- Flooding: Food Shortages, Inflationary Pressure Sets In
The rise in the rate of inflation in the past months in Nigeria, as evaluated by analysts, is as a result of the flooding experienced especially in the northern states, where a higher percentage of food commodities are extracted; and this led to food shortage and an increased inflation.
According to a November 2018 report of the Financial Derivatives Company(FDC), a financial and economic advisory company, Nigeria’s inflation rate increased from 11.14 percent in July, to 11.23 in August and to a higher 11.28 percent in September.
As contained in the report, the inflation rate fell for eighteen (18) successive months until August 2018.
“This prompted some members of the committee to call for a tightening of monetary policy in September, in order to limit the amount of money in the economy and subdue demand pressures. Hence, the impact of the recent flooding has been severe on the economy”, the report stated.
Also stated in the report, is that the northern states experienced difficulty in response to the intense flooding as their revenue could not handle the situation effectively; unlike in the situation of their southern counterparts.
Also, the persistent Farmer-Herdsmen crisis have made effective food production quite challenging in the northern parts of the country, especially Benue, the food basket of the nation. Funds that would have previously been used to boost food production have been spent on ensuring adequate security.
Again, the report noted the need for the Federal Government to support northern states with an intervention fund, which would help the states maintain a lower flood incidence and pastoral crises, which brings about food shortage.
“This kind of intervention would be similar to the bailout funds the Federal Government made available to state governments struggling with salary payments and low levels of economic activity in 2015. Fourteen of the 27 states that benefited from the package were from the North. Kebbi, Katsina and Niger states were among the beneficiaries”.
“As state government finances remain limited, any reluctance or delay by the Federal Government to address the issue will ensure food shortages continue in the country. Consequently, it could further push up food prices and the inflation rate”. The report stated in part.
It is worthy to note that, the rate of inflation in Nigeria will keep increasing in subsequent months, if the Federal Government does not intervene adequately in the shortage of food caused by intense flooding and pastoral crisis.