a consistent increase throughout the year: beginning at 26.29 percent in January, with subsequent rises to 29.81 percent in February, 32.89 percent in March, and a monthly inflation rate of 34.01 percent in April, indicating a growing concern regarding food affordability. The upward trajectory persisted with May’s inflation rate recorded at 34.83 percent, as prices continued to escalate without substantial policy interventions taking effect.
In summary, the situation surrounding food importation expenditure and inflation in Nigeria reflects significant complexities and ongoing challenges. The measures calculated to ease the burden on consumers, such as the duty-free import window and the allocation of foreign currency for food imports, have encountered severe delays and obstacles in implementation, resulting in a situation where food prices remain high and inflation continues to rise. As the challenges in executing government policy become evident, there is an urgent need for streamlined processes and effective coordination between various governmental agencies to ensure that intended benefits reach the populace and effectively mitigate the alarming inflation rates affecting the food sector. This underscores the critical need for responsive economic strategies that adequately address the underlying factors contributing to food insecurity in the nation.
