Economy

Nigeria’s Bold Move: A State of Emergency Declared to Tackle Food Crisis

This unprecedented measure grants the government the authority to take extraordinary actions aimed at improving food supply and affordability, which have been severely impacted by surging prices.

Published

3 months ago

July 14, 2023

Investors King

In a resolute effort to combat the escalating food security crisis gripping Nigeria, President Bola Tinubu has declared a state of emergency.

This unprecedented measure grants the government the authority to take extraordinary actions aimed at improving food supply and affordability, which have been severely impacted by surging prices.

Speaking at a media briefing in the capital city of Abuja, Dele Alake, a spokesman for President Tinubu, outlined the key steps that will be undertaken to address the crisis. One of the strategies involves clearing forests to create additional farmland, which is expected to boost agricultural output and alleviate food inflation. These drastic measures come on the heels of the president’s recent decision to eliminate fuel subsidies and implement sweeping exchange-rate reforms since assuming office in May.

The relentless rise in food prices has made sustenance unattainable for a vast majority of Nigerians, leaving them burdened by hardships. Alake emphasized that this dire situation has resulted in a significant decline in demand, thus jeopardizing the entire agriculture and food value chain.

Nigeria, as Africa’s most populous country, has witnessed a sharp spike in food and transportation costs following the removal of fuel subsidies, which were costing the government a staggering $10 billion annually but had kept gasoline prices among the lowest globally.

To rejuvenate the agriculture sector, the government intends to channel the savings from the fuel subsidy elimination. Among the proposed measures is the establishment of a National Commodity Board responsible for monitoring food prices, maintaining strategic food reserves, and mitigating sudden price fluctuations. Furthermore, the central bank will continue to provide funding for the agricultural sector, sustaining its growth and stability.

Additionally, the government plans to release 500,000 hectares of land, including the clearing of forested areas, to expand available farmland and enhance agricultural productivity. This ambitious move is intended to address the diminished farming activities caused by years of insecurity and recent flooding in Nigeria’s main food-producing regions, particularly in the north-central area.

Even prior to the subsidy removal, consumer price growth had surged to an almost 18-year high of 22.4% in May, with food inflation outpacing the overall rate by over two percentage points. The elimination of fuel subsidies is anticipated to push the price index even higher, potentially reaching nearly 30% by the end of the year, according to Tatonga Rusike, Bank of America’s sub-Saharan Africa economist.

The consequences of these price pressures are already evident in Borno State, situated in northern Nigeria, where food prices skyrocketed by 36% and transportation fares surged by 78% within a week of subsidy removal, as reported by Mercy Corps, a humanitarian organization working in the region. This distressing situation has led to heightened hunger and an increase in petty theft at the community level, exacerbating the already precarious circumstances faced by vulnerable populations. The report also highlights the impact on education, with more students unable to attend school due to the exorbitant transportation costs.

Nigeria’s declaration of a state of emergency showcases the government’s recognition of the severity of the food crisis and its commitment to finding tangible solutions. While the road to recovery may be challenging, these extraordinary steps aim to stabilize food prices, secure the availability of essential commodities, and restore hope to the millions of Nigerians affected by this crisis.

Up Next

President Tinubu Seeks 500 Billion Naira to Offset Fuel Subsidy Removal in Nigeria

Don't Miss

Nigeria’s Public Debt Projected to Soar to N70 Trillion Amidst Economic Reforms, Analysts Forecast Inflationary Pressures in H2’23

Investors King

Comments

Economy

August 2023 Witnesses Highest Revenue Allocation of the Year – N1.1 Trillion Shared

The driving force behind this boost in revenue can be attributed to foreign exchange gains that have contributed significantly to the government’s income stream.

Published

2 days ago

September 30, 2023

Temitayo Olukoya

The Federation Account Allocation Committee (FAAC) unveiled its allocation of N1.1 trillion to the three tiers of government for the month of August 2023, Investors King reports.

This substantial increase was detailed in a communiqué following the committee’s latest meeting. August allocation was the highest so far with an increase of N133.99 billion when compared to the N966.11 billion shared in July 2023.

The driving force behind this boost in revenue can be attributed to foreign exchange gains that have contributed significantly to the government’s income stream.

Breaking down the N1.1 trillion total distributable revenue, the statement reveals that it consists of distributable statutory revenue amounting to N357.4 billion, distributable Value Added Tax revenue totaling N321.94 billion, Electronic Money Transfer Levy revenue at N14.10 billion, Exchange Difference revenue of N229.57 billion, and an augmentation of NN177.09 billion.

Of this impressive sum, the Federal Government is set to receive N431.25 billion, while the State governments will be allocated N361.19 billion, and the local government Councils will obtain N266.54 billion.

However, it’s essential to note that the total revenue available for August stood at N1.48 trillion, marking a 14% or 0.26 trillion decrease from the preceding month’s figure of N1.74 trillion.

The FAAC communiqué further underscores that various deductions were made, including N58.76 billion for the cost of collection, N254.05 billion for total transfers and refunds, and N71 billion allocated to savings. Additionally, the Excess Crude Account maintained a balance of $473,754.57.

The statement elaborated, “Gross statutory revenue of N891.934 billion was received for the month of August 2023. This was lower than the N1,150.424 billion received in July 2023 by N258.490 billion. The gross revenue available from the Value Added Tax was N345.727 billion. This was higher than the N298.789 billion available in July 2023 by N46.938 billion.”

Economy

Zambia’s Finance Minister Faces Dual Challenge in Upcoming Budget Address

Published

3 days ago

September 29, 2023

Samed Olukoya

As Zambia’s Finance Minister, Situmbeko Musokotwane, prepares to present the nation’s budget, he finds himself at a pivotal crossroads.

The second-largest copper producer in Africa is grappling with two pressing concerns: debt sustainability and soaring living costs.

Debt Restructuring Dilemma: Musokotwane’s foremost challenge is finalizing the $6.3 billion debt-restructuring deal with official creditors, led by China and France.

Delays have hindered disbursements from the International Monetary Fund (IMF) and left private creditors in limbo.

To reassure investors, a memorandum of understanding with the official creditor committee is urgently needed.

President Hakainde Hichilema emphasizes the importance of sealing these transactions to signal closure on this tumultuous chapter.

Plummeting Tax Revenue: The key copper-mining industry, which accounts for 70% of Zambia’s export earnings, is in turmoil.

First-half mining company taxes and mineral royalty collections have nosedived, adding to economic woes.

This, in turn, has depreciated the local currency, exacerbating imported inflation, particularly in fuel prices.

Rising Food Inflation: Musokotwane faces mounting political pressure to combat soaring living costs, with annual inflation reaching an 18-month high of 12%. Corn meal prices, a staple in Zambia, have surged by a staggering 67% in the past year.

Neighboring countries’ demand for corn has led to smuggling and further price spikes, raising concerns about food security.

Currency Woes: The kwacha’s value has been a barometer for the nation’s economic health. It depreciated by 16% since June 22, the worst performance among African currencies, reflecting the ongoing debt-restructuring uncertainty.

In his budget address, Musokotwane faces the daunting task of striking a balance between debt management, economic stability, and alleviating the burden on Zambia’s citizens.

The international community will keenly watch to see if his fiscal measures can steer the nation toward a path of recovery and prosperity.

Economy

IMF Urges Sub-Saharan African Nations to Eliminate Tax Exemptions for Fiscal Health

Published

4 days ago

September 28, 2023

Samed Olukoya

Sub-Saharan African countries have been advised by the International Monetary Fund (IMF) to tackle their fiscal deficits by focusing on eliminating tax exemptions and bolstering domestic revenue rather than resorting to fiscal expenditure cuts, which could hamper economic growth.

The IMF conveyed this recommendation in a paper titled ‘How to avoid a debt crisis in Sub-Saharan Africa.’

The IMF’s paper emphasizes that Sub-Saharan African nations should reconsider their overreliance on expenditure cuts as a primary means of reducing fiscal deficits. Instead, they should place greater emphasis on revenue-generating measures such as eliminating tax exemptions and modernizing tax filing and payment systems.

According to the IMF, mobilizing domestic revenue is a more growth-friendly approach, particularly in countries with low initial tax levels.

The paper highlights success stories in The Gambia, Rwanda, Senegal, and Uganda, where substantial revenue increases were achieved through a combination of revenue administration and tax policy reforms.

The IMF also pointed out that enhancing the participation of women in the labor force could significantly boost Gross Domestic Product (GDP) in developing countries.

The IMF estimates that raising the rate of female labor force participation by 5.9 percentage points, which aligns with the average reduction in the participation gap observed in the top 5% of countries during 2014-19, could potentially increase GDP by approximately 8% in emerging and developing economies.

In a world grappling with the weakest medium-term growth outlook in over three decades, bridging the gender gap in labor force participation emerges as a vital reform that policymakers can implement to stimulate economic revival.