SBM Jollof Index shows Nigerians are spending more
The SBM Jollof index is a composite index that tracks the prices of the main ingredients used to prepare a pot of one of Nigeria’s primary delicacies – Jollof rice. This meal was chosen because it has the unique distinction of being a delicacy in every part of the country and thus, an index based on Jollof rice provides a bird’s eye picture of national inflationary trends. SBM tracks this index for the average family size of Nigeria put at 5 individuals in 2015.
In Q2 2017, the national price of cooking an average pot of Jollof rose marginally to ₦5,674 in May in line with an upward trend in these prices that dates to the second half of 2016, despite a slight dip in March 2017 to ₦5,266 from ₦5,388 in February 2017. An analysis by geopolitical spread shows that the most expensive place to cook Jollof rice in Nigeria remains Kano where it would cost a housewife an astonishing ₦7,250 to put together the delicacy at the end of Q2 2017, a marked increase from the already pricey ₦6,640 price tag at the end of Q1 2017. As context, it is the only place in the SBM tally of nine major markets spread across the country’s geopolitical zones where it costs above ₦7,000 to serve up a pot of Jollof. Lagos remains the most Jollof friendly city in Nigeria – a pot of the meal has risen by only ₦20 from February to May 2017, from ₦4,950 to ₦4,970 if you are buying your ingredients at the Trade Fair market. For downtown shoppers at Balogun market in the heart of the city, it will cost you ₦5,070.
In the second week of June 2017, SBM sent correspondents to markets in Abuja, Ibadan, Kano, Lagos, and Onitsha. The questions asked revolved around both the personal lives of the traders. A follow up set of questions regarding the attitudes of regular customers of these traders were administered by phone the following week.
The traders involved in the survey are small scale traders, mostly involved in selling foodstuff. A recurring pattern in this survey was that majority of the respondents said that their customers have reacted negatively to rising food prices. Customers appear to have shorter tempers, bargaining is a lot more confrontational and more importantly, they do not spend as much as previously, indicating that a lingering recession could be heading towards a liquidity trap. It is important for aggregate demand to increase in the economy to stimulate production that will lift the nation out of a recession.
What we observed is a rising personalization of the source of hardship in the person of President Buhari. However, when asked what the government could do to improve things, Lagos turned out to be the most upbeat city in which we carried out our survey. 43% of respondents in Lagos believe that things could improve in the next three months, while in Abuja, Kano and Onitsha, all respondents believe that things will remain the same over the next three months. In Ibadan, half of the respondents actually think that things will get worse.
While food inflation still increased, the rate of increase has slowed down. This trend also is clear in the Jollof Index numbers and this is a positive. We believe that prices may finally be reaching a new equilibrium point and the continuous adjustments that Nigerians have had to make might finally be easing up. Policy makers will however need to act fast as they have a critical role in curtailing the ongoing, albeit slower rise in consumer commodities. This is more important in areas where policies can exert substantial influence such as infrastructure development, which can ease the logistical challenges all economic actors currently face, and by encouraging small scale farming across the country. 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.