The price of household food items has recorded tremendous spike in recent weeks, with consumers and households particularly complaining about the price of Onions, which they now call the “new gold”.
The persistent increase and scarcity of onions in major markets have become a rather interesting topic in recent times as the price of a big bag of dry Onions sells for an average of N80,000, while some markets sell for as high as N85,000 in Lagos State.
Some traders have termed the increase as just a seasonal fluctuation, while some have blamed it on the #EndSARS protest. However, there is more to it than meets the eye, which is why Nairalytics, a research arm of Nairametrics which tracks the prices of major food items in Lagos, Nigeria, visited the Onion Section of Mile-12 market in Lagos State to get insights into the root cause of the irregular trend in price.
Below are some of the reasons highlighted by Onion traders at the market;
- Increase in price of fertilizers
- Seasonal fluctuations
- Strike actions resulting from the #EndSARS protests
- General increment in the price of items amongst others
What’s the trend like?
A look into the historical trend in the price of a big bag of Onions, reveals a 325% increase in the price of dry onions from an average of N20,000 recorded earlier in January 2020 to N85,000 as of November 10, 2020. Also, a 261.1% increase in the price of new onions from N18,000 to N65,000.
Note that between May and July, new onion was not sold in the various markets visited, it resurfaced in August 2020 – mainly due to seasonality of the commodity.
What you should know
Onion is one of the most commonly consumed vegetable crops in the world and widely eaten by Nigeria, as there is hardly a local Nigerian dish that does not require the use of onions in its preparation.
- In Nigeria, onion is grown mostly in Northern states like Kano, Kaduna, Jigawa, Sokoto, Plateau, Bauchi, and Kebbi State.
- There are different varieties of onions, which include red, white, and yellow onion. The red is the most common one in Nigeria and it is of great commercial value to its farmers.
- As of October 2020, food inflation (16.66%) is at its highest since March 2018.
What they are saying
According to Shehu – a major Onion trader at the Mile-12 market, he said the sudden increase in the price of local fertilizers has affected the price of Onions and many other farm products. He said, “sometime last year, we do import the fertilizers that we use. However, we are now forced to use local fertilizers since the ban on importation, which has now increased the price significantly.”
He stated further that 50kg bag of fertilizer was sold around N5,000 and N6,000 but jumped to an average of N19,000 in recent weeks. “Federal government fertilizer that is expected to remain cheap has also increased to N8,500 from an initial value of N5,000,” he said.
Mr Bala, on the other hand, blamed the price increase on insecurity and lack of police officers on the road. According to him, farmers could not go to their farm lands anymore due to armed robbers and kidnappers terrorizing them in the North. Hence, they make use of farm lands closer to their homes.
He also said that truck drivers are afraid to convey goods from the North down to the South, as armed robbers have been attacking and stealing from them on the road ever since the FG disbanded the Special Anti-robbery squad (SARS). He urged the FG to mobilize members of the NPF and the Nigerian Army to help curb the menace perpetrated by these robbers.
Alhaji Muhammed, a trader at the market, blamed the increase in onion price on the aftermath of #EndSARS protest that was hijacked by hoodlums. During the looting and vandalization spree on Wednesday 21, 2020, several lorries carrying Onions from the North to Lagos State were allegedly burnt including the goods in them, he said.
According to him, the burning act has made the association of Onion sellers decide to reduce the number of lorries they bring in. He said, “Usually about 40 to 50 lorries of Onions come into the Mile-12 market daily, now we barely receive 2 to 3 lorries in a day. This scarcity has also contributed to the significant hike in price.”
He, however, stated that the association is having a discussion with the FG and will resume when all has been settled.
Finally, Mr. Usman highlighted other factors that has impeded the free flow of food items from the North into Lagos State. “Lack of security has discouraged our drivers from traveling due to kidnappers and armed robbers. Meanwhile, where and when there are Soldiers or member of the Nigerian police, they collect huge amount of money from the drivers before allowing them passage.”
“This payment at different stop on the road, end up affecting the price of the goods when it finally arrives into Lagos State. Another problem is the increase in the price of fuel, a necessity for the mechanized farmers and the drivers who convey the finished goods.”
Nairametrics Research Analyst found the market filled with people negotiating prices at each store. However, a common reaction was dissatisfaction on the part of the customers concerning the price of onions.
Mrs. Olaoluwa, while talking to a trader at Mile-12 market could be seen trying to convince him to sell a big bag of new onions for N50,000, which he declined. Speaking to Nairametrics Research, she said, “We are tired of the persistent increase in the price of food items in Lagos State, especially onion. We are now buying a bag of Onions for N60,000 while we sell about 9 pieces of Onions for N1,000. The government should come to our aid and help us, the hardship is too much,” she concluded bitterly.
Mrs Chibu, on the other hand, confirmed that the increase in the price of onions has discouraged many customers in her area from cooking with Onions. “Many customers in my area now cook without the use of onions, which is why I am not buying much, so that I won’t fall into loss,” she said.
The sustained increase in the price of onions will most likely affect Nigerians during the yuletide, as onions is a commonly used vegetable fruit in preparing most of the Nigerian and International delicacies during the period.
Fidelity Bank Plc must cover the chink in its curtains to keep rising
Fidelity Bank Plc follows the narrative of top tier-2 banks, which have had better or easier years.
The Nigerian banking sector has consistently been one of the most profitable sectors in the Nigeria Stock Exchange market. However, in 2020, Deposit Money Banks (DMBs) have faced a flurry of impediments, which may have affected their solidity.
With reduced income from fee and commission implemented at the start of the year by the Central Bank of Nigeria, the paucity of foreign currency for international transactions, the resulting economic contraction from dire effects of the coronavirus pandemic, and the consequent operational constraints of keeping employees safe, 2020 is obviously fraught with numerous disorders for banking institutions.
No more N100 a plate meal in Nigeria
Food items across markets have experienced a spike in prices, making it impossible for one to find a decent meal for N100 today even in local outlets.
Gone are the days when an average Nigerian could purchase a meal with N100 and be filled to the brim. Even in Lagos, where foodstuffs are generally perceived to be expensive, a hungry Nigerian with just N100 could buy a loaf of ‘Agege’ bread for N60, beans for N30, and two sachets of pure water at N5 each; or White rice for N50, beans N30, spaghetti N10, and 2 pure water.
Similarly, with N100, an average Nigerian could purchase 1 wrap of “amala” for N50 and 2 slices of meat at N20 each with 2 pure water, while some other person could prefer to buy “fufu” in place of “amala” and still be filled.
However, prices of food items are known to be downward sticky in Nigeria, as food items across diverse food classes have experienced price increases in recent times. Of all items, staple food items are the most affected, especially the prices of rice, garri, yam, potato, cassava, and yam flour, to the prices of relatively ostentatious items like semovita, semolina, or poundo yam.
Even the market prices of spaghetti and indomie, which are considered close substitutes for rice, have experienced major spike in recent times. By taking an investigative stance, one would realize that Golden penny pasta (spaghetti) which sold for between N120 – N150 a year ago, ow sells for between N230 – N250 a piece, marking about a 66.67% increase in 12 months.
Similarly, egg, a pocket-friendly and close substitute for fish, meat, chicken, and turkey, is not so pocket-friendly anymore, with a price increase from N25 a year ago to N50 as of today – a 100% increase.
In line with the recent development, coupled with the widespread economic vulnerabilities in the nation, it is obvious that the cost of cooking a meal in Nigeria today is twice as expensive as it was a year ago. As the price of cooking ingredients like tomato paste has increased by more than 200% this year alone. The price of onion, which is a widely eaten vegetable in the country, has also increased.
Consequently, the cost of buying cooked food from ‘Mama Put’, food restaurants, and other outlets has also gone skyrocketed — it is impossible to get a satisfying meal without spending as much as N300 or more in the process, depending on the type of outlet you patronise. If a person were to spend on meals, an average of N300 twice a day for 31 days, it therefore indicates that an average Nigerian spends at least N18,600 on feeding in a month considering that many Nigerians still earn below the minimum wage of N30,000.
What they are saying
A food vendor in Abule Egba, known by her street name, Iya Sodiq, said that the cost of items she uses in cooking has gone up recently, and the only option she had was to increase the price she charges her customers to compensate for the recent increase. She disclosed that most times when asked to sell a fixed amount of food by a customer, the quantity she sells now is considerably lower than what she would have sold at the same amount earlier this year.
She stressed that even the smallest bread she sells in her shop currently goes for nothing less than N100.
“The prices of everything in the market is now high. Even the customers are complaining that my food is now small, but they don’t understand that I am not even making many gains anymore because food items are now so expensive in the market,” Iya Sodiq said.
In a conversation with another food vendor at Ikeja, by the name Mrs. Tobiloba, she highlighted that the cost of preparing a pot of soup has spiked significantly, given that the price of tomato paste, onions, pepper, seasoning, fish, meat, and even rice has gone up relative to last year, which meant her customers have to spend above N100 to quench their hunger.
She said, “Onions, pepper, tomatoes, rice, fish, meat and everything you need to prepare soup or stew have increased in prices in the market. If I sell in the quantity I was selling before, I will definitely run at a loss.”
What this means
The persistent increase in the prices of food items has put downward pressures on the real value of money and also the real income of Nigerians. With food inflation rate moving towards the 2017 level of 17.38%, the purchasing power of Nigerians has never been this constrained, with nothing to compensate for the recent increase in the prices of food items, despite the increase in the national minimum wage.
What you should know
After a careful comparison of the composite food index between September 2015 and September 2020, Nairametrics reported last month that food inflation increased by 110.5%, this shows that the purchasing power of Nigerians is constrained, as real income has reduced significantly, despite the 66.7% increase in the National minimum wage from N18,000 to N30,000.
Article jointly written by Samuel Oyekanmi and Omokolade Ajayi
How Crypto can curb Nigeria’s high unemployment rate
Cryptos, when fully adopted, will have a considerable impact on Nigeria, by increasing the financial inclusion of individuals and companies.
Nigeria, the largest economy in Africa, has been unable to efficiently tackle its increasing unemployment rate – a ticking time bomb, if not addressed quickly. In 2020, the frontier market witnessed a rise in its unemployment rate, due to an ever-growing dependent population, reduction in the total output of goods and services, and the unprecedented COVID-19 pandemic, which negatively impacted the economy and led to job loss for thousands of Nigerians.
Data from the National Bureau of Statistics (NBS) revealed that:
- Nigeria’s unemployment rate as at 2020 Q2 reached 27.1% — indicating that about 21,764,614 (21.7 million) Nigerians are unemployed.
- Also, 13.9 million Nigerian youths are unemployed.
- Youths between 15-24 years constituted the highest unemployment rate, 40.8%; followed by youths between 25 – 34 years, 30.7%.
Such unimpressive economic data can be curbed, if Nigerian regulators and stakeholders tap into the potentials inherent in cryptos, to further strengthen the development of Africa’s largest economy.
Cryptocurrencies can help tackle the numerous challenges faced in international trade by many Nigerians, who don’t have a bank account. With the help of blockchain technology, many unemployed Nigerians can utilize the tools behind crypto and blockchain to generate income, as traditional jobs steadily become outdated.
Cryptocurrencies like Bitcoin could also help the unemployed facilitate small-scale international trade. Bitcoin enables these parties to sell products in exchange for Bitcoin and a boycott of traditional e-commerce systems, which often involves having to set up a merchant account with traditional banks, coupled with its attendant charges.
Cryptos, when fully adopted, will have a considerable impact on Nigeria, by increasing financial inclusion of individuals and companies. Particularly, by reducing the transaction fees and time, cross-border payments can be improved. This is beneficial for remittance payments, peer-to-peer lending, and international trade.
Experts discuss the utilization of cryptos to curb unemployment
In an exclusive interview with Nairametrics, Chike Okonkwo, Business Development Manager, OKEx, spoke on the role crypto can play in providing income for a substantial number of young Nigerians.
“Since the adoption of cryptocurrency in Africa, Nigeria has become a major hot zone in the African cryptocurrency space. The adoption of blockchain/cryptocurrency by Nigerians, has been able to give jobs to young Nigerians like me.
“The industry will further curb unemployment in Nigeria, but to achieve this — Blockchain and Crypto education must be a key focus because it’s a young industry. I personally encourage a lot of young people looking for a career path to explore the blockchain and crypto space.
“We need people who understand business development, media, marketing, programming, Crypto trading, legal Compliance, design/graphics, etc. in the industry.
“Young Nigerians have built trusted platforms for buying and selling of cryptos and there is more to come. I am a member of Stakeholders in Blockchain Association (SiBAN), which aims to unite/self-regulate players in the industry and Blockchain Nigeria User Group (BNUG), with core focus on educating people about the Industry.”
Charles Okaformbah, Blockchain Solutions Architect, in a note to Nairametrics, gave key insights on the job opportunities that crypto can offer Nigeria’s growing population.
“Aside the trading activities carried out by Nigerians, DeFi products can be created with cryptos to help create businesses that will employ more Nigerians.
“Trading with little funds might not really yield much in comparison with the inflated cost of living, but long-term investments on solid crypto-assets have proven to be a game-changer or yielded much more returns.
“Remittances can also be done with cryptos at a charge for international traders, who are currently limited by government’s monetary policies.
“There is also crypto-collateral. Aside crypto as an end-product, employment can also be provided via tech for tech enthusiasts/geeks, by creating their services like crypto/blockchain solutions for organizations, developing crypto-related products, providing audit for smart contracts, crypto forensic auditing, project management, and a whole lot more.”
Digital currencies or cryptocurrencies as a standalone will not make an all-encompassing impact on the Nigerian unemployment index. However, Nigeria must start building native Blockchain Infrastructures post-pandemic.
This way, the core sovereignty of the technology will originate and mutate in meeting our unique Nigerian market niche. The domino effect across the skilled, entrepreneurial and regular professional layers would be massive.
The improvement of financial inclusion is the most significant and most developed benefit of crypto-currencies for Nigerians.