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FOOD CRISIS: NIGERIA, 44 OTHERS AT HIGH RISK, WARNS BCG

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People buy and sell food at the Illaje market, in Bariga, Lagos, on June 29, 2021. - Since the start of the pandemic in 2019, food prices have risen by an average of more than 22%, according to official statistics, and feeding a family properly has become a daily challenge. (Photo by Benson Ibeabuchi / AFP)

Boston Consulting Group (BCG), a global management consulting firm, has in a recent study, warned that Nigeria and 44 other countries around the world are severely exposed to the impact of the Ukraine war-induced food crisis.

The new report titled, “The War in Ukraine and the Rush to Feed the World,” explores in detail the multiple direct and indirect impacts of the turmoil in Ukraine on global food systems.

The BCG report co-authored with Food Systems for the Future (FSF) also provides 30 near- and medium-term solutions to help respond to the crisis and improve the resilience of global food systems.

It said the affected countries concentrated in Africa, South Asia and Latin America, are hotspots around the world as they are enduring some of the worst effects of the crisis.

According to the BCG report, Nigeria and the other affected countries face severe levels of extreme poverty, compounded by the ongoing economic and social challenges associated with the COVID-19 pandemic.

Additional factors worsening the food crisis identified in the report include heavy reliance on food imports, high import bills, high inflation, a high debt burden, climate risks, and civil unrest.

An estimated 1.7 billion people – most of them in developing economies – could suffer severely increased food insecurity, higher energy prices, or greater debt burdens, according to the UN Task Team for the Global Crisis Response Group. Each of these individual factors adversely affects people’s ability to feed themselves. At the same time, there is a critical need to address them more holistically and across all sectors in order to reshape the country’s food systems to counteract this humanitarian crisis and future ones.

Managing Director and partner at BCG Nigeria, Stefano Niavas, while commenting on the findings, said, “the impact of the Ukraine war on our food systems calls for critical and immediate review of our budgetary allocation. Currently, Nigeria spends over 27 times of its agriculture allocation to service its debt. Compounded with the Ukraine war and the lingering challenges of COVID-19, the average debt-to-GDP ratio across the continent is expected to rise from 60 per cent to 70 per cent.

“To minimise the impact of the crisis on Nigeria’s food systems, the government and all critical stakeholders should ensure stabilising the rising cost of food and fertiliser by the provision of viable seedlings, supporting the growth of alternative nutritious grains and driving the adoption of innovative farm practices. The introduction of alternative sources of fertiliser will help reduce the country’s reliance on food imports.”

Together, Russia and Ukraine account for about 12 per cent of the total food calories traded around the world, and both are critical exporters of key commodities such as wheat (28 per cent of global trade) and sunflower oil (69 per cent), according to the International Food Policy Institute. The UN’s World Food Programme (WFP) buys from Ukraine half of the wheat it distributes around the world.

Further, as exports from these countries tumble, some other leading exporting countries have announced export bans or licensing restrictions designed to protect their own food stockpiles.

As a result, prices are skyrocketing, not just for food, but also for essential agricultural inputs, such as fertiliser and fuel, that Russia has long been a key supplier of. Moreover, the ripple effects of disruptions to the fertiliser supply chain will reach consumers worldwide.

SUN

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WHY DANA AIR REMAINS GROUNDED, BY NCAA

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Dana Air.
PHOTO: Nigerian Flight Deck

The Nigerian Civil Aviation Authority (NCAA), yesterday, reaffirmed its commitment to a safe and secure air transport sector despite the operating challenges.

The apex regulatory body said notwithstanding the backlash it received for shutting down one of the domestic carriers, it remains focused on its statutory safety responsibility to the flying public and the industry.

Director-General of the NCAA, Capt. Musa Nuhu, told journalists that investigations were still ongoing into the operations of the suspended Dana Air and the airline would remain grounded until all the identified issues are resolved in compliance with Nigerian Civil Aviation Regulations (Nig.CARs).

Nuhu explained that the NCAA had carried out a Financial and Economic Health Audit in addition to the Technical Safety Audit of the airline.

The outcome of the two audits revealed a weak financial position and grave violations of Nig.CARs, which prompted the immediate suspension of the airline’s Air Transport License (ATL) and Air Operators Certificate (AOC).

He expressed dismay at some negative comments in some social media platforms against the regulatory body, based on an interview he granted on a television network.

He said almost all the comments during the interview were direct quotes from the NCAA’s findings from the two audits.

“The details of these investigations and proactive action showed the professionalism of the apex regulatory agency,” he said.

The DG urged industry experts to seek clarification from the Authority in order to make informed and balanced comments, adding that the NCAA was open to informed criticisms geared towards improving the industry.

The NCAA had in July suspended the operations of Dana Air’s Transport License (ATL) and Air Operator Certificate (AOC) indefinitely because of the outcome of a Financial and Economic Health Audit and a Technical Safety Audit carried out on the airline’s flight operations.

According to NCAA, the airline was no longer in a position to meet its financial obligations and to conduct safe flight operations, adding that its action was made pursuant to Section 35(2), 3(b) and (4) of the Civil Aviation Act, 2006 and Part 1.3.3.3(a)(1) of the Nigeria Civil Aviation Regulations (Nig.CARs), 2015.

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NIGERIA LOSES N101BN WORTH OF OIL, SAYS OPEC

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Organisation of Petroleum Exporting Countries

Nigeria’s crude oil production plunged by 2.3 million barrels in July 2022 when compared to what the country produced in the preceding month of June, data from the Organisation of Petroleum Exporting Countries showed on Thursday.

In its latest Monthly Oil Market Report for August 2022, OPEC stated that crude oil production figures based on direct communication indicated that Nigeria’s output dropped by an average of 74,000 barrels per day in July.

This implies that for the 31 days in July, the country lost about 2.3 million barrels of crude oil. The organisation further stated that the average cost of Brent crude, the global benchmark for oil, during the month under review was $105.12/barrel.

By losing 2.3 million barrels in July this year, it means Nigeria’s oil earnings fell by about $241.1m or N101.13bn (at the official exchange rate of N419.37/$) in the month under review.

Data from OPEC showed that Nigeria’s oil production in June 2022 was 1.158 million barrels per day, but this dropped to 1.084 million barrels per day in July.

The country had produced 1.024 million barrels per day in May this year, according to figures released by OPEC on Thursday.

The Federal Government, operators and experts have consistently fingered crude oil theft in the Niger Delta as the major reason for Nigeria’s poor output and its continued failure to meet the monthly oil production quota approved by OPEC.

The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, blamed the challenges in the oil sector on the high level of insecurity across the country.

This, he said, had continued to discourage investors in the sector, leading to lower production of crude oil and lower earnings for Nigeria despite the increased cost of crude.

He said, “Investors in the oil and gas sector continue to lament the challenges posed by insecurity, oil theft, unstable policies and inappropriate fiscal regimes.

“The downstream sector has continued to be weighed down by the pricing regimes and the regulatory environments which have continued to dim the growth prospects in the sector.”

Meanwhile OPEC stated that crude oil prices dipped in July, as against their costs in June, adding that crude in OPEC Reference Basket fell by $9.17 or 7.8 per cent month-on-month in July to average $108.55/barrel.

“Oil futures prices remained highly volatile in July, amid a sharp drop in liquidity. The ICE Brent front month declined $12.38 or 10.5 per cent in July to average $105.12/barrel and NYMEX WTI declined by $14.96 or 13.1 per cent to average $99.38/barrel,” the global oil cartel stated.

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IMF STUDY SEES CHANGING FERTILITY PATTERNS AMID CONCERN OVER NIGERIA’S RISING POPULATION

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Overpopulation Scene in Lagos, Nigeria

Coming on the heels of a growing concern about Nigeria’s rising population, a new study by the International Monetary Fund (IMF) highlights “new fertility facts” that are challenging old theories on the relationship between childbearing, years of education and income level.

It points out low-income countries, such as Nigeria and other African countries, as the only places where the negative relationship between income and fertility rate still holds sway.

The Population Division of the United Nations Department of Economics and Social Affairs said Nigeria would become the world’s fourth most populous country in the next 28 years with a population of 375 million.

The projection comes with a foreboding of escalation of the social ills of overpopulation including unemployment, food crisis and crime rates.

Nigeria’s growth had buckled under a fast-growing population in recent times until last year when the gross domestic product (GDP) got an upper hand at 3.6 per cent compared with the average population growth of 2.6 per cent in the past decade. Except the country acts fast, experts are worried about the dire consequence of overpopulation even as the country is estimated to have hit 216 million.

While Nigeria is worried about bloated size, the IMF study entitled, ‘The New Economics of Fertility’ raises concern about emerging ultralow fertility in high-income countries like Germany, Italy, Japan and Spain where the fertility rate is about 1.5 in the past two decades.

The rate, the researchers are worried, is below the average of “just over two children per woman needed to maintain a stable population size.”

The study published as an analytical series, yesterday, reviews established labour economics theories such as the quantity-quality trade-off, which suggests that as parents get richer, they incur costly investments in their children.

“This investment is costly, so parents choose to have fewer children as incomes rise. Historically, fertility and GDP per capita are strongly negatively related, both across countries and over time,” it observes.

It also recalls another theoretical explanation for low fertility among high-income individuals, saying: “As wages increase, devoting time to childcare – time that could otherwise be spent working – becomes more costly for parents, and especially for mothers. The result is a decline in fertility and greater female labour force participation. There is historically a strong negative association between female labour force participation and fertility over time and across countries.”

The report, however, argues that new data have proved that the theories are losing universal appeal. It contends, notwithstanding, that the negative income-fertility relationship is still predominantly true in low-income countries such as sub-Saharan Africa (SSA).

“It has largely disappeared both within and across high-income countries. The same is true for the relationship between fertility and female labor force participation. In a recent survey, we outline these new empirical regularities and discuss the key factors that explain fertility outcomes in recent decades.

“For a long time, high per capita income in a country reliably indicated low fertility. In 1980, fertility was still well above two children per woman in poorer countries, such as Portugal and Spain, but just 20 years later, fertility in the same set of countries had changed substantially. In fact, in 2000 the United States, the second-richest country in the sample, exhibited the highest fertility rate,” the research discloses.

It also reports changing fertility patterns across families in high-income countries (such as France, Germany and the United States). In those countries, it states, the negative relationship between female education and fertility, which is consistent with higher wages increasing the opportunity cost of raising children, is becoming weaker.

“This negative relationship is weaker for US women of recent birth cohorts. Although highly educated women with more than 16 years of schooling had the lowest fertility rate in 1980, this no longer holds true in 2019,” it reveals.

THE GUARDIAN

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