KPMG: Tackling Insecurity Will be Vital to Resolving Food Price Inflation

Ugo Aliogo

The Associate Director, Infrastructure Advisory of KPMG, Olasunkanmi Odede, has stated that tackling the current security crisis in the country would be an effective measure in resolving food price inflation,

He noted that based on statistics, food prices have increased as much as almost 50 percent in the last eight months since the present administration came into power.

Odede, who disclosed this yesterday in Lagos at the KPMG Audit Committee Seminar, said when the issue of insecurity is addressed, farmers can go back to the farm to produce sufficient food, and then the government can begin to solve the logistical issues of getting food from the farm.

He remarked that another issue the federal government needs to address is the rising cost of inputs, adding that some of them are indexed to the US dollars, which links back to the exchange rates; “so, it is a component of fixing insecurity and tackling the exchange rates.”

Odede hinted that if the government is able to address the problems of forex and insecurity and other minor issues, the economy would be fine from an inflationary perspective.

He remarked that inflation would still be high, stating that there are no hopes that the inflation rates might drop anytime soon, however, disclosing that by Q3, or Q4, the economy is going to see some sort of a decline.

According to him, “The truth is that it will take time for the efforts of the government to come to fruition.  One of the things that the Central Bank of Nigeria (CBN) is doing which we saw last week was the increase in Treasury Bills and that was done just to be able to reduce the money supply in the economy.

“The CBN MPC meeting which is coming up soon will give another clarity on the direction of the economy and the interest rates which obviously might have some impacts. Because the inflation in Nigeria is not technical. It is not an interest rate-driven inflation. It is more of a cost increase inflation and largely food-driven.

“We don’t see much happening because the insecurity is still an issue. Considering the fact that nothing significant has really been done to tackle insecurity. The government has mentioned things around the facts that they want to settle.

“The issue of state police will take a while to come to fruition. As I said before, those things will take time to normalise.”