The impacts of the food, fuel and financial crises in Nigeria: A retrospective approach to research enquiry Miguel Niño-Zarazúa and Blessing Chiripanhura

Issues to be discussed Introduction – the triple crises Origins of the crises Impacts on SSA The case of Nigeria – sources and types of data Analytical approach – probit models for categorical and ordered discrete responses, and Tobit models or censored data Results and outcomes Conclusion

Triple crises Food crisisFuel crisis

Triple crises Nigeria – food crisisFinancial crisis From America with trouble … Banks collapsed across the world, and some had to be saved the governments to avoid total collapse of sector SSA not directly hit, but decline in aid flows, remittances, export earnings

Impacts on SSA Social unrest – food riots in SA, Cameroon, CIV, Mozambique High inflation – – From 7.6% in 2006 to 17% in 6/2008 (PRGF-eligible countries) = food – From 6% in 2006 to 19.5% in 6/2008 = fuel Job losses – retrenchments and company closures Degree of vulnerability differed between and within countries – result was, in general, growth in poverty

The case of Nigeria Main characteristics – Resource-rich; under-developed institutional and economic structures – 63% of population lives on <$1.25 a day – Imports 80% of fuel needs – Remittances remained high, at above 5% of GDP during crisis – Growth in credit to the private sector from 2006 onwards

Household survey data From two states, Kano (Sabongari and Ungogo) and Lagos (Ikeja and Amuwo Odofin) – Rural-urban and north-south comparison 100 households in each area (1 less in A-O)

Data analysis and results Probit models for categorical and ordered discrete data, and Tobit models for censored data Using the Foster-Greer-Thorbecke poverty measures, – Over 70% of households were income poor, and remaining 30% vulnerable non-poor Both Lagos and Kano reported high food prices, in part linked to fuel costs, and also weather (drought in the north, floods in the south)

Retrospective data … 45% chance that lagos households experienced food price increases, after controlling for household characteristics 1% chance that households headed by older heads suffered Urban households suffered more from food price increases than rural – Rural households are producer-consumers Changes in consumption bundles in Lagos – households shifted to cheaper substitutes; in Kano they borrowed and/or dissaved – Other coping strategies – pulling children out of school (and labour market effects); child labour

Data shows a significant increase in reported incidences of dropping out of school in 2008, coinciding with the financial crisis – Higher dropout rates in Lagos than in Kano, more so in rural than urban areas – Probability of a girl child living in Lagos dropping out of school increased from 2% in 2006/07 to 10% in 2008 c

Causes for a deterioration in school performance

Growing intensity of child labour (hours worked) as the crisis got worse Older workers did more work – socialisation? A child in Kano is more likely to work compared to a child in Lagos – associated with sharp swings in food prices in the former There was an increase in labour supply during the period as households tried to cope with rising food and fuel prices and other vulnerabilities

Conclusion The triple crises had different effects within and between countries. They caused social unrest in others, and stalked protectionist tendencies in others In Nigeria, the food crisis invoked several coping strategies among households, including increased work intensity, children working in the household, and pulling children out of school.