This is a question that many Nigerians have been asking in the wake of the recent fuel price hike. The government has argued that the subsidy on petrol and other petroleum products was unsustainable and wasteful, and that removing it would free up funds for other sectors, such as health, education, and infrastructure. But what if the subsidy was redirected to food instead?
According to the World Food Programme, Nigeria is home to more than 200 million people, of whom 90 million are living in extreme poverty. The country also faces multiple challenges such as conflict, climate change, population growth and COVID-19, which have worsened the food insecurity situation. About 9.2 million people are estimated to be in need of urgent food assistance in 2021, and more than 5 million children under five are suffering from acute malnutrition.
The subsidy on PMS and other petroleum products is estimated to cost the government about N1 trillion ($2.6 billion) annually, which is equivalent to about 0.8% of the country’s GDP. If this amount were redirected to food production and distribution, it could have a significant impact on reducing hunger and poverty in Nigeria.
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Food is a basic necessity for human survival, and yet many Nigerians struggle to afford it. According to the National Bureau of Statistics, food inflation rose to 21.03% in August 2023, the highest level since 2017. The rising cost of food has been driven by factors such as insecurity, climate change, exchange rate fluctuations, and supply chain disruptions. As a result, many households have been forced to cut down on their food consumption, or resort to cheaper and less nutritious alternatives.
The impact of food insecurity on the well-being of Nigerians cannot be overstated. Hunger and malnutrition can lead to poor health outcomes, reduced productivity, lower educational attainment, and increased poverty. According to the World Food Programme, Nigeria has the second-highest burden of stunted children in the world, with 10.5 million children under five suffering from chronic malnutrition. Moreover, food insecurity can also fuel social unrest and violence, as people become desperate and frustrated.
Therefore, it is imperative that the government takes urgent steps to address the food crisis in Nigeria. One possible solution is to use the subsidy on PMS and other petroleum products to subsidize food instead. This would mean that the government would reduce the price of food items by paying part of the cost to the producers or distributors. This would make food more affordable and accessible for consumers, especially the poor and vulnerable.
The benefits of subsidizing food are manifold. First, it would improve the food security and nutrition status of millions of Nigerians, thereby enhancing their health and well-being. Second, it would stimulate the agricultural sector and create more jobs and income for farmers and agro-processors. Third, it would reduce the dependence on imported food and save foreign exchange for the country. Fourth, it would ease the pressure on household budgets and increase consumer spending and demand. Fifth, it would foster social stability and peace by reducing hunger-induced grievances and conflicts.
Of course, subsidizing food is not without its challenges and drawbacks. For one thing, it would require a huge amount of public funds that could otherwise be used for other purposes. For another thing, it would entail a complex and efficient system of targeting, monitoring, and evaluation to ensure that the subsidy reaches the intended beneficiaries and does not leak to middlemen or corrupt officials. Furthermore, it would pose a risk of creating market distortions and disincentives for private sector investment and innovation in the food industry.
Therefore, before implementing such a policy, the government would need to conduct a careful cost-benefit analysis and consult with various stakeholders, including farmers, traders, consumers, civil society groups, and development partners. The government would also need to complement the subsidy with other measures to address the root causes of food insecurity, such as improving security, infrastructure, storage facilities, extension services, credit access, input supply, quality standards, and market information.
Using the subsidy on PMS and other petroleum products to subsidize food is a potential option to tackle the food crisis in Nigeria. However, it is not a silver bullet that can solve all the problems in the sector. It requires careful planning, implementation, and evaluation to ensure that it achieves its objectives and does not create unintended consequences.
While it is tempting to imagine what if the subsidy on PMS and other petroleum products is now used on food in Nigeria, it is also important to consider the feasibility, implications and alternatives of such a scenario.