CPI rebasing: NBS to change price reference period to 2024

Nigeria is gearing up to announce a rebased Consumer Price Index figures with a new weight reference period of 2023 and a price reference period of 2024 later this month. The rebasing process will involve the digitization of price data collection and an expansion of the basket of items to 960 from the previous 740 varieties. The move is expected to have significant implications on the country's GDP and inflation rate, with potential impacts on various sectors, including agriculture. Kola Masha, the CEO of Babban Gona, recently appeared on CNBC Africa to discuss Nigeria's agricultural outlook for 2025 and the key developments that could shape the sector's future. Masha highlighted the importance of recalibrating economic indicators like the Consumer Price Index regularly, with the typical best practice being every five years. He emphasized the potential impact of the rebasing on inflation rates, noting that the composition of the basket, including items with varying inflation trends, could either alleviate or exacerbate inflation pressures. The addition of items that have experienced lower inflation may have a positive effect, while a focus on products subject to high inflation and forex risks could lead to inflation acceleration. Addressing the persistent challenge of food security in Nigeria, Masha pointed to factors contributing to elevated food prices, citing insecurity and limited supply growth amidst rising demand. He underscored the importance of boosting agricultural productivity and supporting farmers with access to finance for essential inputs like seeds and fertilizers. Masha also emphasized the need for a concerted effort from both the government and the private sector to prioritize the agriculture sector and enhance financing mechanisms to drive productivity and stabilize food prices. When discussing risks facing the agricultural sector, Masha highlighted the significance of climate resilience and the impact of capital availability on productivity. He noted the need for strategic investments in sectors like cocoa and oil palm, highlighting Nigeria's potential in these areas but emphasizing the requirement for modernization and increased productivity to compete with global counterparts. Masha further emphasized the importance of creating the right incentive structures to facilitate financial support for farmers and unlock capital for agricultural development. In terms of partnerships and international support, Masha advocated for leveraging collaborations with countries like France to attract investment and de-risk private sector lending in agriculture. He highlighted the role of development finance institutions in providing guarantees and incentives for financial institutions to invest in the sector. Masha emphasized the need to learn from successful models like the U.S. farm credit system and prioritize liberalizing the seed sector to enhance technology adoption and boost productivity. Looking ahead, Masha outlined two key priorities for Nigeria's agricultural sector: establishing financing models to support farmers and liberalizing the seed sector to enhance technology access. By following these strategies and fostering partnerships with international players, Nigeria stands to unlock its agricultural potential and drive sustainable growth in the sector.