Why IMF Warns Nigeria About Importing Food

By Tolulope Oke

The International Monetary Fund (IMF), has said excessive dependence on importing food has made the food crisis that is currently afflicting Nigeria and other sub-Saharan nations worse.

The IMF noted that wars and natural disasters had an effect on sub-Saharan African staple food prices as well. Depending on the severity, frequency, length, and location of the events, prices rose by an average of 4% after wars and 1.8% following natural disasters.

Contained in a report titled, “Africa Food Prices Are Soaring Amid High Import Reliance,” the analysis noted that the region’s imports of key basic foods contributed to global causes being partially to blame, adding that there was a significant pass-through from global to local food costs.

IMF said staple food prices in sub-Saharan Africa surged by an average 23.9 per cent in 2020 to 22—the most since the 2008 global financial crisis.

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The increase was commensurate to an 8.5 per cent rise in the cost of a typical food consumption basket (beyond generalised price increases).

The report read in part, “We estimate that a 1 per cent increase in the consumption share of a staple food raises the local price by an average 0.7 per cent. The effect is even bigger when a staple is mostly imported, raising the price by about 1.2 per cent. When a country’s net import dependence increases by 1 per cent, the local real cost of a highly imported staple is expected to increase by an additional 0.2 per cent.

“The relative strength of a country’s currency is another driver as it affects the costs of imported food items. We find that a 1 per cent depreciation in real effective exchange rates increases the price of highly imported staples by an average 0.3 per cent.”