Can Nigeria stem rising food prices?

Nigeria is currently facing a significant challenge with its rising food inflation rate, which has increased by 7.08 per cent to 39.93 per cent year-on-year. This surge is primarily driven by higher energy and transportation costs, as well as increases in the prices of staple foods. To delve deeper into Nigeria's journey to food security and the outlook for the grains market, Kola Masha, CEO of Babban Gona, sat down with CNBC Africa for an insightful discussion. Masha highlighted the root cause of the high food inflation, emphasizing the constraints on the supply side. He emphasized the need to address these constraints in order to effectively tackle the issue in the coming months. Despite the challenging trajectory of food inflation, Masha expressed concerns about the impact of government strategies in arresting the rising tide. The current outlook remains uncertain, as a blend of fiscal and monetary policies could potentially slow down the pace of moderation in headline inflation. The recent investments in Nigeria's agricultural sector, such as the $2.2 billion facility for special agro-industrial processing zones and the 300 million euro agreement on food security with France, are crucial steps towards enhancing food production. However, Masha noted that these investments primarily focus on the demand side, particularly in agro-processing, rather than directly addressing the supply side constraints faced by farmers. Despite the potential benefits of investing in genetically modified foods (GMOs) to boost productivity, Masha underscored the importance of complementing advanced seed varieties with proper soil and weed management practices to maximize yields. Moreover, he emphasized the need for responsible technology adoption with robust regulatory frameworks to mitigate associated risks. Looking ahead, Masha discussed the pressing issue of food insecurity in Nigeria, exacerbated by devastating floods and the inadequate infrastructure for all-year-round farming. He stressed the pivotal role of irrigation in enhancing agricultural productivity and highlighted the need for a comprehensive investment strategy similar to successful agricultural exporters like Thailand. In terms of market outlook, Masha pointed out the modest growth of 1.14% in the agricultural sector in the third quarter of the year. He highlighted persistent challenges such as FX volatility, high input costs, and insecurity that hinder the sector's potential for growth. While discussing the outlook for 2025, Masha expressed concerns about the exorbitant interest rates and limited access to affordable financing for farmers, which ultimately impacts food production. In light of price movements for key grains like wheat, paddy rice, and maize, Masha emphasized the importance of addressing the food inflation challenge to prevent a looming food security crisis. Despite the short-term efforts to manage demand by limiting exports, Masha highlighted the long-term potential for Nigeria to leverage its strategic position and vast market in West Africa. By boosting productivity and supply through innovative solutions and increased investments, Nigeria can capitalize on trade opportunities within the African continental free trade area. The road ahead may be challenging, but with concerted efforts and sustainable strategies, Nigeria can overcome its current food inflation crisis and pave the way for long-term food security and economic growth.