Improve agric inputs to boost food production, IMF urges FG
The International Monetary Fund has charged the Federal Government to increase agriculture inputs to boost production and bring down the prices of food items.
This was revealed in its IMF Country Report No. 23/94 released this month, where it identified the drivers of food insecurity and possible solutions.
It said, “The cross-country analysis identifies four levers for raising food security levels: raising per capita consumption, raising production yields, limiting food price inflation, and reducing reliance on food imports.
“Per capita consumption is far below comparator countries in Nigeria, and it could be stimulated through increased diversification. Yields are also lower in Nigeria than in other countries due to scarcity of inputs (fertilisers, modern irrigation methods, and mechanisation).
“Addressing challenges to access to timely, high quality, and price competitive inputs would not only achieve optimal productivity of agricultural outcomes but also temper food inflation.”
The IMF added that food insecurity was an increasing policy concern in Nigeria.
“The country is endowed with immense agricultural resources and over 81 million arable and largely fertile hectares, with maize, cassava, guinea corn, yam beans, millet, and rice being the major crops.
“Despite rising domestic production of staples, the global increase in food prices is adversely affecting food security conditions. Rural areas are insulated somewhat from the recent price surge because of more home production although peripheral areas of the country have suffered the worst effects in recent years,” the report indicated.
Providing likely solutions, the IMF advised that the government revisit the programme of giving e-vouchers to farmers to enable them obtain agric inputs at subsidised rates.
It added, “Nigeria has achieved a substantial increase in agricultural production associated with its policies but some have been less successful. Import dependency for key staples has not fallen and the cost of these agricultural products remains driven by international prices.
“Further, central bank credit to the agricultural sector has not succeeded in increasing production beyond the stimulus of high rainfall and high food prices.
“In contrast, the government’s e-voucher scheme for farmers to obtain subsidised inputs has proven to boost yields. This latter policy is currently being introduced in tandem with the creation of new special processing zones and offers good prospects provided it is handled efficiently.
Meanwhile, the multilateral lender has projected that inflation may hit 44 per cent in Nigeria in a worst-case scenario before the effect of the monetary policy tightening is felt.
In its Post–Financing Assessment Discussions—Staff Report released this month, the IMF said that this could happen in an adverse scenario of an inflation-depreciation spiral combined with climate shock.
“Monetary policy is tightened insufficiently to bring down inflation below 20 per cent and pressures on the naira persist.
“In addition, Nigeria is hit by another adverse climate shock in early 2024 (following severe flooding in late 2022) that exacerbates the current weakness in agriculture and leads to a decline in output and a surge in food prices.
“Given the absence of local production and the recent liberalisation of commodity imports, the exchange rate would likely depreciate further—by an estimated 35 per cent in 2024—and contribute to a further sharp rise in inflation, peaking at 44 per cent, before monetary policy is eventually tightened sharply,” IMF noted.
Nigeria’s inflation figure for January stood at 29.90 per cent
The IMF added that if Nigeria continued on the trajectory, it could lead to civil unrest, which would require funds to quell.
“The fiscal deficit increases to above six per cent of GDP (Gross Domestic Product) in 2024 and 2025, driven in part by increased transfers to quell social unrest (1 per cent of GDP) and a rise in the implicit fuel subsidy.
“With limited external financing options and higher expenditures, there is increasing use of CBN and domestic financing. The authorities implement expenditure measures in 2026, for example, phasing out the implicit fuel subsidy but the debt to GDP ratio still rises by 6 percentage points above the baseline by 2028.”
According to the international lender, the spike in inflation and rise in uncertainty trigger portfolio outflows, and Nigeria is unable to access Eurobond financing. Reserves decline to $17bn in 2025.
In its macroeconomic performance and outlook for 2024, the African Development Bank Group had warned of unrest over the rising cost of living in Nigeria, Angola, Kenya and Ethiopia.
AfDB said “Internal conflicts and violence could also result from rising prices for fuel and other commodities due to weaker domestic currencies and reforms. For instance, the removal of fuel subsidies in Angola, Ethiopia, Kenya and Nigeria and the resulting social costs has led to social unrest driven by opposition to government policy.”
