The International Monetary Fund (IMF) has encouraged Nigerian Government to make food security its immediate policy priority.
This is coming amidst deafening cries of hunger among Nigerians in recent times triggered by biting food inflation, devalued naira and dwindling purchasing power of many households.
A team of the International Monetary Fund led by Axel Schimmelpfennig, IMF mission chief for Nigeria, visited Lagos and Abuja February 12–23, 2024, to hold discussions for the 2024 Article IV Consultations with Nigeria.
At the end of the meeting with critical stakeholder in the country, the body encouraged Nigeria to be proactive on various policy fronts but with immediate commitment to ending hunger in the land.
It said: “With about 8 percent 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 fertilizers, as well as Nigeria’s introduction of dry-season farming.”
It emphasised that the recently approved targeted social safety net program that will provide cash transfers to vulnerable households needs to be fully implemented before the government can address costly, implicit fuel and electricity subsidies in a manner that will ensure low-income households are protected.
IMF noted that Nigeria’s economic outlook is challenging even as the economic growth strengthened in the fourth quarter, with GDP growth reaching 2.8 percent in 2023. Regardless, it said the growth slightly fell short of population growth dynamics.
Looking ahead, it noted that 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 percent, although with high inflation, naira weakness, and policy tightening to still provide headwinds.
Meanwhile, the IMF acknowledged the recent improvements in revenue collection and oil production, describing these as good developments.
It said: “Nigeria’s low revenue mobilization constrains the government’s ability to respond to shocks and to promote long-term development. Non-oil revenue collection improved by 0.8 percent of GDP in 2023, helped by naira depreciation.
“Oil production reached 1.65 million barrels per day in January as the result of enhanced security. The capping of fuel pump prices and electricity tariffs below cost recovery could have a fiscal cost of up to 3 percent of GDP in 2024.”
On another front, the IMF team welcomed the Monetary Policy Committee (MPC)’s decision to further tighten monetary policy.
Recall that the MPC increased the policy rate by 400 basis points to 22.75 percent for a total tightening of 1,025 basis points since May 2022.
Even as many economic experts warned that the move could further squeeze an already-troubled real sector of the economy, the IMF has a different opinion.
According to the body, “This decision should help contain inflation, which reached 29.9 percent year-on-year in January 2024, and pressures on the naira.”
Meanwhile, IMF acknowledged that the Tinubu’s administration inherited a difficult economic situation marked by low growth, low revenue collection, accelerating inflation, and external imbalances built up over years.
