Nigerians should be prepared for greater food costs and risks in 2023, according to the International Monetary Fund, because of recent flooding and expensive fertilizer.
The National Bureau of Statistics reports that, on an annual basis, food inflation reached 23.72 percent in October 2022, with inflation on some food items reaching by 50 to 100 percent.
Despite this, the IMF forecast that food prices would worsen in 2023 since recent floods have reduced agricultural productivity.
The Federal Government’s continuous reliance on the Central Bank of Nigeria to finance its budget deficit and the effects of climate change were additional risk concerns, it was stated. The value of the naira is prone to fluctuation.
The Washington-based lender disclosed this in its ‘Nigeria: Staff Concluding Statement of the 2022 Article IV Mission’ report seen by our correspondent at the weekend.
It said, “The effects of recent flooding and high fertilizer prices could become more entrenched impacting negatively both agricultural production and food prices in 2023.
“Similarly, further volatility in the parallel market exchange rate and continued dependence on central bank financing of the budget deficit could exacerbate price pressures. In the medium term, there are downside risks to the oil sector from possible price and production volatility, while climate-related natural disasters pose downside risks to agriculture.”
It added that despite Nigeria’s limited direct exposures, the war in Ukraine was affecting the nation through higher domestic food prices. The IMF said high food insecurity was compounding the pandemic’s effect on Nigeria’s vulnerable.
It stated that the nation’s headline inflation should moderate by the end of 2022 because of the start of the harvest season, although it also projected an increase in rice prices caused by recent flooding.
The IMF further stated that over the next 10 years, the nation would have to create about 25 million additional jobs. It said, “Strengthening the performance of the agricultural sector is key to job creation, food security, and social cohesion.
“Over the next decade, an estimated 25 million additional jobs will be needed to employ the new labor market entrants. For agriculture to continue playing a strong role in employment and ensure food security, boosting production and yields through improved input usage, especially through affordable fertilizers and higher quality seeds, better storage facilities and more coordinated policy support across government agencies are recommended.”
The NBS disclosed last Thursday that 133 million Nigerians were multidimensionally poor, with a significant portion of them lacking access to food security, healthcare, and education.