Weakening naira, rising food prices affecting Nigerians

A report from the United Nations Conference on Trade and Development reveals that the combination of high food costs and a strong currency has a detrimental impact on the people of Nigeria and other developing nations.Information Guide Nigeria

According to the report, this combination forces many people in these countries to make difficult decisions, such as skipping meals or withdrawing a child from school, in order to make ends meet.

It said this in its ‘A Double Burden: The effects of food price increases and currency depreciations on food import bills,’ report released in December.

It said, “The price of food has increased everywhere, reaching historic levels in 2022, as stated by the Global Crisis Response Group.

“This is a challenge for food security globally, but particularly for net food importing developing countries. And unlike in previous food crises, they now face a double burden. They not only pay higher prices for the food they import, but the price increase is exacerbated by the depreciation of their currency vis-à-vis the US dollar.NYSC portal

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“This erodes the fiscal space that many developing countries need to face the concomitant challenges of recovering from the COVID-19 pandemic, the cost-of-living crisis, and the climate emergency. This note assesses the potential effect of high prices of wheat and concurrent currency devaluations on the import bills of selected developing countries.”

The organisation explained that three significant food price rises have occurred in the present century. The first two occurred in 2007-2008 and 2010-2012, and the third is currently occurring because to the COVID-19 epidemic and the conflict in Ukraine.JAMB portal

It was reported that the dollar’s value decreased during the initial two price surges.

It said, “The depreciation of the US dollar and the consequent appreciation of other currencies made imports cheaper and provided some ease to food import bills for many developing countries.

“However, the current price spike is different. In an attempt to combat high inflation in the United States of America, the Federal Reserve increased its interest rates causing the US dollar to appreciate some 24 per cent between May 2021 and October 2022. This made the US dollar and the food that developing countries buy with it more expensive.”

According to UNCTAD, developing countries face a double burden of high food prices and the depreciation of their local currency against the dollar, and with national budgets stretched thin, net food importers are in a vulnerable position.

It added, “Research shows that exchange rates can have a significant impact on food prices. Take for example the price effects on wheat, the most widely cultivated crop in the world, for six countries: Egypt, Ethiopia, Mauritius, Pakistan, Peru, and Thailand.

“Since 2020 wheat prices have increased substantially. As of October 2022, the average price was 89 per cent higher than the average in 2020. During the same period, the average US dollar exchange rate vis-à-vis the respective national currencies rose between 10 and 46 per cent.”JAMB Result