The SBM Jollof index is a composite index that tracks the prices of the main ingredients used to prepare a pot one of Nigeria’s primary delicacies – Jollof rice. This meal was chosen because it is a delicacy in every part of the country. We believe that this index gives a bird eye’s picture of national inflationary trends.
An SBM tally of these prices since the second half of 2016 has showed a quarter by quarter increase in the average national index– from ₦4,087 in July 2016 to ₦5,388 in February 2017. An analysis by geopolitical spread shows that the most expensive place to cook Jollof rice in Nigeria is Kano where it would cost a housewife or house-husband ₦6,640 to put together the delicacy in Q1 2017.
Chart – rising cost of jollof rice in Kano
Chart – rising cost of jollof rice in Lagos and Ibadan
This compares unfavourably with Lagos, where a pot of the meal will set you back only ₦4,950, the lowest in the country. The south-eastern cities of Onitsha and Awka are also very Jollof friendly at ₦4960 in Q1 2017 each, while in the national capital, President Buhari’s pot of jollof will cost a hefty ₦5,750 in Wuse, the closest major market to Aso Rock – a mighty delicious incentive for government planners to do more to keep one of the country’s few culinary joys from getting out of reach of consumers.
Chart – The jollof index for Awka and Onitsha
Chart – The Abuja jollof index
Nigerians across the country have decidedly become more methodical in allocating their finances. Most Nigerians we spoke to have chosen to cut back on much of their discretionary spending, focusing on meeting the essentials and putting aside money in their savings where there are leftovers after meeting the essentials, in order to prepare for future price increases.
Also, Nigerians who were ordinarily loyal to specific brands have taken to buying whichever brand is available on the shelves when they want to buy. They have also been more willing to explore more alternatives as price of their preferred brands move out their reach.
Buying habits have also moved away from bulk buying for the month in many homes to a “buy as you need” model as Nigerians seek to conserve cash at hand as opposed to tying their money down for a month.
On March 8, 2017, SBM researchers went out in the Ikeja area of Lagos and spoke with fifty randomly selected street corner traders regarding the effect of rising food prices on their lives. Each respondent answered four questions regarding their monthly expenditure on food, how rising costs have changed their financial habits, how these costs have affected other parts of their lives, and what they may be doing, if anything, to improve things.
Thirty percent of those interviewed sell rice
Ten percent sell beer
Ten percent sell plantain
Ten percent sell fruits
Ten percent sell yams
Ten percent sell noodles
Twenty percent sell bean products
Of the interviewees, thirty percent spend ₦60,000 per month on feeding or more.
Sixty percent spend ₦30,000 per month on feeding or less
The rest spend between ₦30,000 and ₦60,000 a month on feeding.
Only ten percent of our respondents say that the current inflationary trends for food items, have not affected other aspects of their lives.
Twenty percent of our respondents are doing nothing to improve things, twenty percent have started looking for other means of income, while the rest are digging into their savings more and more.
Finally, eighty percent of our respondents, have been forced to change their financial habits because of the rise in food costs.
The overall outlook remains tricky. The Nigerian consumer has continued to be squeezed by a host of well documented and acknowledged, but yet to be satisfactorily addressed factors. Incidents of widespread lay-offs and cutbacks, falling, and in many cases, delayed wages, and pockets of unrest in key farming regions will continue to show up on the shelves of open-air markets and in the decreasing range of choice available to ordinary families. The irony is that as the purchasing power of Nigerians decreases, the price of the very items they seek to purchase will continue to increase rapidly, creating a double jeopardy situation.
Policy makers need to play a crucial role in curtailing the persistent rise in consumer commodities, especially in areas that it can exert substantial influence over such as infrastructure development, which can ease the logistical challenges all economic actors currently face, and by encouraging small scale farming across the country. Very importantly, these schemes must ensure standardization and yield improvements in the farming practices. The government also needs to invest in agricultural extension programmes to ensure that farmers – a full 30% of the population are ushered into the 21st Century. Critical to increased production is securing the stability of the food growing North East and the North Central regions, and increasingly, the South West and the Delta regions.
The government urgently needs to address the country’s persistent and varied security challenges so that farmers can return to planting.
Also crucial to arresting the price fluctuations is the government’s FX policy. Much of the increases have been caused by supply chokes due to FX scarcity. We encourage the government to take the bold step of liberalising the FX market properly to enable the market allocate and determine the FX rate.
The government urgently needs to address the country’s persistent and varied security challenges so that farmers can return to planting. The government also needs to invest in new, as well as upgraded storage infrastructure and further encourage trade, taking advantage of local food growing comparative advantages, thus elongating the availability of key farm products and ultimately contributing to bringing down their prices. More resources should be allocated to agricultural research and development in order to raise productivity levels in such things as plant yield, improved seed varieties and average production per hectare, as well as deploying technology to give farmers access to market information and modern techniques.
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