A gloomy May Day awaits Nigerian workers

Imagine living alone and walking into a local food market in Lagos, Nigeria’s commercial capital, to buy a week’s worth of basic food. In less than 15 minutes, you will find that you have spent at least 10,000 Naira (or US$24 at the official exchange rate of US$1 = 416 Naira).

This may seem minuscule for privileged households, but the expense is a heavy burden for Nigeria’s 62 million workers.

Most Nigerian workers have to get by on a monthly minimum wage of 30,000 naira (US$72). Only 17 percent of Nigerian workers have jobs that pay enough to lift them out of poverty.

After taking into account rent, transportation, medical expenses, and electricity, among others, the average Nigerian worker cannot make ends meet. This has been exacerbated by the rising cost of living. For most Nigerians, the cost of living is about 5.3 times the average salary.

The increase in food prices is the main cause. Nigeria’s inflation rate was 15.9% in March 2022, and food prices increased by 17.2%, among the highest in Africa.

Much of Nigeria’s inflation is due to rising prices of staple foods such as bread, grains, potatoes, yams, fish, meat, oils and fats. Food prices contributed 60% to Nigeria’s inflation in 2021.

Those prices have been rising for various reasons, including insecurity in the country’s food-producing areas, poor transportation and storage facilities, the removal of some foods from the list of imports eligible for foreign exchange through the official windows of the Central Bank of Nigeria, the depreciation of the Naira, which led to increases in imported food prices, and the closure of borders in 2019 that resulted in sharp falls in food imports.

The war in Ukraine has added more upward pressure on the prices of raw materials and fuels. This will see headline inflation and food prices continue to rise well into 2023, an indicator that Nigerian workers will have a very rough ride in the coming months.

The rising cost of living has left Nigerian workers with a stark choice. They spend much of their income on food and forego other essential needs, or drastically reduce food expenses in order to pay for essential services. This Hobbesian option is worse for a multi-person, single-income household, where the monthly minimum wage must be distributed among household members.

Not surprisingly, the number of poor people in Nigeria is forecast to rise to 95 million or about half the population by 2022.

Many of these poor Nigerians, including those in vulnerable employment, would see their living standards deteriorate precipitously. That’s because Nigerians spend most of their income on food. An average Nigerian household spends around 56% of their income on food. The other three countries that spend the most on food are Kenya (46.7%), Cameroon (45.6%) and Algeria (42.5%).

To put things in context, in the US, UK, Canada, and Australia, the average household spends on food at 6.4%, 8.2%, 9.1%, and 9.8% of income , respectively.

The more expensive food becomes, the poorer and less healthy Nigerians become. The fact that Nigerian workers have not embarked on food riots or organized mass demonstrations to protest unbearable increases in food prices implies that they must have found ways to deal with food inflation.

coping strategies

To maintain a decent level of food consumption and avoid becoming one of the 5 million Nigerians facing hunger, households are cutting back on essential services such as health, electricity and transportation. It has become customary for households to turn off the electricity at night to reduce energy bills. Many are now postponing or avoiding non-essential travel.

The workers are also doing additional work. These include operating Uber and other shared taxis and trading in a variety of products. They also offer services such as hairdressing, hair braiding, fashion design, tailoring, event planning, photography, commission sales, digital marketing, and exploring web opportunities. Some workers are even cutting back on their regular jobs to spend more time on other income-generating activities.

In their attempts to cope with food inflation and rising costs of living, some Nigerian workers have fallen victim to predatory moneylenders, or what are widely known as “loan sharks.”

Taking advantage of the despair of workers, these lenders charge exorbitant interest rates of up to 60 percent. Unable to repay their loans on time, many borrowers find themselves trapped in unsustainable debt.

Is there a role for government? Instead of the usual May Day fanfare, government officials should focus on how to make food more affordable in Nigeria. A starting point is to learn how India successfully tackled its food shortages and rising food prices.

Lessons from India

Food shortages were so severe in the 1950s and 1960s that India became known as the “beggar’s bowl” nation.

Today, India is not only self-sufficient in food, but food is widely affordable. It has become a net exporter of food.

The situation changed through the Green Revolution launched by Prime Minister Jawaharlal Nehru in the early 1960s.

This involved massive investment in rural infrastructure, pro-agricultural economic policies, and land reform. India also invested in agricultural technology, including seedlings, modern machinery, fertilizers and pesticides.

Land reform under the Green Revolution has allowed rural dwellers access to agricultural land, supported by government-provided irrigation systems, rainwater catchments, and extension officers.

India’s land reform set a 25-acre cap on land ownership per household. Absentee landlords with surplus land were forced to give up parts of their land for redistribution to landless farmers.

Contrary to the myth that commercial agriculture is the panacea for Nigeria’s food crisis, India’s agriculture is dominated by small and medium farmers.

Perhaps the biggest driver for food production in India is the country’s extremely cheap and extensive transportation network. The villages are connected to major towns, cities, and markets through paved roads and rail systems.

State buses are widespread and run through the most isolated regions of the country. Due to easy access to inexpensive transportation, farmers can bring their produce to the open market every day.

It has been a win-win phenomenon for farmers and workers alike. Farmers’ incomes have been rising, while workers have benefited from lower food prices.

Rising rural incomes have stimulated demand for manufactured goods and, in many cases, have led to the location of factories in rural communities, thus creating employment opportunities for rural dwellers.

Small-scale farming is the solution

The Indian case has shown that the key to food security lies with small farmers, unlike Nigeria’s focus on large-scale agricultural projects that produce cash crops or turn out to be white elephants.

To ease food supply constraints and ultimately reduce the cost of food in Nigeria, the government needs to focus on boosting the productive capacities of small farmers. This can be done by granting them access to arable land, providing them with credit to purchase inputs, facilitating access to markets, provision of irrigation and storage facilities, as well as safety nets that insulate them from exogenous shocks.

Author: Stephen Onyeiwu – Andrew Wells Robertson Professor of Economics, Allegheny College The conversation

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