Bread and Brains

Food Policy is about Human Capital

In August, Nigerians all around the country took to the streets in what was called "End Bad Governance" protests. The government responded as it often does—with blackmail, intimidation, and violence. The somewhat ambiguous tag of the protests - the underlying theme - was the country's current cost-of-living crisis. Many people called it the "hunger protest". Food costs have been ravaging people's pockets and stomachs for the past four years, and their government does not seem to care. Teenagers were arrested for protesting and remanded in prison for three months. It took the outrage that followed the images of them looking visibly malnourished and anguished in court for their release.

Despite the scale of the hardship caused by high food costs, no one in the Nigerian government thinks it should be solved. In his recent blog, Nonso Obikili outlined the problem (read his post for a vivid data visualization of the problem).

I spent the weekend reviewing data from the Food and Agriculture Organization on the cost and affordability of a healthy diet. You may have noticed that the National Bureau of Statistics recently began publishing a monthly "Cost of a Healthy Diet" indicator. This is part of a global effort to better understand food affordability issues worldwide. Interestingly, in Nigeria, we actually have relatively affordable costs for a healthy diet, according to the standardized index.

We are slightly more expensive than some of our neighbors and marginally above the Sub-Saharan African average. However, the difference isn't too large, and we remain below the global average. When we narrow it down to the cost of an energy-sufficient diet—that is, focusing purely on calorie or energy intake—the affordability challenges become very apparent.

According to the globally comparable index, our costs are more than twice the global average and significantly higher than those of many neighboring countries. This is driven by the high costs of staple foods that supply most of the energy, such as yams, maize, and rice. It's important to note that this reflects the "real" cost, independent of the Naira or exchange rates. The relatively high prices of staple foods, combined with current poverty rates, present serious affordability and hunger challenges for many people

If you look at Nonso's charts, you will see that Nigeria is way above the global average in the cost of an energy-sufficient diet and second only to India in the population of people who cannot afford sufficient calories. The cut-off point for data is 2021, which means it is not a recent problem. It is also reasonable to assume the numbers will be worse now. So again, it begs the question of why the government does not think this is a policy emergency.

In July, the president announced that import tariffs on some important food items would be suspended to ease the rising costs. But Bloomberg reported earlier this month that the government itself did not follow through on the plan:

Nigeria has not taken advantage of a six-month window to import key food duty free, even as the West African nation confronts a cost-of-living crisis that a recent report warned was set to worsen. Two senior officials involved with the tariff moratorium on wheat, corn, rice and other crops said it hadn’t been embraced because the authorities want to avoid hurting local producers. They asked not to be identified because deliberations about the matter are private.

The officials said the duty-free window would not be renewed after price pressures eased slightly in September and because of optimism about the domestic harvest. Finance Minister Wale Edun and Minister of Agriculture Abubakar Kyari didn’t respond to requests for comment. Still, the situation may remain challenging. A report released Oct. 31 warned Nigeria faces unprecedented food price growth in 2025 as the country grapples with long-standing issues including insecurity in vital farming regions.

Inflationary fallout from reforms last year by Tinubu have also played a role, after he loosened currency restrictions and began rolling back costly fuel subsidies. These caused the naira to slump and transportation costs to surge, directly impacting the cost of living. African Commodities Exchange Ltd., which surveyed more than 40,000 Nigerian farmers, projected corn prices will jump 48% to about 910,000 naira ($542) per ton, while rice — a staple consumed by millions of Nigerians — will increase by 55%. “If swift action is not taken, the already high levels of food insecurity in the country are likely to worsen,” Afex said, recommending social protection measures for the poor and access to farm inputs and fertilizers. The government said it’s implemented some of those recommendations to ease the economic hardship, such as cash handouts of 25,000 naira to 5 million households, and distribution of grains and improved seedlings to farmers.

So now, at least, we have one answer. The government worries that measures to ease food costs through imports will negatively affect local production. Regardless of whether the government is beholden to a faceless food production cabal, this has never been a debate. The instinctive policy reaction to imports in Nigeria is always adverse. What is baffling, however, is why rising hunger and poverty are not enough to suspend this instinct, even in the short term.

There is a bias problem here, borne out of decades of economic illiteracy at the highest level of policymaking. Even if we accept the naive premise that Nigeria can become completely self-sufficient in food, it will take decades to achieve. Exploring every option to reduce the cost of food in the short term for a poor population is certainly worthwhile for any long-term objectives. As the economist Thomas Sowell said: "There are no solutions. There are only tradeoffs".

There is also an incentive problem. Trade policy in Nigeria is about expropriating rent and not facilitating trade for long-term development objectives. This dates back to colonial governance; everything seems to have stayed the same. The Nigerian Customs Service has been announcing record revenues throughout the worsening food cost crisis. The reliance on customs duties and tariffs creates the incentive to always tax trade without regard for the distortionary effects it may have on the overall economy. Customs is also one of the super agencies of the Federal government that benefits from the civil service rule of keeping a portion of their revenues as operating costs - which means the agency will always rationalise its functions mainly in terms of rent. The criminalisation of food importation has also created an underground smuggling economy, which also benefits Customs and other law enforcement agencies by empowering them to be extortioners.

Lastly, there is the obsession of policymakers and politicians with control. In the eyes of the government, Nigerians, especially people with low incomes, are not free citizens who work, earn, learn, and sustain the economy through their skills and productivity. These free citizens will be further enriched when they do not spend a significant portion of their earnings on food and other necessities of life. This way, they have more to save, invest, and even create new industries in the economy through their consumption. Instead, the typical attitude of the government is that citizens are children, and their dissatisfaction with bad policies can only be met by giving them things and telling them what to do. In this view, citizens have no agency, and the government knows what is best for them.

This assertion might sound exaggerated or even libertarian, but it has profound implications for Nigeria's political economy. Unless when functioning under external pressures from multilateral commitments, the Nigerian government does not see macroeconomic stability as a meaningful policy objective. Economic policy is not seen as a way of solving collective action problems or promoting national development but rather as a means of sociopolitical control. The control of the economy is a constitutionally-backed mandate of the federal government. It never wants to relinquish this control, even when it creates negative economic distortions that cause hardship. Bringing down the cost of food and inflation is not as paternalistic and controlling as giving people rice and cash to manage their poverty.

Reframing the debate on food and everything else downstream of it is important. It is important to understand that having a population that is not starving, constantly worrying about where the next meal will come from, or spending a lot of their income on food is not a humanitarian policy of mercy from the government to the people. It is time for economic and development policy to embrace a view of the world that sees people as brains, and not stomachs to be fed. When people are unburdened from constant worry about the scarcity of the basic necessities like food, then they are free to be creative, acquire skills, start businesses, innovate and be productive citizens who pay taxes. This will only happen with policies that promote economic growth and development like export-focused industrialisation, structural transformation, macroeconomic stability (low inflation, debt sustainability, stable exchange rates), and investment in the country's human capital - which includes health, education, and food.

Food policy is about human capital development.