By Tochukwu Bliss, Abuja
The International Monetary Fund (IMF), has called for urgent and immediate measures to address food insecurity in Nigeria.
In its End-of-Mission statement issued after the completion of the IMF Staff 2024 Article IV Mission to Nigeria, the Fund said: “Addressing food insecurity is the immediate priority.”
“The recent approval of a well-targeted and effective social protection system is an important step towards addressing food insecurity in Nigeria and its implementation will be crucial,” it added in the statement released on Monday.
The Article includes statements that convey preliminary findings after a visit by an IMF team to the country, in this instance, led by the Mission Chief for Nigeria, Axel Schimmelpfennig, who visited Lagos and Abuja from February 12 to February 23, 2024, to hold discussions for the 2024 Article IV Consultations with Nigeria.
The Team noted that the Bola Tinubu’s government inherited a difficult economic situation marked by low growth, low revenue collection, accelerating inflation, and external imbalances built up over the years.
Contrary to criticisms by some economic experts, the IMF however said the recent Monetary Policy Committee’s decision to further tighten monetary policy would help contain inflation and pressures on the naira.
The statement said: “The team welcomed the MPC’s decision to further tighten monetary policy. The MPC increased the policy rate by 400 basis points to 22.75 per cent for a total tightening of 1,025 basis points from May 2022.
“This decision should help contain inflation, which reached 29.9 per cent year-on-year in January 2024, and pressures on the naira.”
The statement further revealed that while in the country, the team met with the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, and the Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso.
Others were senior government and CBN officials, the Ministries of Agriculture, and Environment, as well as representatives from sub-nationals, the private sector and civil society organisations.
The recent approval of a well-targeted and effective social protection system is an important step towards addressing food insecurity in Nigeria and its implementation will be crucial.
Team’s observations
Additionally, the statement quoted Mr Schimmelpfennig as saying: “Nigeria’s economic outlook is challenging. Economic growth strengthened in the fourth quarter, with gross domestic product growth reaching 2.8 per cent in 2023. This falls slightly short of population growth dynamics.
“Improved oil production and an expected better harvest in the second half of the year are positive for 2024 GDP growth, which is projected to reach 3.2 per cent, although high inflation, naira weakness, and policy tightening will provide headwinds.
“With about eight per cent of Nigerians deemed food insecure, addressing rising food insecurity is the immediate policy priority. In this regard, staff welcomed the authorities’ approval of an effective and well-targeted social protection system.
“The team also welcomed the government’s release of grains, seeds, and fertiliser, as well as Nigeria’s introduction of dry-season farming.”
He further described as encouraging recent improvements in revenue collection and oil production, adding that Nigeria’s low revenue mobilisation limits the government’s ability to respond to shocks and to promote long-term development.
“Non-oil revenue collection improved by 0.8 per cent of GDP in 2023, helped by naira depreciation. Oil production reached 1.65 million barrels per day in January as a result of enhanced security.”
Mr Schimmelpfennig warned that the capping of fuel pump prices and electricity tariffs below cost recovery could have a fiscal cost of up to three per cent of the GDP this year, adding that the recently approved targeted social safety net programme that will provide cash transfers to vulnerable households needed to be fully implemented.
“This is before the government can address costly implicit fuel and electricity subsidies in a manner that will ensure low-income households are protected,” he added.
