‘There is no certainty the socio-economic situation will be better in the near future. Investment in human capital is extremely low, placing it at the sixth from the bottom of human capital index (HCI) ranking. At 33.3 per cent, Nigerians are third most unemployed Africans with the situation only worse for South Africans and Namibians’
THE days ahead may be tougher for Nigerian households on the bottom of the income pyramid as staple foods experienced the steepest increase in prices in the past one year.
Headline inflation was high, almost touching 20 per cent few months ago before a gradual deceleration that saw it pegged at 16.6 per cent in September, from 17.01 per cent it stood in August. Food inflation, last month, was estimated at 19.57 per cent as against 13.74 per cent recorded against core inflation.
The differential between core inflation (change in prices of goods and services less volatile items like food, transportation and energy cost) was at an all-time high; the gap is almost 50 per cent, which underscores the increasing financial pressure on poor households.
Analyses of official statistics released by the National Bureau of Statistics (NBS) signal even a more dangerous social trend – food items consumed by the poorest families have seen much faster inflation in the past one year.
For instance, prices of beans, a staple food which hitherto served as a source of protein to average households, have increased by an average of 59.7 per cent year-on-year. While brown beans witnessed a price rise of 57.4 per cent, white beans posted 62.04 per cent increase between September 2020 and September 2021, making the item the most inflationary in the period.
This suggests that the food item is about 60 per cent less affordable to consumers than it was this time last year. It also implies that some families, who have no luxuries to remove from the spending menu, would need to give up other essential consumptions such as quality children education or decent accommodation to continue to afford beans.
Garri, which many families use as a substitute for beans even though they do not provide the same nutrients, has also increased by between 20 and 30 per cent in the last 12 months. Yam, a direct substitute for garri, has increased by approximately 25 per cent in the year.
On year-on-year, prices of NBS’s selected food items increased by an average of 21.42 per cent, which is worrisome enough. But the bigger problem is that the most essential and heavily consumed items saw a sharper rise than items many families can do without.
Egg saw a price increase of 26.6 per cent, according to the NBS figure, while beef rose by as much as 30.8 per cent. Chicken also jumped by about 20 per cent just as the commonly available Titus fish went up by 20 per cent, leaving poor households with fewer options than taking their meals without beef, egg or chicken.
The trend of the consumer price index (CPI) is similar. Four out of the top five items that recorded the highest price increase under the food category in September were basic items – milk/cheese/egg, bread/cereals, fish and yam. Only coffee could be considered as a ‘big man’ consumable among the five items.
In the core inflation segment, the prices were driven by essential consumptions. Among the items were gas, household textile and hospital service – basic services and commodities that cause sleepless nights for those who have to spend out of their pockets to acquire them.
While the poor spend a larger portion of their incomes on food and other essential consumables, their incomes have remained stagnant or fallen in recent times. This raises concern about worsening income inequality.
Already, the World Bank and the International Monetary Fund (IMF) have expressed concern that inequality, especially in developing countries, could be worsened by the current two-track growth caused by uneven COVID-19 vaccination.
As inequality exacerbates, an increasing number of households are becoming financially insured and face difficult trade-offs between food and accommodation, a survey by NBS in conjunction with the World Bank had suggested.
The survey on Covid-19 impact said more than half of renting households reported being worried they would be unable to make their next rental payment. In urban areas, 23 per cent of all households were said to rent insecure. That figure represents nearly 52 per cent of urban households who rent their dwelling.
“The insecurity could represent an imminent crisis for many of these households, as 56 per cent of rent insecure households have a rental payment due within the next month. The main cause for rent insecurity is reduced income (85 per cent of rent insecure households), followed by an increase in the price of food and non-food items (58 per cent and 50 per cent, respectively). This suggests that renting households are facing a situation where they must make difficult trade-offs between paying rent and buying food,” the report said.
When households grapple with existential needs like food and accommodation, investments in the development of children and acquisition of skills needed for future earnings are pushed aside as unaffordable luxuries. That justifies the strong direct positive between the current financial stability and future wealth of households.
That increasing number of masses are pushed to the survival level suggests that the poverty level could be worse in the future. The poverty profile is is already grim and embarrassing for a country endowed with so much human and natural resources. The NBS, in 2020, said 40 per cent or 83 million Nigerians live in poverty. The 2021 data are yet unknown but it is generally believed that the situation is not better than last year, and it that the poverty rate could surpass 45 per cent in 2022 and even 71 per cent if the World Bank’s income threshold of $3.20 per day is applied.
Compared to lower rates for some oil-producing developing countries like Brazil (9.1 per cent), Mexico (6.5 per cent), Ecuador (9.7 per cent) and Iran (3.1 per cent), Nigeria is, indeed, in a social crisis. Only Equatorial Guinea and South Sudan’s poverty level is currently higher than the rate Nigeria could get next year.
There is no certainty the socio-economic situation will be better in the near future. Investment in human capital is extremely low, placing it at the sixth from the bottom of human capital index (HCI) ranking. At 33.3 per cent, Nigerians are third most unemployed Africans with the situation only worse for South Africans and Namibians.
The 2022 appropriation is considered the most education-friendly in recent times at 7.9 per cent of the total figure or N1.29 trillion ($3.1 billion). Yet, the per capita education, which suggests the amount the government plans to spend on each citizen’s education, is merely N6,450 or $15.
On the other hand, South Africa’s basic education allocation in the 2021/2022 medium-term expenditure framework (MTEF) is R27 billion ($1.8 billion). When decomposed, South Africa’s per capita budget for basic education (secondary, tertiary and other specialised education not included) is $30.
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