CBN Raises Benchmark Interest Rate To 22.75%
CBN governor, Yemi Cardoso addressing journalists after MPC meeting on Tuesday, 27 February 2024

CBN Governor And Waste Of Economic Terms

2 hours ago
4 mins read

Recently during a Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN) in March 2024, the CBN governor, Olayemi Cardoso, said that government’s large-scale purchase of foodstuff as palliatives is contributing to the country’s rising food inflation. Throughout the meeting, Cardoso did not address the reasons that Nigerians need food palliatives in a country with unimaginable agricultural potentials. Instead, he emitted a succession of floating economic terms, which can compound the hunger in the ordinary reader.

Like Cardoso, President Tinubu, at the World Economic Forum in Saudi Arabia, accused fuel subsidy of being the problem with Nigeria. Tinubu forgot that if Nigeria refined her own fuel, subsidy would die a natural death. Cardoso also forgot that if Nigeria commercially (not subsistent agriculture) produced her own food in accordance with the sheer quantum of the available agricultural lands, food insecurity, rising inflation and similar economic jargon would not be regular lexicons in his meetings.

What Cardoso Also Forgot 

Maybe Nigeria should talk to Israel, the Netherlands, Singapore and Japan. etc.. That is, if none of our leaders has ever visited those countries to see how they employ home-grown, advanced agricultural techniques to produce a lot of food on relatively small areas of arable land. Israel (with around 22.072 square kilometers of total landmass has about 17% arable land; Japan (377,975 square kilometres) has around 12% arable land; Singapore (728 square kilometres) has 1% and the Netherlands (41,543 square kilometers) has 26%. Despite this, Netherlands, for instance, is one of the largest exporters of agricultural products in the world.

Nigeria has approximately 923,768 square kilometers in total land size, 33% of which is arable land, yet cannot produce enough food for its citizens. Nigeria’s arable land alone is bigger than each of the total landmass (not arable land) of Israel and Singapore. Israel is not a net exporter of agricultural products, and its imports exceed exports. However, looking at a country where water is a problem, in addition to space constraints, Nigeria should hide its face in shame. Though the Netherlands has just over 17 million people, it is the second largest exporter of agricultural products in the world, only behind the US. The country, without much rain like Nigeria, is also one of the world’s highest exporters of agricultural technology. Consider this report in the Washington Post about agriculture in the Netherlands:

The Netherlands produces 4 million cows, 13 million pigs and 104 million chickens annually and is Europe’s biggest meat exporter. But it also provides vegetables to much of Western Europe. The country has nearly 24,000 acres — almost twice the size of Manhattan — of crops growing in greenhouses. These greenhouses, with less fertilizer and water, can grow in a single acre what would take 10 acres of traditional dirt farming to achieve. Dutch farms use only a half-gallon of water to grow about a pound of tomatoes, while the global average is more than 28 gallons. Their centrality in global food exploration is indisputable: Fifteen out of the top 20 largest agrifood businesses — Nestlé, Coca-Cola, Unilever, Cargill and Kraft Heinz — have major research and development centers in the Netherlands.

 

Playing on Words

So, as usual, Cardoso played on words just to fill up the time he had. He diverted attention from the real economic issues in Nigeria, using economic platitudes such as benchmark interest rate, inflationary pressure, commodity market structures, food palliatives, and a hyperinflationary scenario. It is just like all the noise and war about minimum wage over the last nine years in Nigeria, which prioritizes such noises over efforts to upgrade education, healthcare, and electricity.

READ ALSO: Nigeria: Why Inflation Keeps Rising

How can an increased minimum wage make sense in the face of a steadily rising inflation and lending rates? As of April 2024, Nigeria’s inflation hovered around 34%, while food inflation had hit 40.01% as of March 2024, with the lending rate at 24.75%. Instead of combating terrorism in the farms, government is approving five billion naira to states to buy non-existent food for poor people.

Nigeria Needs to Implement Its Agricultural Plans, Not Economic Cosmetics

During the MPC meeting, Cardoso insisted that “the principal drivers of acceleration in inflation are hikes in food and energy prices. He added that huge purchases by the government for distribution as palliatives to the vulnerable citizenry is adding another dimension to the food price inflation. The National Bureau of Statistics attributed the surge to rising prices of essential items like garri, millet, and yams.

Commendably, Cardoso noted that structural factors are also responsible for the problem though he did not specify what these factors are. Perhaps, that is why another committee member, Baka Bello, noted that “The Federal Government’s initiatives to address food insecurity, such as grain releases and support for dry season farming are commendable, but more needs to be done to tackle the rising inflation”. Bello must be referring to structural factors such agricultural plan, security for farmers, and agricultural technology and facilities such as seedlings.

There is a virtual absence of commercial farming in Nigeria as well as storage for agricultural products. Worse, the cost of food production has risen astronomically, not only because of the cost of fuel. It is also because there is no sustainable agricultural research that can make Nigeria self-sufficient in producing agricultural resources such as seedlings, fertilizers, tractors, harvesters and food processing plants.

 

Agricultural Dependence is the Term, Not Food Palliatives

Dependence on the import market for key resources and facilities has created a kind of agricultural colonialism, where suppliers appear to chemically engineer seedlings not to last more than one planting season, and to be highly susceptible to pest attacks. Seedlings such as maize, tomatoes, cassava stems, etc., must be bought every year at huge prices. A kilogram of tomatoe seedlings in Nigeria is around 200, 000 naira. It is almost the same with animal farming, where the majority of farmers go through hell to secure the young of their animals such as chicks and kids.

Agriculture takes over 60% of Nigeria’s labour force, with a potential for up to 45% of GDP, yet the country is a net importer of food and seedlings. Usman Birat of Kaduna State University in Nigeria found in a study on the impact of insecurity on food production that kidnapping, castle rustling, communal clashes and general insecurity contributed the most among the reasons for lack of access to the farms or lack of interest in farming. The distribution chain is yet another headache, with problems such as bad roads, levies and taxes by security agents and other non-state actors on the roads.

Some estimates have put the scale of losses to terrorism in Nigeria from 2009 to 2023 between $5 billion and $10 billion dollars. During this time, anywhere between 500 and 2000 businesses, especially oil and gas, telecommunications and agriculture, left the country, in addition to hundreds of young people that run away from the country daily. These are some of the issues that Cardoso tended to forget as he blamed food palliatives for Nigeria’s rising food prices. Until these issues are squarely tackled, the country will keep hearing perfunctory story stories laced with bland economic platitudes just like Cardoso lectured recently at the CBN’s MPC meeting.

 

 

Dr Mbamalu, a Jefferson Fellow and Member of the Nigerian Guild of Editors (NGE), is a Publisher and Communications/Media Consultant. His extensive research works on Renewable Energy and Health Communication are published in several international journals, including SAGE.

SMS/Whatsapp: 08094000017

Follow on X: @marcelmbamalu

 

Dr. Marcel Mbamalu is a communication scholar, journalist and entrepreneur. He holds a Ph.D in Mass Communication from the University of Nigeria, Nsukka and is the Chief Executive Officer Newstide Publications, the publishers of Prime Business Africa.

A seasoned journalist, he horned his journalism skills at The Guardian Newspaper, rising to the position of News Editor at the flagship of the Nigerian press. He has garnered multidisciplinary experience in marketing communication, public relations and media research, helping clients to deliver bespoke campaigns within Nigeria and across Africa.

He has built an expansive network in the media and has served as a media trainer for World Health Organisation (WHO) at various times in Northeast Nigeria. He has attended numerous media trainings, including the Bloomberg Financial Journalism Training and Reuters/AfDB training on Effective Coverage of Infrastructural Development of Africa.

A versatile media expert, he won the Jefferson Fellowship in 2023 as the sole Africa representative on the program. Dr Mbamalu was part of a global media team that covered the 2020 United State’s Presidential election. As Africa's sole representative in the 2023 Jefferson Fellowships, Dr Mbamalu was selected to tour the United States and Asia (Japan and Hong Kong) as part of a 12-man global team of journalists on a travel grant to report on inclusion, income gaps and migration issues between the US and Asia.

Dr. Marcel Mbamalu is a communication scholar, journalist and entrepreneur. He holds a Ph.D in Mass Communication from the University of Nigeria, Nsukka and is the Chief Executive Officer Newstide Publications, the publishers of Prime Business Africa.

A seasoned journalist, he horned his journalism skills at The Guardian Newspaper, rising to the position of News Editor at the flagship of the Nigerian press. He has garnered multidisciplinary experience in marketing communication, public relations and media research, helping clients to deliver bespoke campaigns within Nigeria and across Africa.

He has built an expansive network in the media and has served as a media trainer for World Health Organisation (WHO) at various times in Northeast Nigeria. He has attended numerous media trainings, including the Bloomberg Financial Journalism Training and Reuters/AfDB training on Effective Coverage of Infrastructural Development of Africa.

A versatile media expert, he won the Jefferson Fellowship in 2023 as the sole Africa representative on the program. Dr Mbamalu was part of a global media team that covered the 2020 United State’s Presidential election. As Africa's sole representative in the 2023 Jefferson Fellowships, Dr Mbamalu was selected to tour the United States and Asia (Japan and Hong Kong) as part of a 12-man global team of journalists on a travel grant to report on inclusion, income gaps and migration issues between the US and Asia.

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