TWO ESSAYS ON FOREIGN DIRECT INVESTMENT AND FOOD SECURITY IN NIGERIA: A MIXED METHODS APPROACH by Olufemi Bamgboye B.Sc., University of Lagos, 2008 THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF ARTS IN DEVELOPMENT ECONOMICS UNIVERSITY OF NORTHERN BRITISH COLUMBIA December 2014 © Olufemi Bamgboye, 2014 UMI Number: 1526504 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Di!ss0?t&iori Publishing UMI 1526504 Published by ProQuest LLC 2015. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 Abstract Two Essays on Foreign Direct Investment and Food Security in Nigeria: A Mixed Methods Approach The study set itself the goal of examining the impact of sectoral FDI on food security in Nigeria as well as to capture a snapshot of the kinds of dietary adaptation and convergence taking place within the Nigerian population and the impact on individuals” health and nutritional status. The study employs a mixed methods approach and data is obtained from the Food and Agriculture Organization (FAO) and the Central Bank of Nigeria between 1960-2009. The study found out that primary Foreign Direct Investment (FDI) is decreasing food security in Nigeria. Also, secondary and tertiary FDI are both increasing food security in Nigeria with the latter having a greater impact on food security. The study also reveals that tertiary FDI is resulting in dietary adaptation and convergence. While home-cooking appears to be the dominant means of individuals assessing foods, food from street food vendors, supermarkets and fast-food restaurants are becoming popular. Key words: foreign direct investment, fo o d security, dietary convergence, dietary adaptation. ii Abbreviations CBN Central Bank of Nigeria DEC Daily Energy Consumption DPC Daily Protein Consumption FAO Food and Agriculture Organization FDI Foreign Direct Investment GDP Gross Domestic Product HDI Human Development Index IMF International Monetary Fund MDG Millennium Development Goal MNC Multi-National Corporation NBS National Bureau of Statistics PFDI Primary Foreign Direct Investment SFDI Secondary Foreign Direct Investment TFDI Tertiary Foreign Direct Investment UN United Nations VAR Vector Auto Regression Acknowledgements Above all, I would like to give all gratitude to God - the source of my strength and knowledge. A special gratitude also goes to my family and friends - I find comfort in your support and prayers. In addition, I would like to express my profound appreciation to all participants of my research for finding time and elaborating honest answers to the questions posed within the conducted questionnaire survey. The scope of the thesis was developed in consultation with Dr. Paul Bowles, Professor of the Economics and International Studies Program at the University of Northern British Columbia in Prince George Canada, who went to great lengths to contributing to improvement of the quality of this thesis through an array of insightful comments and recommendations. The same holds in many ways for Dr. Ajit Dayanandan, Associate Professor of Finance at the College of Business and Public Policy at the University of Alaska Anchorage in the United States for his patience, support, and intellectual insight during this research process. Dr. Matias Margulis, Associate Professor of the International Studies Program at the University of Northern British Columbia in Canada provided valuable comments and guidance that were of tremendous assistance in navigating this research process. Dr. Chris Opio, Associate Professor of Ecosystem Science and Management at the University of Northern British Columbia in Canada served as the External examiner and provided valuable feedback in the improvement of the thesis. Many thanks to Dr. Stephen Rader, Chair of my thesis defence committee for the key role he played in facilitating a hitch free oral defence. T able of C ontents A bstract.................................................................................................................................................. ii A bbreviations...................................................................................................................................... iii Acknowledgements..............................................................................................................................iv List of F ig u res......................................................................................................................................ix List of G ra p h s:.................................................................................................................................... ix List of T a b le s:.......................................................................................................................................x 1.0 C hapter One: Introduction............................................................ 1 1.1 Research Question..........................................................................................................................7 1.2 Research Objectives........................................................................................................................8 1.3 Contribution To Existing Literature................................................................................................ 8 1.4 Contribution Of The Study............................................................................................................. 8 1.5 Limitations Of The Study.............................................................................................................. 11 1.5.1 Data Availability........................................................................................................................ 12 1.5.2 Data Reliability.......................................................................................................................... 13 1.6 Organization Of The Study........................................................................................................... 13 2.0 C hapter Two: Contextualizing Nigeria....................................................................................15 2.1 introduction................................................................................................................................. 15 2.2 Nigeria: Geographical, Sociopolitical, Historical And Economic Contexts.....................................IS 2.2.1 Geographical Context.................................................................................................................15 2.2.2 Sociopolitical Context.................................................................................................................18 2.2.3 Historical Context.......................................................................................................................19 2.2.4 Economic Context...................................................................................................................... 20 2.3 The Paradox Of Plenty: Growth Of Fdi And Persistent Food Insecurity As Evidenced In Nigeria .24 3.0 C hapter Three: Approaches To FDI And Food Security.................................................... 31 3.1 Introduction................................................................................................................................. 31 3.2 Modernization Approach............................................................................................................. 35 3.2.1 Assumptions of Modernization Approach................................................................................. 38 3.2.2 Mechanisms Through Which Modernization Impacts Food Security........................................ 38 3.2.3 Evidence of Modernization in Nigeria....................................................................................... 41 3.2.4 Critiques of Modernization........................................................................................................ 44 3.3 Dependency Approach................................................................................................................. 45 3.3.1 Assumptions of Dependency..................................................................................................... 49 3.3.2 Mechanisms Through Which Dependency Impacts Food Security........................................... 50 3.3.3 Evidence of Dependency in Nigeria.......................................................................................... 51 3.3.4 Critiques Of Dependency........................................................................................................... 53 3.4 Conclusion.................................................................................................................................... 54 4.0 C hapter Four: Im pact O f Foreign Direct Investm ent On Food Security In Nigeria 55 4.2 Literature Review....................................................................................................................57 4.3 Food Security................................................................................................................................ 58 4.4 Unit Of Analysis: Individual Food Security....................................................................................63 4.5 Dimensions Of Food Security........................................................................................................ 63 4.5.1 1. Food Availability............................................................................................................... 64 4.5.2 2. Access To Food.................................................................................................................. 65 4.5.3 3. Food Utilization................................................................................................................. 66 4.5.4 4. Food Stability..................................................................................................................... 67 4.6 Measures Of Food Security.......................................................................................................... 68 4.6.1 The FAO Method................................................................................................................... 70 4.6.2 Indicators of food security......................................................................................................70 4.6.3 Individual Dietary Survey Methods (IDSM).......................................................................... 71 4.7 Causes Of Food Security/Insecurity: Perspectives................................. 72 4.7.1 Urbanization Perspective........................................................................................................72 4.7.4 Techno-Ecological Perspective...............................................................................................76 4.7.5 Military Famine Perspective...................................................................................................77 4.8 Food Security Situation In Nigeria................................................................................................78 4.9 Foreign Direct Investment (FDI)....................................................................................................82 4.10 Primary Foreign Direct Investment (PFDI)..................................................................................83 4.11 Secondary Foreign Direct Investment (SFDI)............................................................................. 88 4.12 Service/Tertiary Sector FDI (TFDI).............................................................................................. 91 4.12 Theoretical Framework, Data And Methodology And Empirical Analysis............................ 94 4.12.2 The Cobb-Douglas Production Function.............................................................................. 95 4.12.3 Econometric Model.............................................................................................................. 96 4.12.4 VAR model.......................................................................................................................... 96 4.13 Data.......................................................................................................................................... 101 4.13.1 Dependent Variables...........................................................................................................102 4.13.2 Independent Variables.....................:.................................................................................. 102 4.13.3 Control Variables............................................................................................................... 103 4.14 Lag Selection Criteria And The Determination Of Lag Length.................................................. 103 4.15 Descriptive Statistics.................................................................................................................105 4.16 The Soundness Of Analysis....................................................................................................... 106 4.17 Empirical Results....................................................................................................................... 107 4.17.1 Impulse Response Function................................................................................................109 4.17.2 Impulse Response Function of VAR 1 Model.....................................................................109 4.17.3 Variance Decomposition.....................................................................................................113 4.18 Variance Decomposition of PFDI_GDP, SFDI_GDP, and TFDI_GDP........................................... 114 4.19 Findings.....................................................................................................................................117 4.20 Conclusions.............................................................................................................................. 119 5.0 Chapter Five Essay 2: Impact Of Tertiary Foreign Direct Investment On Food Systems In Nigeria................................................................................................................................... 124 5.1 Introduction............................................................................................................................. 124 5.2 Literature Review....................................................................................................................... 125 5.3 Food Systems............................................................................................................................. 125 5.4 Positive And Negative Impact Of Tertiary Fdi On Food Systems In Nigeria............................... 127 5.4.1 Dietary Adaptation................................................................................................................... 127 5.4.2 Home Cooking and Street Foods............................................................................................. 128 5.4.3 Supermarkets And Fast Food Industry..................................................................................... 131 5.4.4 Dietary Convergence................................................................................................................ 134 5.4.5 Dietary Energy Supply From Grains....................................................................................... 135 5.4.6 Dietary Energy Supply From Fats And Oils............................................................................ 139 5.4.7 Dietary Energy Supply From Animal Source Foods............................................................... 140 5.5 Nutrition And Nutritional Related Challenges............................................................................141 5.6 Nutritional Challenges In Children In Nigeria..............................................................................143 5.6.1 Stunting.....................................................................................................................................143 5.6.2 Wasting.....................................................................................................................................145 5.6.3 Underweight..............................................................................................................................147 5.7 Nutritional Challenges In Women...............................................................................................148 5.7.1 Undemutrition...........................................................................................................................148 5.7.2 Overweight And Obesity......................................................................................................... 149 5.8 Methodology.............................................................................................................................. 151 5.8.1 Introduction...............................................................................................................................151 5.8.2 Descriptive research................................................................................................................. 151 5.9 Method.......................................................................................................................................152 5.9.1 Rigour of Method..................................................................................................................... 153 5.9.2 Personal Framework................................................................................................................ 154 5.9.3 Data Analysis of Methods........................................................................................................ 155 5.9.4 Descriptive Data Analysis........................................................................................................ 156 5.9.5 Participants............................................................................................................................... 158 5.10 Summary.................................................................................................................................. 159 5.10.1 Snapshot Of Dietary Adaptation And Convergence Taking Place In The Nigerian Population 160 5.10.2 Dietary Adaptation................................................................................................................. 161 5.10.3 Dietary Convergence...............................................................................................................165 5.11 Thematic Analysis..................................................................................................................... 167 5.11.2 Consumption of ‘healthy’ foods and health implications...................................................... 167 5.11.3 Availability of ‘healthy’ foods ataffordable prices................................................................ 169 5.12 Conclusions.............................................................................................................................. 170 6.0 C hapter 6 .................................................................................................................................. 173 6.1 Conclusion................................................................................................................................ 173 Bibliography......................................................................................................................................184 Appendices........................................................................................................................................203 viii List of Figures Figure 1- Map of Nigeria showing the 36 states, the federal capital territory and the 6 political zones....................................................................................................................................... 16 Figure 2: Channels of Sectoral Foreign Direct Investment (FDI) Impact on Food Security 57 Figure 3: Impulse response from the VAR 1...............................................................................I l l Figure 4: Impulse response from the VAR 2 ...............................................................................112 Figure 5: Stability of VAR 1 and VAR 2 ................................................................................... 203 Figure 6: Residual Analysis........................................................................................................ 204 Figure 7: VAR Residual Normality Test.................................................................................... 204 Figure 8: Bootstrapping.............................................................................................................. 205 Figure 9: Test For Heteroskedasticity (White Test)................................................................... 206 List of Graphs: Graph 1: Inflow of Sectoral FDI into Nigeria: 1980-2009 (N’million)........................................ 26 Graph 2: Foreign Direct Investment (FDI) inflows and number of hungry Nigerians 1981-201227 Graph3: Persistence in the number of Hungry Nigerians, 1981 -2012....................................... 29 Graph 4: Foreign Direct Investment (FDI)/Real Gross Domestic Product (GDP) and Global Hunger Index (GHI).............................................................................................................. 29 Graph 5: Prevalence of stunting among children in low-and-middle income countries............. 145 Graph 6: Prevalence of obesity among women in Nigeria..........................................................150 Graph 8: Number of meals prepared at home (Children in Eti-Osa and Alimosho LGAs).........163 Graph 9: Meals bought from street food vendors (all respondents)............................................163 Graph 10: Meals bought by from street food vendors by adult women and children in Eti-Osa and Alimosho LGA s.............................................................................................................164 Graph 11: Meals bought from supermarkets and fast food restaurants (all respondents)...........165 Graph 12: Frequency of varieties of food consumed (all respondents).......................................166 Graph 13: Graph of Variables at Level....................................................................................... 207 Graph 14: Variables At First Difference..................................................................................... 208 List of Tables: Table 1: FAO Classification of Hunger Levels.............................................................................. 3 Table 2: World Grain Production, 1960 -1996............................................................................. 65 Table 3: Methods for Measuring Food Security........................................................................ 69 Table 4: Food production (Million tonnes), net trade (N’million) in Nigeria, 1980 - 2010......... 80 Table 5: Food production, food import and population growth rate in Nigeria (1979 - 2012).... 80 Table 6: Agricultural composition of PFDI in Nigeria, 1999 - 2007............................................ 85 Table 7. Endogenous variable descriptions and apriori expectations........................................... 99 Table 8: Lag length determination...............................................................................................104 Table 9: Descriptive Statistics.....................................................................................................105 Table 10 :Bi-variate Scatter Plots................................................................................................106 Table 11: Granger Causality Test................................................................................................108 Table 12: Variance Decomposition of DEC................................................................................114 Table 13: Variance Decomposition of DPC................................................................................116 Table 14: Dietary energy supply from grains in Nigeria (1980 - 2009) Source FAO Stats (2012) ..............................................................................................................................................136 Table 15: Dietary energy supply from oil sources in Nigeria (1980 - 2009)............................ 140 Table 16: Dietary energy supply from animal source foods in Nigeria (1980 - 2009)............. 141 Table 17: Trends in Stunting and Wasting in Children, 1990-2008.......................................... 146 Table 18: Prevalence of undemutrition among women in Nigeria..............................................149 Table 19: Descriptive Statistics...................................................................................................160 Table 20: Overall results of the study..........................................................................................175 Table 21: Variance Decomposition for PFDI_GDP................................................................... 209 Table 22: Variance Decomposition of SFDI_GDP.................................................................... 209 Table 23: Variance decomposition of TFDI_GDP..................................................................... 209 Table 24: Variance Decomposition of PFDI G D P.................................................................... 210 Table 25: Variance Decomposition of SFDI_GDP.................................................................... 210 Table 26: Variance Decomposition of TFDI GDP.................................................................... 211 xi 1.0 Chapter One: Introduction As a young boy o f 16 years, I took my first public bus ride over Oshodi bridge (popularly known as Oshodi-Oke) which is on the mainland, a suburb in Lagos State, Nigeria. I alighted on the bridge to board another bus heading towards Obalende on the Island, but first was captured by the sheer volume o f human and vehicular traffic below me in the popular Oshodi market, stretching as fa r as my eyes could see. As I sat on the bus heading east towards the Island, I wondered why there were so many people? Where did they come from? What were they buying and selling? In an economy that was still feeling the brunt o f the policies implemented under the World Bank Structural Adjustment Programme (SAP): how did these people meet their basic human requirements o f food, shelter, and clothing? These questions served as the impetus fo r my research and indepth study o f the relationship between a country that is rapidly expanding and connecting on several levels and the consequence o f that on a single, but arguably the most important and basic o f human needs, food. Nigeria has experienced economic growth over the past five decades, which has continuously outperformed many of its continental neighbours, due in part to the ever-increasing levels of foreign direct investment (FDI) making its way into the economy. Despite the evolution of its economy, the paradox exists that economic growth as a result of foreign direct investment (FDI) has not yielded commensurate levels of human welfare as measured by the level of food security currently experienced by Nigerians. In the past five decades there has been a fundamental reorientation of economic policy, which ushered in a renewed drive by the government to speed up its economic growth by opening up the Nigerian market through the speedy shift from direct conduct of commercial activity to the embracement of private sector-led growth. As an oil-producing nation, the new millennium brought about continuous economic growth from the sale of crude oil. These two factors account for the main reasons why Nigeria in recent years has witnessed this continuous economic growth measured in per capita real gross domestic product (GDP). 1 One of the main benefits of the further opening up of Nigeria’s market has been the rapid rise in the inflow of foreign direct investment (FDI) into the country. FDI is defined as when a foreign company has a 10% stake or more in the stock in a local company. The most common form of FDI1 in Nigeria was made up of mostly “Greenfield” FDI, that is, it is mostly utilized for the establishment of new enterprises and some through the existing enterprises (Wafure & Nurudeen, 2010). FDI implies the transfer of financial resources by a foreign firm into the Nigerian economy. Two factors connect FDI and food security, namely, a country’s economic development and growth, and food access and availability (Djokoto, 2012). FDI has the potential to spur economic growth and development within the host country. As a result, countries have the financial means not only to boost their agricultural production, but also to bridge any shortfalls in domestic food production through the importation of food. The presence and growth of Multinational Corporations (MNCs) is key to a country’s economic development. MNCs provide employment and income, which ensures that individuals have the financial means to purchase sufficient food. In addition, the activities of said MNCs allows for the availability of a wider variety of food at relatively cheaper prices. All of the above ensures an individual’s access to an adequate level of the food security is enhanced. Food security is a complex sustainable development issue that is not only linked to health through nutrition and dietary adaptation, but also to sustainable economic growth and development. The Food and Agricultural Organization (FAO) of the United Nations (UN) 1 Greenfield FDI and Mergers & Acquisitions are the two most common forms o f FDI in Nigeria. Greenfield is a form o f foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. Mergers & Acquisition are the combination o f two or more companies belonging to the same legal entity (or not) to achieve strategic and financial objectives. 2 explains that food is the most basic of human needs. In defining food security, the FAO states that “food security exists when all people, at all times, have physical, social, and economic access to sufficient, safe and nutritious food which meets their dietary needs and food preferences for an active and healthy life” (FAO, 1996, 8). The paradox lies in the fact that even with the large growth of foreign direct investment inflow, many Nigerians experience food insecurity. FDI inflow between 1981 and 2012 has increased thirteen-fold (from about $542 million to $7,013 million per annum), while the number of hungry Nigerians remains persistent, ranging between 20 million and 27 million individuals over this period. Given this, one is left to ponder how this continuous FDI-supported economic growth has not translated into better improvements in human welfare as measured by food security. The hunger level in Nigeria is categorized by the FAO as “serious”. The FAO recognizes five categories to depict to varying degrees the hunger level in individual countries as shown in Table 1 below. Table 1: FAO Classification of Hunger Levels [Category Hunger Level (GHI Classification Moderate Alarmini Source: FAO (2012) In spite of the fact that the hunger level in Nigeria as a whole is categorized as “serious”, intra-country differences prevail. Parts of North-Eastern Nigeria and the South-South regions are 2 Global Hunger Index 3 valid examples. In parts of North-Eastern Nigeria the hunger situation is categorized as “alarming” as a result of the prevalence of drought and famine in the Chad Basin and due to the activities of armed militia who have displaced many households from assessing their sources of livelihood. The oil producing region of the South-south region have also been categorized as “alarming” due to oil exploration activities that have resulted in the loss of many household sources of livelihood. The FAO in 2010 declared Nigeria among the countries that are at the moment unable to meet their food needs. The period that has elapsed between the FAO declaration in 2010 and the end of 2012 has witnessed a significant rise in the inflow of FDI (Nigeria attracted over $21 billion within this period), yet, over a million additional Nigerians had gone hungry. By the end of 2012, the FAO stated that almost 30 million Nigerians remain hungry and that urgent measures must be taken to improve the food security situation in Nigeria (FAO, 2012). Food security is a global issue that is not limited to Nigeria. Despite the “Green Revolution” where the initial focus of attention was primarily on food supply problems and ensuring the availability of food at both the international and national level, the number of hungry people around the world was still high (Overseas Development Institute, 1997). Along with the significant growth in foreign direct investment, between 1979 and 1990, almost half of the world’s less developed countries (LDCs) suffered a decline in aggregate food supply, leaving more than a quarter of these countries to contend with an increase in hunger (Bongaarts, 1996; FAO, 1996). By 2012, the FAO estimated that about 870 million people were considered to be undernourished in terms of dietary energy supply, accounting for approximately 12 percent of the world’s population. A vast majority of this populace lives in developing countries, where malnutrition and undernourishment are rife (FAO, 2012). 4 Strong positive and negative interdependencies exist between food security and many other broad sustainable development goals, including malnutrition, undernourishment, dietary adaptation and convergence, and health. Access to adequate nutritious food not only ensures that food security is most likely assured, but that individuals live healthy lives. The broader environment that encompasses this relationship between food security and nutrition is food systems. Food systems in Nigeria, their production and consumption components have changed considerably in recent years. The inflow of FDI is impacting each sector of the Nigerian economy differently, hence the need to explore how FDI in each sector impacts human welfare measured by food security. The inflow of FDI into the Nigerian economy is resulting in the influx of MNCs and in individuals seeking employment and improvement in living standards. This has fuelled urban growth resulting in increased urbanization. The UN Population Division recognized that when urbanization is discussed, “the focus is often on large cities, cities whose populations are larger than many countries” (2009, 3). Urbanization is rapidly transforming food systems and the scope and nature of nutritional challenges as a result, spurring greater concentration of the food industry leading to an adaptation and convergence of dietary patterns and preferences. With about half of the Nigerian population living in urban areas, urbanization is resulting in the emergence of new patterns of food systems. These new patterns of food systems are capable of improving nutrition and resulting in an adaptation and convergence of dietary lifestyle towards diets in developed countries. The growth of the oil sector has witnessed an increased inflow of foreign direct investment into the primary sector and has contributed to the substantial stream of foreign exchange generated from the sale of crude oil. With high but fluctuating prices of crude oil over 5 the past several years, Nigeria has enjoyed substantial economic growth. This has attracted new and expanded existing foreign firms especially in food retailing across the country. This is resulting in the availability of a variety of nutritious foods causing dietary convergence. Changes to food systems as a result of the inflow of FDI are occurring in many Nigerian states. These changes are not only the result of changes in dietary lifestyle due to urbanization, but also changes in the ways individuals’ access food for consumption in order to meet their daily dietary food intake (i.e. home cooking, street foods, and supermarkets and fast food restaurants). Nowhere in Nigeria is this more evident than in Lagos State. According to the Lagos State Ministry of Economic Planning and Budget, the State attracted about 24 percent of the total FDI into Nigeria in the period 2010-2012, by far the largest of all states in Nigeria. FDI, the State argues, has created jobs and resulted in the migration of individuals into the State. Lagos State accounts for about 10% of Nigeria’s population, approximately 17 million people. Lagos State has become urbanized and named as one of the world’s megacities. The implication of this is that the inflow of FDI has fuelled the influx of MNCs and the migration of individuals to urban cities in search of employment opportunities. This has led to urbanization and changes in dietary lifestyle. Dietary adaptation is occurring at a faster rate than previously observed as more food is consumed outside the home. Having stated this, state-wide data on the number of hungry individuals in Nigeria is unavailable as data provided is aggregated to reflect total number of hungry individuals in Nigeria. It would be interesting to observe in future studies whether FDI has resulted in a commensurate reduction in the number of hungry in Lagos State. 6 The notion that foreign direct investment impacts food security has been explored through the lens of various approaches including the modernization, dependency, globalization, neoliberal, and the modemity/post-modemity approaches. This research will be based on the modernization and dependency approaches for the following reasons. Firstly, the modernization and dependency approaches provide the synthesis and bedrock upon which the other approaches mentioned above are based. Secondly, these approaches recognize the differences between developed and developing countries, bringing to forefront the effects of these relationships on human welfare measured by food security. Depending on what approach one focuses on, they arrive at conflicting conclusions. The modernization approach argues that attracting FDI would be beneficial to Nigeria and would improve the all-around food security of its citizens. It also posits that FDI would provide employment, generate income, and lead to healthy competition between local and foreign firms, which would reduce prices and increase food supply. The dependency approach sounds a note of caution to developing countries like Nigeria in encouraging more FDI inflow stating that FDI would reduce food security. This approach argues that an increase in FDI inflow results in foreign firms crowding out local firms, thus stifling competition. This is characterized by loss of employment and income. The resultant effect is that food security declines. These approaches will be examined more closely in chapter 3 with a view in determining the channels through which foreign direct investment influences food security in Nigeria. 1.1 Research Question This study will explore two research questions, namely: 1. What is the impact of sectoral foreign direct investment inflow on food security in Nigeria? 7 2. To what extent is the inflow of sectoral foreign direct investment influencing dietary adaptation and convergence in Nigeria? 1.2 Research Objectives The overall objective of this study is to understand how the impact of foreign direct investment has influenced the food situation in Nigeria. The specific objectives of this research project include: 1. Disaggregate FDI into primary, secondary, and tertiary sectors and test using a Vector Autoregressive (VAR) regression model the impact of tertiary FDI on food security. 2. Capture the kinds of dietary adaptation and convergence taking place within the Nigerian population as well as explore its impact on individuals’ health and nutritional status. 1.3 Contribution To Existing Literature 1. This research will show empirically that by disaggregating foreign direct investment (FDI) into sectoral FDI —primary, secondary, and tertiary FDI respectively, each plays a unique and different role on food security. 2. This research will help to focus attention on the effect of foreign direct investment on changing patterns of food systems in developing countries. 3. This research will provide a snapshot of how much dietary convergence and adaptation has been taking place in the Nigerian population. 1.4 Contribution Of Tbe Study This study will review the existing literature on foreign direct investment and food security in Nigeria. Previous studies have focused on developing countries, grouping them into geographic and economic regions. Few studies discuss the flow of FDI and food security at a country specific level. For instance, previous studies on the effect of FDI on food security in 8 developing countries have concentrated mainly on Asian and Latin American regions with occasional references to Africa. These studies may not necessarily apply to Africa, let alone Nigeria because of the uniqueness of the region, its colonial past and geographical location. These unique factors make the independent study of Nigerian FDI and food security essential in that the existing studies fail to address the effect of sectoral FDI on food security. By breaking down FDI into its sectoral components (primary FDI, secondary FDI, and tertiary FDI), one is able to explore the relationship between each sector and food security and its overall impact. This analysis has the potential to be a powerful tool in the hands of policy makers and/or governments in establishing positive and/or negative impacts of sectoral FDI on individuals’ food, nutrition, and well-being. The study conducted by Ayodeji Idowu & Liu Ying3 (2013) focuses on the empirical relationship between foreign direct investment and the agricultural sector. His study not only excludes FDI into the extractive industry but also excludes FDI into the secondary and tertiary sectors. Craig Jenkins & Stephen Scanlan4 (2001) explore the relationship between foreign direct investment and food security in less developed countries and argue that the key component in understanding this relationship lies in exploring economic growth, democratization, and social equity. Again, this study fails to explore the sectoral components of FDI as an avenue for understanding the degree to which sectoral FDI influences food security. 3 Using a VAR model from available data between 1980 - 2007, results from the analysis show that FDI over this period had no significant impact on agricultural output and they suggests that further increases in the inflow of FDI into the agricultural sector in Nigeria would increase the sector’s output. 4 This study shows that food supply has only modest effects on child hunger rates and that food supply is structurally rooted in development processes. The study further reveals that the effects o f foreign direct investment trickle down to affect both food supply and child hunger and that population pressure and age dependency in developing countries undermine both the supply o f food and populations access to it. 9 Jacques Morisett5 (2000) explains that host government’s policies on FDI shape the role FDI plays in improving livelihood, health, and reducing hunger in Africa. This argument is based on the assumption that the most important aspect of FDI that explains food security is government policies that encourages or inhibits the flow of FDI. Mihalache-O’Keef & Li6 (2011) come closest to exploring the relationship between food security and sectoral FDI. They focus on 56 developing and transition economies and conclude that the host countries’ ability to determine the role of FDI in each sector determines the extent to which hunger can be reduced and whether the food security situation can be enhanced. All of these studies have not adequately addressed the importance of disaggregating foreign direct investment at individual country-specific levels, yet, these are basic elements within a rapidly globalizing world that determine one of the basic human needs: food security. FDI is one of the leading causes of urbanization and dietary adaptation and convergence. Sahu (2013) explains that evidence from developing countries like China and India show that FDI inflow is promoting rapid urbanization. Reardon, Timmer, Barrett, & Berdegue (2003) explain that FDI not only fuels urbanization, but also results in changes to food systems, which is evident in the amount of dietary adaptation and convergence occurring. What has so far been largely ignored will be the focus of this study. This study will not only discuss the main dependent variable (food security), but also discuss and disaggregate the 5 The study reveals that countries such as Nigeria, South Africa, Cote d’lvorie, and Angola have traditionally been the main recipients of FDI in sub-Saharan Africa. The study also shows that these countries have attracted FDI primarily because o f their abundant natural resources and the size of their domestic markets. Finally, the study shows that countries in sub-Saharan Africa have attracted FDI due to government policies which include liberalizing trade, launching attractive privatization program, adopting international agreements, and modernizing mining and investment codes all of which have improved the business environment. 6 This study examines the effect o f sectoral FDI on food security in 56 developing and transition economies and reveals that primary FDI reduces food security, manufacturing FDI increases food security, and that tertiary FDI is country-specific and can have a positive or negative effect on food security. 10 main independent variable (FDI), exploring the relationship and the impact sectoral FDI plays on food security. This study will also explore the kinds of dietary adaptation and convergence taking place within the Nigerian population. This research employs a mixed methods approach in examining the role FDI plays on Nigerian food security and the changing patterns of food systems, specifically dietary adaptation and convergence. Johnson, Onwuegbuzie & Turner explain that a mixed methods approach “employs rigorous quantitative research assessing magnitude and frequency of constructs and rigorous qualitative research exploring the meaning and understanding of constructs” by focusing on research questions that call for “real-life contextual understandings, multi-level perspectives, and cultural influences” (2007, 114). Since food security is a multidimensional concept, it is imperative that it be investigated beyond a uni-directional angle to fully understand and appreciate the extent to which FDI is influencing food security in Nigeria. By drawing on available national data on FDI and food security, one is able to closely examine through rigorous statistical analyses, the extent to which FDI in each sector is influencing food security in Nigeria. While this provides a level of analysis at the macro level, at the micro level, administering questionnaires and obtaining oral testimonies can reveal the level of dietary adaptation and convergence taking place within the Nigerian population as a result of the influx of FDI. Together, both methods give a more insightful explanation of the links occurring between FDI and food security and as equally important, the effect on the Nigerian population. 1.5 Limitations Of The Study There are limitations to this study. Data availability and reliability remain two of the significant constraints one encounters in attempting time series analysis of Nigeria. Data on foreign direct investment to Nigeria, if available, can be very unreliable due to a number factors 11 including poor recording systems or recording capital in incorrect accounts (Pigato, 2001). Also, Nigeria has witnessed considerable inflow of FDI into the oil sector, which is encompassed within the primary sector. Available data do not disaggregate primary FDI inflow further into its subsectors (i.e. FDI inflow into the oil and agricultural subsectors). As a result further analysis as to what extent oil and non-oil FDI inflows are contributing to the impact of primary FDI on food security could not be examined. Another limitation to this study is the focus on urban areas. As pointed out earlier, increased inflow of FDI is resulting in urbanization and a change in dietary patterns, thus emphasis will be placed on urban areas specifically Lagos State, Nigeria. Further, there is relative insecurity prevalent in Nigeria. By choosing Lagos State, the aim of the researcher was also to mitigate the risk to personal security attached to administering face-toface questionnaires, while at the same time finding a diverse sample of the Nigerian population in which dietary adaptation and convergence could be observed. 1.5.1 Data Availability Before any data can be considered for their reliability or otherwise, they must first be available. Lack of data constitutes one of the greatest challenges facing those trying to do a study on FDI and food security in Nigeria. The choice of Lagos State in administering semi-structured questionnaires is partly due to the fact that Lagos accounts for about 10 percent of Nigeria’s population, has the largest economy (on state-wide level), and consists of almost all ethnic tribes in Nigeria. In addition, due to the prevailing insecurity, one of the most relatively secure states in Nigeria is Lagos State. Most states in Nigeria do not have data on the flows of FDI and the states that do, have some years with missing data. This results in the limitation of the number of observations that could be 12 made and thus the inability to explore a cross-section analysis of the relationship between FDI and food security. 1.5.2 Data Reliability After obtaining data, the next concern is their reliability. The data available on FDI and indicators of food security: hunger and nutrition in Nigeria are highly unreliable by any standard. Inconsistencies in the Central Bank of Nigeria data and World Bank data on the flows of FDI are common because of the differences in the methods used in gathering those data by the various agencies. The empirical analysis in Chapter 4, data on FDI inflows are used for analysis because they provide a breakdown of FDI inflow by sectors in Nigeria. Indicators for measuring food security are captured by the Food and Agricultural Organization of the United Nations. For these reasons, I choose Lagos State for the administering of questionnaires. In doing this, I take into cognizance that administering questionnaires to a focus group/audience in one state in Nigeria may not be a true representation of the whole population. 1.6 Organization Of The Study Given the multidimensional nature of food security, this study assesses food security in Nigeria from a quantitative and qualitative perspective. The purpose of this is to give a robust response to the question of whether FDI is increasing or decreasing food security in Nigeria. This thesis is divided into two essays exploring the effects of FDI on Nigerian food security. Prior to launching into the studies, the reader in Chapters 2 and 3 is provided with information relating to Nigeria in its geographical, sociopolitical, historical, and economic contexts as well as approaches to foreign direct investment and food security. Contextualizing Nigeria and the approaches to FDI and food security in this manner allows the reader to gain a fuller understanding of the results presented in chapters 4 and 5. Chapters 4 and 5 contain separate 13 studies exploring food security, utilizing quantitative and qualitative methodologies respectively. Each essay is accompanied by a literature review and full description of the methodological approaches used to explore the relationship between foreign direct investment and food security. Chapter 4 (Essay 1) entitled “Impact of FDI on food security in Nigeria” explores the relationship between foreign direct investment and food security in Nigeria at the national level. This essay contains a literature review on food security, its measures, and causes, as well as a discussion of the overall food security situation in Nigeria. Foreign direct investment (FDI), including sectoral FDI, and their impact on food security is also addressed. Essay 1 employs a quantitative approach by using a Vector Autoregressive (VAR) model in determining the impact of FDI into each sector on food security in Nigeria. Chapter 5 (Essay 2) entitled “Impact of tertiary FDI on food systems in Nigeria”, serves as a continuation of essay 1, focusing on the effect of FDI on urbanization and changing food systems in Nigeria with a view to determining how much dietary adaptation and convergence is occurring at the individual level. Within this essay is a review of existing literature relating to the impact of FDI on food systems in Nigeria, and the effect of changing food systems on the health and nutritional status of individuals, particularly women and children. This is undertaken in order to observe the kinds of dietary adaptation and convergence occurring in the Nigerian population. The thesis concludes with Chapter 6, which contains the conclusions drawn from both essays, including areas for future research on food security and foreign direct investment. 14 2.0 Chapter Two: Contextualizing Nigeria 2.1 Introduction In order to grasp the role large increases in foreign direct investment plays on food security in Nigeria, one must situate this research through an understanding of Nigeria within its geographical, sociopolitical, historical, and economic contexts. This chapter gives a general overview of the environment within which Nigerian food security exists in terms of the demographics, climatic conditions, the types of crops, both cash and food crops. All of these are factors are explored with a view to understanding the in-depth review of the existing literature on the food security in Nigeria as provided in Chapter 4. 2.2 Nigeria: Geographical, Sociopolitical, Historical And Economic Contexts 2.2.1 Geographical Context Bordered by the Niger Republic and the Republic of Chad to the north, the Republic of Cameroon to the east, and the Republic of Benin to the west, Nigeria has approximately 850 kilometres of coastline on the Gulf of Guinea to the south (CIA, 2014). It is divided into 36 states, plus the Federal Capital Territory of Abuja. The states are grouped into six distinct political zones namely: North-Central, North-East, North-West, South-East, South-South, and South-West; which are used as the primary geographic identifiers in this research. Nigeria has a total land area of 923,000 square kilometres (NBS, 2007). 15 Figure 1- Map of Nigeria showing the 36 states, the federal capital territory and the 6 political zones7. Bauchi ■BBMl HI HI North west North east North central South west South south South east Source: Okechukwu, Ogah, et al., 2004,332. 7 The above map (figure 1) is divided along the 6 political regions that exist in Nigeria rather than dividing along the 3 major ethnic groups in Nigeria (located in the northern, western, and eastern parts o f Nigeria). Doing so allows for a broader and better understanding o f the economic, social and climatic conditions present as well as the different crops grown within these regions in Nigeria. 16 Nigeria spans 10 degrees of latitude and zero to nearly 2,500 metres of altitude, resulting in a wide range of agro-ecological conditions from semi-arid in the North to tropical and humid in the south (Gleick, 2000). The River Niger Delta in the South drains a watershed of approximately 2 million square kilometres accounting for 7.5 percent of total land area in the country. Small-scale agriculture is vital to the livelihoods of citizens living along the coast in the delta region, which has also been the site of intensive oil extraction since the 1960s. The brackish water in the delta and along the coast is an ideal environment for mangrove forests, which cover 653,669 hectares, and are the largest in Africa (Giri et al., 2011). This area is characteristically grain-dominated. The main crops produced include sorghum, millet, corn, cassava, cowpeas and sesame seeds, the most significant commercial crop of this region (Kuku-Shittu et al., 2013) However, the mangrove forest has dwindled over two decades due to urbanization and pollution from oil and gas activities (Ayodeji, Ibeh, & Oyebanjo, 2011). In the south, the warm temperatures and the long rainy seasons, which extend from April to October (mean annual rainfall around 400 centimetres), promote the growth of lush vegetation, such as the aforementioned mangrove swamps, as well as fresh water swamps and tropical rainforest (FEWSNET, 2012). The fresh water flood plains of the Niger River are the most agriculturally productive part of the country because of their rich alluvial soils. This area is characterized by extensive tree and crop farming systems. The staple crops in this region are root crops, including cassava, yams, and sweet potatoes as well as tree crops such as cacao, oil palm, and rubber, constitute the areas’ main commercial produce (Kuku-Shittu et al., 2013). The subhumid zone, which has a savannah landscape, accounts for approximately half of Nigeria’s land area and includes the middle belt and northern regions, which are significantly more arid with a 17 rainy season of only four to five months, from around May to September. Nutrient run-off resulting from poor water penetration, combined with a shallow water table mean this region has poorer soil quality. Food productivity in this region is lower than the flood plains in the south (Mohammed-Salem, 1986). The North is prone to drought with an average annual rainfall of only 60 cm (ibid.). Many areas of the country are vulnerable to disaster either from drought, most frequently experienced in the North, or from flooding experienced along the major rivers and the delta region. Both flooding and drought can be widespread and severely affect food security (Enete & Ezenwanji, 2011). In this region, the staples are millet, cowpeas, and the drought resistant variety of sorghum known as guinea com. The principal commercial crops are cotton and groundnuts (Kuku-Shittu et al., 2013). 2.2.2 Sociopolitical Context Nigeria is the most populous country in Africa and the seventh most populous in the world, with an estimated 170 million people in 2012 (World Bank, 2012a). The population of Nigeria is continuing to grow at annual rate of 2.6 percent because of a high fertility rate (5.38 children bom per woman) (CIA, 2014). The high population growth rate has numerous social, environmental, and economic impacts with implications for food security. Rising population pressure is leading to overcrowding with an estimated population density of 174 people per square kilometer in 2010 (IFAD, 2012). According to UNICEF Statistical Division, Nigeria has one of the highest urban growth rates in the world, with an average annual rate of 4.1% between 1990 and 2013 (UNICEF, 2013). The scarcity of land and other resources in rural areas is causing rapid urbanization. Since independence, Nigeria has witnessed several years of military rule and civil war. In Nigeria’s 54 years of existence (post-independence from Britain) it has witnessed about 31 years 18 of military rule (Danjibo, 2009). Nigeria displays a high degree of ethnic diversity with more than 250 distinct ethnic groups. Among the most prominent groups are the Hausa/Fulani, Yoruba, and Ibo located predominantly in the North, South-west, and South-east respectively. The official language is English, nevertheless, about 576 indigenous languages and dialects are spoken across the country (Osaghae, 1986). Given the ethnic diversity, antagonism towards ethnic groups is commonplace. Sectarian violence has occurred periodically between ethnic groups with competing interests. In more recent years, sectarian violence has erupted in some parts of the country with groups like Boko Haram, which exerts influence in the northeastern states. Sectarian and ethnic violence has also erupted in Ijaw land in the south-south oil producing region of the country; Ife-Modakeke in the South west to mention a few (Ukeje, 2001 ). 2.2.3 Historical Context Nigeria, like many other African countries, has emerged out of the shadow of British colonialism. During British colonial rule (1885-1960), the administration of Nigeria was based on a system of “indirect rule” (Aghalino, 2000). Under this system, Britain ruled through existing institutions rather than establishing a wholly new administrative network. The colonial economy in Nigeria was structured to improve the economy of Britain. In the scheme of things, what mattered was how the colonial economy would benefit Britain. “Colonial rule was not a benevolent political system”, argue Adeyeri & Adejuwon (2012, 1). A look at the balance sheet of colonial rule in Nigeria shows a negative effect because the dominant motives of British colonialism in Nigeria were the search for cheap raw materials and expansion of markets for the products of British factories (Adeyeri & Adejuwon, 2012; 19 Aghalino, 2000). Agriculture and trade dominated the colonial economy (Adeyeri & Adejuwon, 2012 ). British colonial economic policies in Nigeria discouraged indigenous industrialization, but promoted export crops like palm oil and kernel, cotton, cocoa, groundnut, and rubber to feed the British factories (Shokpeka & Odigwe, 2009). The implementation of these policies resulted in increased foreign exchange earnings generated by trade in major agricultural products (cash crops). The promotion of cash crops generated substantial foreign exchange for the government, but created problems in some other aspects of the economy. It left the production of food crops in the hands of peasant households who generally worked on small plots of land with inefficient technologies (Shokpeka & Odigwe, 2009). Thus, the emphasis on cash crops production created the conditions for the food insecurity, which Nigeria would later experience after independence in 1960 (Adeyeri & Adejuwon, 2012). 2.2.4 Economic Context Nigeria is a lower-middle-income country with a national GDP of $235.9 billion, which translates to a national per capita GDP of $1, 452 (World Bank, 2012b). The average GDP growth rate of 6.8 percent over the seven years from 2005 to 2011 was higher than both the global average of 4.9 percent and the continent’s average of 5.5 percent (ibid.). Agriculture remains the largest contributor to the Nigerian economy, accounting for about 40 percent of the national GDP and providing employment for about 70 percent of the labour force (NBS, 2012). Despite the economic importance of the agricultural sector, development within the sector has been neglected as attention has focused on the extraction of natural resources. Annual growth of food production between 2000 and 2010 had declined to 3.7 percent from 6.1 percent per annum in the preceding decade, lagging behind the growth rate of 20 food demand at 6.5 percent within the same period (Liverpool-Taise, Kuku, & Ajibola, 2011). Low agricultural productivity in Nigeria is due to wide variety of factors including poor soil quality caused by pollution, erosion, negative impacts of climate change on weather patterns, the scarcity and high cost of inputs, rudimentary implements, and outdated farming practices (Liverpool-Taise, Kuku, & Ajibola, 2011). As a result of slow growth in the agricultural sector and rapid increase in population and urbanization, Nigeria has shifted from being self-sufficient in food production in the 1960s to being heavily dependent on food imports in the 1980s onward (Fasoranti, 2006). Dependence on food imports makes Nigeria vulnerable to fluctuating world market prices. The spike in world food prices in 2007/2008 caused inflation to rise to from 5.4 percent in 2007 to 9.7 percent in 2008. It also caused the share of household income spent on food for the same period to increase from 45 to 80 percent (NISER, 2008). While the inflow of investment to the agricultural sector in comparison to the oil sector has lagged behind, the latter has attracted significant investment with Nigeria realizing significant earnings from the sale of crude oil. The discovery of oil has made Nigeria significantly dependent on petrodollars as a means of generating revenue for public spending. Proceeds from the sale of crude oil accounts for about 98% of export earnings and 85% of government revenue over the last decade (CBN, Statistical Bulletin). In spite of this, Nigeria has not been able to translate the benefits from petrodollars into galvanizing the agricultural sector and assuring food security. Blame has been placed at governments’ lack of accountability and the appropriation of resources by elites in society (Liverpool-Taise, Kuku, & Ajibola, 2011; Maji & Odoba, 2011). 21 Many oil-exporting developing countries have large food deficits (Ng & Aksoy, 2008; World Bank, 2011). One reason for this is in the way a government deals with the profits of oil production. Oftentimes, developing countries that are rich in oil have focused a lot of attention to the oil sector to the detriment of other sectors as receipts from the sale of crude oil has funded government spending. This has caused sectors like the agricultural sector to suffer setbacks due to inadequate funding and poor government policies and implementations (Woertz, 2013; Mold, 2011 ). Oil rich countries in Africa and the Gulf countries (i.e., Nigeria, Libya, Egypt, Qatar, Saudi Arabia, etc.) have relied significantly on food imports and equally parted with substantial amounts of oil proceeds in order to meet their food demand (Akinyele, 2009; Azzam & Rettab, 2012; Lippman, 2010). Evidence suggests that there is a relationship between oil and food prices in that rising oil prices results in higher food prices. (Lippman, 2010; World Bank, 2011). It appears that some oil-exporting developing countries presume that more food can easily be purchased because more revenue is generated from the sale of crude oil. This implies that an over dependence on food imports implies that in a globalizing world that is heavily reliant on fossil fuel the cost of food associated with food production and transportation would also significantly rise. Some have argued that significant rise revenue from crude oil sales may not necessarily translate to an increase in the quantity of food import as food exporting countries may not be willing to supply their share of global food demand due to reduction in food production and/or increases in global food demand (Lippman, 2010; Woertz, 2013). Nevertheless, even where large surpluses generated from crude oil sales exist, there are no guarantees that food will be available in sufficient quantity (Akinyele, 2009; Lippman, 2010). Given the amount of cash per unit of population in oil exporting developing countries, one would 22 assume that they would be better able to deal with problems of food shortages than other non­ food sufficient countries. A lesson was learned during the 2007/08 global food crisis when, despite their oil wealth, these countries were unable to purchase all of the grains they needed for domestic consumption (Kramer, 2009). Food exporting countries such as the U.S, Canada, Russia, and New Zealand were unwilling to supply their share of global food demand because of the food crisis and the overall reduction in food production, (ibid.). Over the years, Nigeria was reported to have been allocating only 3 % of the annual budget to the agricultural sector despite the recommendation of a 10% minimum by the FAO. Yet, in 2007 alone the country spent a huge $2,797 billion on food importation (Chukwuma, 2014). That figure pales in comparison when looking at the 2012 figures, which state that Nigeria spent $11,667 billion on the importation of food (ibid.). Admittedly, the food crisis was a global phenomenon, but nations are at liberty to articulate strategies for addressing it. The steps taken by the Nigerian government in tackling the growing food crisis in 2008, demonstrates the government’s inadequacies in dealing with such a critical issue. The Nigerian government implemented three steps to address the global food crisis as it was being experienced in the country. First, the then President approved the immediate release of $600 million from the National Resources Development Fund (NRDF) for the importation of 500,000 metric tonnes of rice from Thailand. Secondly, he approved the immediate release of about 11,000 metric tonnes of grains from the Federal Government Strategic Reserves to augment an earlier release of over $40 million of import duties on rice for six months (Akinyele, 2009; Chukwuma, 2014). One issue with this approach is that the Nigerian government intended to import from a country that had cut down, and in some cases stopped the exportation of rice in order to meet the local demand of citizens (Omotor, 2009). Given the low global harvest, coupled with accompanying 23 high food prices, oil-producing countries like Nigeria who may have the capacity to import have realized that generating large sums from oil proceeds does not necessarily translate to having the capacity to import sufficient amounts of food. In such a situation, the gains from the proceeds from crude oil sale along with an agricultural sector that is lacking adequate investment are unlikely to benefit Nigeria as a whole. Rather, the status quo virtually ensures that small portions (elites) in society will grow richer. Such occurrences have the greatest negative impact on the poor in society, who rely heavily on traditional livelihoods such as subsistence agriculture. It is therefore not surprising that along with economic growth, inequality measured using the Gini index is high among the population. According to the World Bank, Nigeria’s Gini-index increased from 0.43 in 2004 to 0.49 in 2010 (World Bank, 2012b). While this shows that Nigeria as a whole is experiencing an increase in inequality, the World Bank further suggests that due to income and wage disparities there is the existence of intra-country inequality, implying that within Nigerian states/regions, inequality is also on the rise. 2.3 The Paradox Of Plenty: Growth Of Fdi And Persistent Food Insecurity As Evidenced In Nigeria The Food and Agricultural Organization (FAO) currently lists Nigeria among the nations that are unable to meet their food needs. The FAO explains that some parts of Nigeria have witnessed a decline in undernourishment, but due to the size of its population, 25 percent of all undernourished West Africans still live in Nigeria (FAO, 2011). Forty percent of Nigerians do not have enough food for nourishment on a daily basis. The country has the third largest number of severely malnourished children in the world, 26 percent are under the age of five. Of that amount, 25 percent are underweight and 40 percent are stunted in their growth (ACF, 2010). The 24 World Bank classifies Nigeria as a lower-middle income country. In comparison with countries within this income bracket, the 2012 FAO report on the State of Food Insecurity in the World shows Nigeria has been far less successful in battling high levels of malnutrition8. The Rome Declaration of Food Security states the need for adequate access to safe and nutritious food vital for assuring food security, while the International Food Policy Research Institute (IFPRI) (2001) warns that unless more aggressive measures are taken, progress against malnutrition is likely to slow down. Yet, despite these warnings, the prevalence of malnutrition in Nigeria is still high. A 2011 report published by the Federal Ministry of Health in Nigeria, states that high incidence of malnutrition appears to be persistent. The countrywide survey indicates that this issue is most acute in the North, where malnutrition affects as much as 80 percent of children and riddles the adult population as well. The above revelation is incomprehensible given Nigeria’s continuous economic growth in the last decade. Nigeria, which has the largest economy in Africa and is the sixth largest producer of crude oil in the world, has enjoyed both inflow of foreign earnings from crude oil sales and economic growth. Over the past three decades, Nigeria has ranked as one of the top two primary destinations for foreign direct investment flows to Africa (the other country is South Africa). FDI inflows into the country in 2012 exceeded $7 billion, which was 1.5 times that of South Africa and almost 15 percent of the continent’s total (World Bank, 2012b). The flow of FDI into Nigeria has been at sectoral levels namely: primary FDI - accounting for the flows of FDI into the agricultural, mining, and extractive sector; secondary FDI —accounting for the flow of FDI into the manufacturing sector; and tertiary FDI - accounting for flows of FDI into the 8 The 2012 FAO report on the State o f Food Insecurity in the World shows that countries within the lower-middle income bracket such as Angola, Bangladesh, Cameroon, Ghana, Georgia, Indonesia, Nicaragua, and Vietnam have fared better than Nigeria in reducing high levels o f malnutrition. 25 service sector. Available data on sectoral FDI inflow (Graph 1) show substantial increase over the past three decades. Graph 1: Inflow o f Sectoral FDI into Nigeria: 1980-2009 (N’million) S ecto ra l FDI in N igeria: 1980-2009 160,000.0 140.000.0 120. 000.0 100, 000.0 80,000.0 60,000.0 40.000.0 20 000.0 . ll . Jill ■ PFDI II 11 11 ■ SF0I ■ TFDI Year PFDI = Primary Foreign Direct Investment SFDI = Secondary Foreign Direct Investment TFDI = Tertiary Foreign Direct Investment Source: CBN Statistical Bulletin (2012). Many, such as Glenn Firebaugh & Frank Beck (1994), Simeon Hein (1992), Tsai Panlong (1995), have argued that an increased flow of FDI into a host country should increase the host country’s productive capacity, increase its national income, provide employment, raise individual and household incomes, alleviate hunger, and improve the quality and standard of living. These are all necessary in assuring individuals’ of food security. Consequently, this should be evident in either the host country’s ability to be self-sufficient in food production or its ability to have the financial means to procure adequate and sufficient food. The underlying assumption is that the inflow of FDI would translate to improved food security of the host country by alleviating poverty. 26 Nigeria seems to defy the assumption put forth by proponents of FDI inflow (modernization), in that large inflows of FDI are stimulating economic growth, yet there is still widespread hunger and malnutrition. Nigeria appears to be experiencing the “paradox of plenty” or the “resource curse” (Karl, 1997), a phenomenon where Nigeria’s dependence on petroleum has led to disproportionate fiscal reliance on petrodollars and public spending. This situation creates the illusion of prosperity and development. Alternatively, Nigeria is experiencing the “Dutch Disease”, a term used to describe the apparent relationship between the increase in exploitation of natural resources and a decline in the agricultural sector and/or manufacturing sector. Whatever classification used to describe Nigeria there is clear evidence within the available literature pointing to the fact that Nigeria is an economy characterized by large inflow of FDI and a persistent food insecurity situation (Graph 2 and 3). Graph 2: Foreign Direct Investment (FDI) inflows and number o f hungry Nigerians 1981-2012 FDI inflow vs. N u m b e r o f H ungry N igerians ■ M i Number of Hungry Nigerians - M - F D I INFLOW (CURRENT US $ Millions) Source: World Development Indicators (2013); FAO (2010) While the Global Hunger Index (GHI)9 (Graph 3 below) on face value shows a decline between 1981 and 2012 figures, the GHI may not reflect some peculiarities occurring as it pertains to the number of hungry Nigerians. 9 To reflect the multidimensional nature of hunger, the GHI combines three equally weighted indicators into one index: 27 In absolute terms the number of hungry Nigerians in 2012 was over 26.8 million and has considerably increased from about 20 million Nigerians in 1990, the year in which the Millennium Development Goal (MDG) was initiated to halve the proportion of hungry individuals by 2015. Progress towards meeting the MDG target has been slow and does not realistically appear attainable by 2015. Some may argue that the GHI has declined from 20% in 1990 to 16% in 2012, but when one factors in that almost 7 million Nigerians (Graph 2 above) have been added into the category of hungry Nigerians within this period it appears that hunger in Nigeria is persistent and an increased inflow of foreign direct investment may not have translated to improvements in food security in Nigeria. 1. Undernourishment: the proportion o f undernourished people as a percentage of the population (reflecting that portion o f the population with insufficient caloric intake). A country’s average minimum energy requirement is used to estimate undernourishment 2. Child underweight: the proportion o f underweight children under the age of five who are categorized as underweight (implying low weight for their age, reflecting wasting, stunted growth, or both) 3. Child mortality: the mortality rate o f children younger than five (reflecting inadequate food intake and unhealthy environments) (FAO, 2012). 28 Graph 3: Persistence in the number o f Hungry Nigerians, 1981 - 2012 GHI vs. N u m b e r o f H ungry N igerians YEAR Source: CBN (2012); Global Hunger Index (2013) Graph 4: Foreign Direct Investment (FDI)/Real Gross Domestic Product (GDP)10 and Global Hunger Index (GHI) FD I/6D P vs. GHI 35.00 cO 30.00 | 25.00 a. nziz ................. ■ £ 20.00 "o ■ FDI/GDP a i5.oo a i ■ u 2. 5.00 n nn v.v/\s ■ GHI ■ g 10.00 j ........... f^ " ' ....... . ...................... "" ff ^ Source: World Development Indicators (2013); Global Hunger Index (2013) The GHI (2013) report states that 40 percent of Nigerian children under age five are stunted in their growth, nine percent are wasted (have low weight given their height), and 25 10 Gross Domestic Product (GDP) is a macroeconomic measure o f the value o f economic output adjusted for price changes. 29 percent are underweight, all due to hunger. It further shows that two out of every five children in Nigeria are chronically underfed. As a country, Nigeria ranks in the GHI top 20 countries most ravaged by hunger, accounting for 5.7 percent of hunger problems in the world. With 65 percent of Nigerians having insufficient access to the amount of food required to keep them healthy, the report also shows that Nigeria has not made enough progress in meeting the Millennium Development God (MDG) of halving 1990 hunger figures by the year 2015. The impact of the food security situation in Nigeria on the sub-region cannot be overemphasized. As poorer neighbouring countries export more food to Nigeria in exchange for petrodollars, people there also go hungry. For example, in 2005, thousands of children in neighbouring Niger died of malnutrition not because the country had a particularly bad harvest, but because there was a food shortage in Nigeria and people in Niger could not afford the ensuing higher food prices (ACF, 2010). In summary, we know that food security in Nigeria remains at a level characterized by the FAO as “serious”, with severe implications for the most vulnerable in society. Access to food is a basic and non-negotiable right. Nigeria is obligated to ensure that an adequate level of food security is assured. This obligation has yet to be met. Two approaches will be undertaken in analyzing how the process of globalization, specifically increased FDI, has impacted Nigerian food security. Firstly, quantitative analysis will be employed through the disaggregating of foreign direct investment into sectoral components, specifically examining how FDI into each sectoral component impacts food security. The second approach takes on a qualitative analysis and captures a snapshot of how much dietary adaptation and convergence is taking place in the Nigerian population. 30 3.0 Chapter Three: Approaches To FDI And Food Security 3.1 Introduction The mechanisms through which Foreign Direct Investment (FDI) impacts human welfare as measured by food security have been debated over the decades. These controversies have generated the general notion that there are certain approaches to understanding the impact of FDI on food security. As such, depending on the approach to FDI adopted, the food security status of individuals within countries is theorised to increase or decrease. Therefore, this chapter serves not as a review of the literature of FDI and food security, but rather a summary of two broad approaches, namely: the modernization and dependency approaches. Through these approaches the links and controversies surrounding FDI and food security can be better understood, debated, and unraveled. As such, this chapter is not meant to serve as an exhaustive list of the relationship between FDI and food security rather it contextualizes the links between FDI and food security, serving as a guide on which later chapters will build on in more detail. The study of human welfare is multidimensional and has drawn growing attention, and over time has become central to the study of food security. Most studies from the 1970s and 1980s (Elsenhans, 1975; Evans & Timberlake, 1980) have focused on human welfare at the macroeconomic level, that is, focusing on economic growth, income per capita, and inequality. More recent studies (Brady et al., 2007) focus on human welfare at the microeconomic level. Measuring human welfare at the micro level is a better litmus test in assessing development than the macro level measure because it goes beyond income to assess the level of people’s long-term well-being. The UNDP’s11 Human Development Index (HDI)12 and the Millennium 11 United Nations Development Program (UNDP). 31 Development Goals (MDGs)13 provide micro level indicators, such as infant mortality (Firebaugh & Beck, 1994); the role of women in society (Shen & Williamson, 1997); life expectancy (Veenhoven, 1996); health and nutrition (Strauss & Thomas, 1998); and food security (Firebaugh & Beck, 1994; Jenkins & Scanlan, 2001). Controversies exist as to whether the approach taken by countries to attract or limit the inflow of FDI into their economies is resulting in either improvements or the decline of the indicators mentioned above, particularly on human welfare as measured by food security. To better understand and unravel these controversies, two broad approaches, namely, modernization and dependency are examined with a view to shedding light on the links between FDI and food security. The modernization and dependency approaches were chosen because they serve as the foundational building blocks upon which all subsequent approaches used to explore the role of FDI in explaining the patterns of change in human welfare. These two approaches offer contrasting outcomes to human welfare and will be applied to understanding the effect of FDI inflow on food security. These two approaches have been widely used through the literature to address both the micro and macroeconomic effects on FDI inflow on developing host countries. The implications are far reaching and by extension are applied by the writer to the central issue of food security, because food, as a basic need, is important not only for developing countries but for the whole of humankind. Although both approaches rarely directly or explicitly address the 12 The UNDP explains that Human Development Index (HDI) is a summary measure of average achievement in key dimensions o f human development: a long and healthy life, being knowledgeable and have a decent standard of living. The HDI was created to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country and not economic growth (UNDP, 2013). 13 The Millennium Development Goals (MDGs) are the world’s quantifiable targets for addressing extreme poverty in its many dimensions-income poverty, hunger, disease, lack o f adequate shelter, and exclusion- while promoting gender equality, education, and environmental sustainability (UNDP, 2013). 32 relationship between FDI and food security, the implication was extended - FDI has the propensity to either stimulate or inhibit economic growth, attract Multinational Corporations (MNCs), the effects of which permeate society —resulting in the improvement or decline of human welfare as measured by food security. The dynamics of the modernization approach help diffuse socio-cultural and economic values from developed to developing countries. Plainly, such interactions increase developing countries’ reliance on the wealthy and developed countries’ economic and technological assistance. In contrast, the dependency approach manifests a unidirectional relationship between the economies at the core (developed countries) and economies at the periphery (developing countries). It is argued that the former advanced at the cost of the latter through expropriation of economic surplus (Lewellen, 1995). This view is succinctly captured by David Lake when he states that the dependency approach “taps into issues of international inequality, uneven growth, and national control over international economic forces that remain central to contemporary debates about globalization” (2007, 761). Both the modernization and dependency approaches are not without their shortcomings, especially in appreciating the dynamics of social and economic development. Both have been criticized for their bias for urban centres. Their inclination towards urbanization has not resulted in improving the agricultural sector, which accounts for many of the livelihoods in rural areas. The modernization approach asserts that “urban expansion is part of the national transition from traditional (agrarian) society to a modem (industrial) nation” (Berliner, 1977, 448-449). Critics have also queried the modernization approach and stated that pressure on urban cities produces only temporary economic growth in developing countries and does not yield the type of long­ term, equitable development that is possible only through aiding agriculture (Lipton, 1984). 33 Contrariwise, the dependency approach posits that foreign direct investment reduces the amount of land available to farmers in the rural areas, thereby resulting in a rural-urban push (Ledogar, 1975). Moreover, economic dependence distorts urban labour markets and impedes comprehensive economic development (Kentor, 1981). The modernization and dependency approaches, which sprung up in the 1950s and 1960s respectively, have in contemporary times fuelled the pro-and-anti globalization debates from the 1990s onwards. While in contemporary times debates about globalization have been at the forefront of understanding the impact of the inflows of FDI on a countries’ human welfare, nevertheless, debates on globalization can be traced back to the modernization and dependency approaches and are as relevant today as they were in times past. Therefore, a clear understanding of the modernization and dependency approaches provides an understanding of the links between FDI and food security occurring within the present age of globalization. Both the modernization and dependency approaches emphasize the central role of a country’s relationship with other countries through inflows of foreign direct investment, but predict opposing outcomes arising from economic integration and interconnectedness. The modernization approach canvasses policies that attract more FDI arguing that taking this approach would result in the influx of MNCs, create employment, provide income, and raise living standards, all of which would improve human welfare- as measured by food security. This is in contrast to the arguments put forward by the dependency approach, which canvasses for the imposition of greater restrictions to the inflow of FDI into countries. This approach posits that as more FDI flows into a country it would not only make countries overly reliant on foreign capital, but that it would also stifle local competition resulting in a reduction of human welfare measured by food security. To grasp these two contrasting approaches, I will briefly analyze the fundamental elements of the modernization and dependency approaches, their underlining assumptions, and critiques. Additionally, I will focus on how the implementation of the arguments posed by the modernization and dependency approaches are influencing the inflow of FDI and shaping food security in Nigeria. 3.2 Modernization Approach In the 1950s, the modernization approach emerged as a development theory informed by evolutionary and functional theories. In accordance with the evolutionary theory, modernization assumes “social change [that] is unidirectional, progressive, and gradual, [and] irreversibly moving societies from a primitive stage to an advanced stage... making societies more like one another as they proceed along the path of evolution” (So, 1990, 3). The modernization approach assumes that once the process of modernization starts, the process will progress along a linear path. Furthermore, based on functional belief, the modernization approach reflects the notion of a systematic and transformative process as it affects social changes in all social realms of society, and aims to transform all traditional structures and values according to modem ideals (based on Western standards) (So, 1990). The modernization approach describes development from ‘traditional’ to ‘modem’ societies (Wehler, 1975). The background of the modernization approach are dualisms between traditional and modernity, industrial centres and rural areas, owning and non-owning classes, and differences between the countries at the core and countries at the periphery. Due to the policies adopted as a result of the modernization approach, developing countries grew in the same direction as developed countries. Consequently, this process should result in a convergence. In 35 the long-run developing countries in terms of development will “catch up with rich, industrialized and developed countries” (Menzel, 1995, 22). One of the best-known approaches to the modernization approach is rooted in economics, Rostow’s Stages of Growth Model, which was prominent from the late 1950s to the mid-1960s. The foundation of Rostow’s approach is the classification of societies within five steps of development, which he described as progressing along a linear path from ‘traditional society’, to ‘preconditions for take-off, ‘take-off, ‘drive to maturity’, and finally to the ‘age of high mass consumption’ or development. In the first phase, traditional society, the conditions of production are limited because science and technology are barely accessible. This society is based on subsistence agriculture. The next phase is described as a society in transformation whereby the preconditions for economic growth are established. The role of science and technology increases and investment in the industrial sector is fostered (Rostow, 1960). This transformation allows for a shift from traditional societies towards a more industrialized one where “Investments increase, especially in transport, communication and raw materials, and the result is a general commercial expansion” (Harrison, 1988,26). The next stage is the economic rise in which the industrial sector grows exponentially and begins to play a dominant role within a given society. Industrial growth is accelerated through foreign direct investment. Employment is provided, the agricultural sector becomes commercialized, and new methods of production develop (Rostow, 1960). Rostow explains that the penultimate stage, drive to maturity, is achieved when an economy has exerted its position in the international market. Rostow bases his argument on the gestation period required by 36 countries to progress from traditional societies to mature societies. Rostow explains that the process from traditional to mature society takes three decades, because modem technology needs three generations for an adequate diffusion in any society. A key component towards the drive towards a modem society is the influx of MNCs and foreign direct investment, which allows for technological spillover from developed to developing countries. When a society reaches the stage of high mass consumption, foreign direct investment inflows are maximized and per capita income increases such that individuals have disposable income, beyond all basic needs, that allows for more private consumption. This process will inevitably and spontaneously continue, and lead to the development and modernization of former traditional societies (Levy, 1967; Rostow, 1960; Todaro, 2000). The common ground of the modernization approach is the characterization of modem society as the ‘better society’, and the way from tradition to modernity is the only way and should be aspired globally by all societies. The modernization approach reflects the belief that values within societies will have to change from traditional agricultural and subsistence lifestyle towards mass consumption. In more recent years, the forces of globalization such as technology and policies on foreign direct investment and trade liberalization are seen as the chief architects towards the drive to modernity. This is evident not only in the global movement of foreign investment and the increase in the consumption of high value consumer goods, but also technological advancements that have fuelled the ease with which foreign direct investment and goods move globally. As such the forces of globalization, most prominently foreign direct investment, are seen as the chief architect towards a society’s drive to modernity— the sense that a country should embrace globalization if it is to attain modernization. 37 3.2.1 Assumptions of Modernization Approach Several assumptions are made by the modernization approach, central for the progression from traditional to mature society. Firstly, the modernization approach is a phased process. For example, there are five phases associated with Rostow’s theory of economic development for a particular society. Secondly, the modernization approach is a homogenizing process, in this sense; we can say that the modernization approach produces tendencies towards convergence among societies. For example, Marion Levy explains that “as time goes on, they will increasingly resemble one another because the patterns of modernization are such that the highly modernized societies become, the more they resemble one another [converge]” (1967, 207). Thirdly, the modernization approach is an Europeanization or Americanization process. In the modernization approach literature, there is an attitude of complacency toward Western Europe and the United States. These countries are viewed as having unmatched economic prosperity and stability (Tipps, 1976). Lastly, the drive towards a modem society is an irreversible process, and once started cannot be stopped. In other words, once developing countries come in contact with developed countries, change occurs, and they will not be able to resist the drive towards a modem society. 3.2.2 Mechanisms Through Which Modernization Impacts Food Security The modernization approach is a progressive process, which in the end is desirable and inevitable. It is rooted in economic liberalism. The modernization approach argues that developing economies situated at the ‘periphery’ tend to benefit from economic linkages with developed countries at the ‘core’. Through foreign direct investment, developing countries gain the capital and technical knowledge essential for development. The benefits are bi-directional. Mihalache-O’Keef & Li explain that “[D]eveloped economies also benefit from such 38 interdependence, as they acquire cheap raw materials, opportunities for investment, and markets for their products” (2011, 74). Drawing on economic liberalism, the modernization approach explains that economic openness will result in the redirection of factors of production that allows for competition, efficiency, and the optimization of factors of production. Consequently, FDI creates productivity gains and spillover effects within developing countries. In the end, as explained by Rostow (1960), this process has the potential to lead to convergence where development levels and real wages between developed and developing countries is equalized. In recent times, the debate on the modernization approach has evolved into arguments concerning globalization. Like the modernization approach, proponents of globalization such as Jose Villaverde & Adolfo Maza (2011) have opined that the willingness, or lack thereof, of countries to embrace globalization would determine to a large extent societies’ trajectory towards a modem society. Both argue that for globalization to have the desired impact, governments’ must adopt policies that ensure the liberalization of trade and attract foreign investment, while embracing advancements in technology. Many scholars view the process of globalization and the drive towards a modem society as resulting in increasing similarity between the developed and developing world (Kerr, Dunlop, Harbison, Myers, 1964; Rostow 1960; Ohmae, 1990; Friedman, 2006; Villaverde & Maza, 2011; Bhagwati, 2004). The implication of the above is that as forces of globalization prevail, not only is there a convergence towards equalizing global economic growth, but that there is also the growth of the middle-class in developing countries. By extension, the emergence of the middle class would see a change in taste, preference, and consumption of goods, trends similarly witnessed in developed countries (Bhagwati, 2004; Villaverde & Maza, 2011). 39 Applied to the question of food security, the modernization approach conjures some fascinating and interesting arguments. Firebaugh & Beck (1994) suggest that FDI leads to higher productivity. As firms compete for factors of production such as labour, increased productivity will result in higher wages. Thus, FDI penetration in developing countries raises real wages and would more than likely assure food security, as individuals have the resources to purchase sufficient food. Also, economic and social development reduces hunger as countries seek full participation in the global economy, while making the transition from traditional to modem societies (Scanlan, 2001b). By improving trade, attracting MNCs, and seeking new food markets, the potential to not only generate the required foreign exchange, but also to enhance food supply becomes an important step towards assuring food security (Bongaarts, 1996). In summary, the modernization approach enhances food security in three ways. First, policies adopted within the modernization approach result in a country’s economic growth, providing the financial resources when there are shortfalls in domestic production to purchase sufficient quantities of food in the global market. Second, through policies undertaken by governments in favour of the modernization approach, the resultant effects of the modernization approach is that it leads to the opening up of markets and the influx of MNCs. Along with the inflow of income MNCs provide, they allow for competition, which results in not only the availability of a variety of food products, but also at prices that are relatively low. Finally, the adoption of the modernization approach to the increasing of FDI inflow not only attracts MNCs and creates employment, but also ensures the improvement in the real per capita income of individuals such that they have the required income to purchase food in sufficient quantities. 40 3.2.3 Evidence of Modernization in Nigeria The modernization approach has been beneficial in Nigeria’s drive towards a modem society. Nigeria’s quest to transition to a modem society started in earnest during its colonial occupation by the British. The patterns of the Nigerian economy were laid in the first half of the twentieth century. As the country moved to the second half, it began to focus more on the development and the transformation of the traditional sectors (Falola, 2004). The economy was conditioned by the need to satisfy the goals of the colonial government. This created a narrowly focused economy based primarily on the export of raw materials and some minerals (Grubbs, 2006). Nevertheless, this created an important landmark as Nigeria, more than ever, became more integrated with the rest of the world. If the industrialized world was prosperous, Nigerians would benefit; if they witnessed a downturn, Nigerians would suffer (Falola, 2004). The Nigerian economy witnessed its greatest expansion after 1945 (Ayo, 1988; Falola, 2004). A substantial increase in public spending, an agricultural boom, and the creation of new industries are some of the reasons for this phenomenal expansion. Many of the restrictions of the war period (World War II: 1939-1945) were lifted, thus generating greater trade and income. The value of total exports rose from $94.8 million in 1946 to $519.2 million in 1955 and $662.4 million in 1960. Similarly, the value of imports rose from $159.2 million in 1946 to $544.4 million in 1955 and to $863.6 million in 1960 (Falola, 2004, 82). Industries such as the United Africa Company (UAC) founded Nigerian Breweries in 1949, and a host of other new industries followed, notably, the Sapele sawmill and plywood plant in 1950. New assembly plants such as Bedford Lorries and Raleigh bicycles sprung up in 1951, and around 1965 Nigeria began to witness the creation of new industries in the petroleum sector (Falola, 2004, 83-84). Thus, the 41 foundations towards a modem society were laid primarily as a result of boom in export trade and increased foreign investment, which assisted in the developmental process (Ayo, 1988). Many of the economic changes geared towards a modem society were generated through the process of administration and conscious planning (Ayinla, 1998; Ogunjimi, 1997). In 1946, the British introduced the “Ten Year Plan of Development and Welfare for Nigeria”. Under this Development Plan, a total expenditure of about $220 million for a period of ten years was earmarked for the period 1946 to 1956 (Ogunjimi, 1997). Analyzing the focus of the ten-year Development Plan, Ayo (1998) observes that the plan focused on building a transport and communication system. Further, Edward Ayo also observed that the development plan was selective in its focus on agriculture, as attention was concentrated on a limited range of cash crops, which include cocoa, palm products, cotton groundnuts. An important conclusion that can be drawn from this is that the drive towards a modem society under the colonial era was meant to serve the interests of the British (Falola, 2004). Post-colonialization heralded the era of fixed medium-term plans. That is, a period between 1960 and the mid-1980s where focus was on medium to long term economic goals. Within this period, four plans were launched, namely, the First National Development Plan (1962-1968), the Second National Development Plan (1970-1974), the Third National Development Plan (1975-1980), and the Fourth National Development Plan (1981-1985) (Ayinla, 1998; Ayo, 1988). These Plans were comprehensive because they were conceived and formulated within the framework of improving infrastructure and industrializing Nigeria (Grubbs, 2006). They covered the operations of both the public and private sectors of the economy; and equally important they 42 had projects related to a number of well-articulated overall economic targets of sustained economic growth and the actualization of a modem society (ibid.). The First National Development Plan was launched in 1962 and was to cover a period of six years (1962-1968). Under this plan, a total investment expenditure of about $3.1 billion was proposed. Of this amount, the public and private sectors were expected to contribute $1.93 billion and $1.27 billion respectively (Grubbs, 2006). During this period, the Federal government successfully executed projects like the Oil Refinery in Port-Harcourt, the Paper Mill, the Sugar Mill, the Niger Dam, the Niger Bridge, and ports’ expansion as well as the construction of roads and the establishment of Universities (Ayinla, 1998; Gmbbs, 2006). The Second National Development Plan (1970-1974) was launched shortly after the end of the civil war in Nigeria. Because it was a post-war development plan, it focused on the reconstruction of the economy. Like the First Development Plan, the Second Development Plan successfully executed the construction of several roads, the introduction of agricultural loan schemes and scholarship schemes to students to raise the level of literacy in the country (Ayinla, 1998; Falola, 2004). The Third National Development Plan covered the period between 1975 - 1980. Ayinla describes this plan as “a watershed in the evolution towards a modem society” (1998, 41). It was a unique development plan because, apart from its huge initial investment of about $50 billion (later revised to $72.2 billion) extensive consultations with the private sector were made during its preparation and implementation (Ogunjimi, 1997). The cardinal objectives of this plan were: more even distribution of income, reduction in the level of unemployment, diversification of the economy, and overall balanced development. Emphasis was placed on projects like agriculture, 43 water supply, infrastructure, health, which were thought to have direct effects on the living standards of the Nigerian population (Ayinla, 1998). The Fourth Development Plan (1981-1985) was intended to further the process of establishing a solid base for the long-term economic and social development of Nigeria. The capital investment target was $137 billion shared, $117.5 billion and $19.5 billion respectively between the public and private sectors (Ogunjimi, 1997). The performance of this Development Plan was viewed generally as poor partly as a result of the changes to government, both in 1981 and 1984 in addition to both governments’ poor implementation plans (Grubbs, 2006; Ogunjimi, 1997). 3.2.4 Critiques of Modernization The above examples lend credence to the significance of adopting policies canvassed by the modernization approach in explaining development in Nigeria. However, in the 1970s it became obvious that despite the worldwide economic growth measured in Gross National Product, the anticipated benefits of development had not been shared equally among all countries; rather this led to a widening gap between the developed and underdeveloped countries (Todaro, 2000). Consequently, the modernization approach has been criticized because of their “misleading evolutionary and functionalist assumptions, methodological problems, and ideological biases” (So, 1990, 59). For instance, Rostow’s economic growth model has been recognized as suffering from overgeneralization as his model insists on societies’ development from traditional to modem societies. Development is considered a linear, evolutionary process with a determined final goal. The current social, political, ecological, technical, and economic conditions of the developed world are considered to be the only desirable aims of societies (Bichler & Gaderer, 2009). 44 Development in that sense starts at point ‘A’ in time and ends at an undoubtedly defined point ‘B’ in the future. This process ignores the notion that human history is not a continuing linear progression. The modernization approach is criticized for ignoring the fact that within countries different stages of development can be witnessed and that even in developed countries various stages of development coexist. For example, in Lagos State, it is easy to switch from areas with easy access to the internet and paved road networks to areas with lack of electricity and portable water. Based exclusively on the interpretation of the factors for development, Todaro (2000) explains that the modernization approach focuses to a large extent on the effects of foreign direct investment as a catalyst in transforming traditional societies to modem societies, yet it fails to explain the kinds of negative effects such as loss of subsistence livelihood, crowding out of local firms in FDI recipient countries that may occur as a result of over reliance on FDI from host countries. Further, the modernization approach is criticized for placing too much importance on the state to lead the development process without active input from recipients of development (top-down process) (So, 1990). A final set of the critique relates to the need to eliminate traditional values as the same traditional beliefs may not be good for development. Developing countries do not have a homogenous set of traditional values. Their value systems are highly heterogeneous. Nigeria, like many developing countries, has witnessed a hybridization of its value system - a mixture of traditional and foreign values. 3.3 Dependency Approach The dependency approach emerged in the early 1960s as a response to the deteriorating popularity of the modernization approach. The dependency approach is built upon a historical investigation of external forces that constructed the economic, political, and cultural 45 dependencies between countries at the core and periphery (Preston, 1996). In broader terms, Theotonio Dos Santos (1971, 226) emphasizes the historical dimensions of dependency relationships and states: [Dependency is]...an historical condition which shapes a certain structure of the world economy such that it favours some countries to the detriment of others, and limits the development possibilities of the subordinate economies... a situation in which the economy of a certain group of countries is conditioned by the development and expansion of another economy, to which their own is subjected. Narrowly defined, the dependency approach is “an explanation for the economic development of a state in terms of the external influences—political, economic, and cultural—on national development policies” (Sunkel, 1969, 23). There are three common features to these definitions. Firstly, the dependency approach characterizes the international system as comprised of two sets of countries, core and periphery. The core countries are the advanced industrial countries in the Organization of Economic Co-operation and Development (OECD). The dependent countries are those in Latin America, Asia, and Africa, which have low per capita GNP and rely heavily on the export of a single commodity for foreign exchange earnings. Secondly, both definitions assume that external forces are of single importance to the economic activities within countries at the periphery. These external factors include MNCs, FDI, and any other means by which advanced industrialized countries can represent their economic interests in countries at the periphery. Lastly, the definitions of the dependency approach indicate that the relationships between countries at the core and periphery are dynamic because the interactions between the two, tends to not only reinforce, but also intensify the unequal patterns. In short, the dependency approach attempts to explain the underdeveloped state of many developing countries in the world by examining the patterns of interaction among countries and 46 by arguing that inequality among countries is an intrinsic part of that interaction. Countries at the core are economic centres, which become powerful by weakening the surrounding peripheries. Countries at the periphery supply countries at the core with inexpensive primary and low technology products, while the core produces highly priced high-tech goods. The dependency approach maintains that this unequal economic exchange is the root of the development conflict (Fry & Martin, 1991). Further, it claims that the underdevelopment of some countries is the direct result of global economic structures, which is determined by the undue influence of developed countries. The dependency approach combines the neo-Marxist perspective with Keynes’ economic theory, the liberal economic ideas which emerged in the Unites States and Europe as a response to the depression years of the 1920s. Raul Prebisch, a proponent of the dependency approach points out that in order to create conditions for development within a country, it is necessary to promote a more effective internal demand in terms of domestic markets as a base to reinforce the industrialization process. Additionally, there is a need for the creation of a platform for investments, giving preferential role to national capitals and allows the entrance of external capital following priorities already established in national plans for development; and finally, to develop national strategies according to the model of import substitution and protectionism (Prebisch, 1959). Proponents of the dependency approach (Preston, 1996; Dos Santos, 1971; Prebisch, 1959) regard the adoption international capitalism fuelled by multinational corporations as the reason behind the relationships that exist between countries at the core and periphery. According to these proponents of the modernization approach, the capitalist system has enforced a rigid 47 international division of labour, which is responsible for the underdevelopment of developing countries. MNCs began relocating labor-intensive production to low-wage countries in the 1980s, which became the cornerstone of a new global economy. With it came the inflow of FDI (Petras & Veltmeyer, 2007). Until the 1980s, MNCs were constrained under a host country’s rules, but with a new wave of globalization, countries began opening their markets, deregulating them and welcoming MNCs for the perceived benefits of their capital and the diffusion of technology. FDI has been a “repressive instrument” argue Petras & Veltmeyer (2007, 114) not only in Latin America, which they focused on but also in many developing countries (Sala-i-Martin & Subramanian, 2003). Petras & Veltmeyer, in criticizing the ills of the modernization approach, argue that the policies adopted under the modernization approach are the export of capital to the recipient country in the form of FDI and the import of raw materials in return. They argue that FDI stagnates and in some cases slows down the recipient country’s economic growth. The evidence Petras &Veltmeyer (2007) provide is clearly supported when one considers the economic growth under the neoliberal economic model as propagated by the modernization approach. It appears that it promised prosperity, but delivered quite the opposite. By the 1990’s the average per capita growth overall was cut in half from the “state led development” approaches that had been undertaken prior to this period (2007, 56). It was reduced to 1.5% from 3% per annum in industrialized countries and in developing countries (excluding China and India) to 1.2% from 3.5% per annum. For the poorest countries it was even worse, going from 1.9% to a negative 0.5% per annum (2007, 56). The only exceptions were a group of eight Asian “rapidly growing countries” whose governments were cautious of embracing neoliberal economic policies canvassed for by proponents of the modernization approach. Instead, the 48 leaders of these eight countries followed a policy of state intervention with remarkable results. Hence, the dependency approach explains that the modernization approach stagnates and in some cases reduces the economic growth of FDI recipient countries because the profits are expropriated back to host countries of MNCs. Even where profits are realized in recipient countries, the dependency approach argues that it results in the widening of the income inequality gap between the ‘halve’ and ‘halve-not’ and resources are pillaged by elites in society (Sachs & Warner, 2001). 3.3.1 Assumptions of Dependency The dependency approach rests upon the assumption that economic and political power are heavily concentrated and centralized in the industrialized countries, an assumption shared with the Marxist theories of imperialism. If this assumption is valid, then any distinction between economic and political power is spurious: governments will take whatever steps are necessary to protect private economic interests, such as those held by multinational corporations (MNCs). The dependency approach aims to explore the causes of underdevelopment. For the dependency approach, underdevelopment is a wholly negative condition, which offers no possibility of sustained and autonomous activity in a dependent country at the periphery (Brewer, 1990). Further, the dependency approach assumes that developed and industrialized countries are responsible for impoverishing developing countries, and sees capitalism as being responsible for impeding the development of these countries. In addition, the dependency approach is viewed not as a stage of development, but as a process through which countries reach to attain development goal. Finally, flow of FDI into countries at the periphery is viewed with skepticism and suspicion. The dependency approach believes that foreign direct investment is never free. 49 Inflows of FDI come with underlining conditionality imposed by developed countries through state-actors like MNCs. This creates a debt trap to the developing countries and an expropriation of surplus by developed countries-thereby impeding the development goals of countries at the periphery (Preston, 1996). 3.3.2 Mechanisms Through Which Dependency Impacts Food Security With regard to food security, the dependency approach claims that exploitation in the global economy creates inequality between countries and therefore promotes hunger. An international food order creates an unequal exchange relationship between countries at the periphery and core. As a result, this creates an unequal exchange between poor developing countries located at the periphery and rich developed countries located at the core. The resultant effect is a situation whereby poorer countries at the periphery are dependent on rich countries at the core for food imports, while at the same time multinational corporations that set up firms in poorer countries exploit the availability of cheap labour and pay workers less wages in comparison to wages paid to workers in the host countries. Further, the influx of MNCs has resulted in the displacement of individuals from the land, their source of livelihood. Some of the activities of these MNCs are not related to the production and/or processing of food products and as such MNC activities do not adequately compensate for the loss of agricultural activities. In this regard, formerly food secure countries lose their subsistence way of life to the marketoriented characteristic of globalization (Scanlan, 2001b; Barkin, Blatt, & De Walt, 1990). The dependency approach argues that foreign direct investment has a strong harmful effect on food consumption, even more detrimental than that of primary export dependence. MNCs penetration reduces food security for the periphery countries for several reasons. FDI promotes a luxury goods market that diverts consumer demand. Again, as pointed out earlier, 50 MNCs use capital-intensive production in labour-surplus environments, and as such cause unemployment and underemployment. The implication is that unemployment results in loss of income and the inability for individuals to purchase food in sufficient amount (Lee, Francois, & Arthur, 2007). Susan George (1989) notes that the most concerning thing about MNCs particularly in the agricultural sector is that they crowd out smaller firms due to their sheer size. But the effect of MNC influx further extends to their exploitative nature of using host country’s land and labour for producing food and rarely satisfies the local needs as agricultural products are exported to developed markets. Many opposed to the increased influence of MNCs argue that they stifle competition and crowd out local food producers (Wimbereley, 1991; Susan George, 1989). The implication is that the livelihood of local farmers is lost and there is a gradual erosion of culturally distinct foods resulting in a decline in food security. 3.3.3 Evidence of Dependency in Nigeria Today, many developing countries at the periphery are trapped by large debts that prevent them from developing. Between 1970 and 2002, African countries received $540 billion in loans from wealthy developed countries through the World Bank and the International Monetary Fund (IMF). African countries have paid back $550 billion of their debt, but still owe $295 billion (DMO, 2005). The difference is compound interest. On the surface, Nigeria’s recent agreement with the Paris Club over the much talked about debt relief programme may seem like a cause for celebration, but upon closer inspection one can see that this ‘gift’ is a real cause for concern and skepticism. A critical analysis of the “debt relief’14 shows that, on balance, Nigeria comes out as a big loser. 14The history o f Nigeria debt with the Paris Club o f creditors (a group o f officials from 20 o f some o f the world’s biggest economies which provides financial services such as debt restructuring, debt relief, and debt cancellation to 51 The deal confirms what the literature of the international economic order and proponents of the dependency approach have long argued, that an international economic system is designed to benefit the wealthy developed countries at the core at the expense of developing countries at the periphery. In sum, the Nigeria-Paris Club agreement provides that the Club will “write-off’ 60 percent of the debt that Nigeria owes members of the Club and pay 40 percent ($12.4 billion) (DMO, 2005). Victor Okafor explains that Nigeria has invested large amounts of money to service its debt, yet, it appears that the country’s debt profile is not declining. He goes further to state that, “attention must shift to unconditional debt cancellation as opposed to debt relief...” (n.p.), to find lasting solution to the debt trap impasse. Proponents of the dependency approach argue that widespread malnutrition is an effect of the over-reliance of foreign investment. This is common around the globe. Nigeria is one of the world’s largest oil exporters, but is classified as a low-middle income country with over half of the population living on less than $2/day. These are the arguments proponents of the dependency approach point to in explaining the exploitative nature of core-periphery relationships (World Bank, 2011; UNDP, 1997). Today, many parts of Nigeria still experience acute fuel shortages yet the export of crude oil continues. indebted countries) dates back to 1964 when Nigeria was granted a loan of U$ 13.1 million from the Paris Club for the building o f the Niger Dam. By the time the debt relief was granted in 2005, the conditions of its repayment constituted an enslavement of the country. The combined principal o f the loans purportedly taken out by 2005 was about $18 billion. As at 2005, Nigeria had paid over $42 billion yet still owed over $30 billion. Between 2003 and 2005, for instance, Nigeria paid $3.4 billion to service its debt, but the interest alone rose by $4 billion during the same period, causing the total debt to jump from $28 billion to over $32 billion (Dijkstra, 2011,9). In total, the debt relief granted by the Paris Club allows Nigeria to obtain a debt cancellation at $18 billion (including moratorium interest representing an overall cancellation o f about 60% o f its debt to the Paris Club of about $30 billion. Paris Club creditors will be paid an amount o f $12.4 billion, representing regularization o f arrears of $6.3 billion, plus a balance o f $6.1 billion to complete the exit strategy. In order to benefit from the debt relief Nigeria had to pay the $12.4 billion just over a period spanning 7 months (October 2005 to April 2006). The payment o f such a whooping sum o f money by a country which has large numbers o f the population povertyridden only to be relieved of debts o f which over twice the cumulative principal borrowed had been repaid have left many wondering whether the debt relief granted Nigeria by the Paris Club was beneficial to the country (Dijkstra, 2011). 52 3.3.4 Critiques Of Dependency The principal critics of the dependency approach have focused on the fact that this school does not provide exhaustive empirical evidence to support its conclusions. Firstly, the dependency approach uses highly abstract levels of analysis. Secondly, it is argued that the dependency approach considers ties with MNCs as being only detrimental to countries when these links are used as a means of transference of technology (Young, 1995). In this sense, it is important to remember that the U.S. was also a colony, and it had the capacity to break the vicious cycle of underdevelopment (Dos Santos, 1971). Thirdly, the critiques state that the exclusive reliance on external influence gives the impression of the periphery being passive and without any influence in decision-making. Finally, a number of critiques question the ability of the dependency approach to provide solutions (Fry & Martin, 1991; Young, 1995). For example, given the frequent occurrence of fuel shortages in Nigeria and the country’s dependence on ‘outside help’ (importation of refined oil), it is questionable if the cessation of exportation of crude oil will resolve the issue of domestic shortages of refined oil without the country improving its domestic refining capacity. It is also unclear if it will help the country in overcoming underdevelopment. Critiques of the dependency approach argue that policies implemented under the dependency approach allows for more government involvement through the establishment of state-owned corporations. When compared to the private sector led MNCs, critics of the dependency approach (Fry & Martin, 1991) explain that policies of the dependency approach lead to inefficiencies of state owned corporations. These resources that come out of state coffers represent money not spent in other ways, like the development of domestic infrastructure. 53 3.4 Conclusion In conclusion, the modernization and dependency approaches provide bedrocks in understanding the role FDI plays in assuring food security. Both approaches pose varying perspectives into the controversies surrounding foreign direct investment and food security in countries at the periphery. The major arguments to note are the modernization approach claims that underdevelopment is due to tradition, which prevents developing countries from progressing through the ‘universal’ stages of development, whilst the dependency approach states that it is due to developed countries developing at the continual expense of developing countries. As much as the reasons proposed contradict each other, the solutions offered are entirely conflicting responses to the problem. The modernization approach believes that external solutions must be implemented, whereas the dependency approach believes that only internal solutions will bring change to the issue of development. Overall, the impact of FDI on food security offers contradictory outcomes and mixed evidence. In my view, the key to this puzzle is the overlooked fact that foreign direct investments in different economic sectors behave differently, and as such have different consequences, hence, the need to disaggregate FDI as a way in understanding its impact on food security. 54 4.0 Chapter Four: Impact Of Foreign Direct Investment On Food Security In Nigeria 4.1 Introduction The challenge facing Nigeria is to eradicate hunger and attain food security. The approach to attaining food security and economic development lies in the Nigerian government creating an environment that encourages more private sector participation and attracts foreign direct investment... ” “ — Dr.Akinwumi Adesina (September 10, 2013)15 One of the controversial issues in economic development is the role of FDI in the food security of a nation. Protagonists of the modernization approach argue that FDI inflow can promote food security while opponents argue that FDI inflow can be detrimental for food security of nations especially developing economies. Mihalache-O’keef & Li (2011) explain that each sectoral foreign direct investment influences food security differently and as such, there is the need to disaggregate FDI into primary, secondary, and tertiary FDI and examine their impact on food security. This is relevant to the research question posed in this research study which states “What is the impact of sectoral foreign direct investment inflow on food security in Nigeria? And to what extent is the inflow of sectoral foreign direct investment influencing dietary adaptation and convergence in Nigeria?” There are mechanisms through which FDI can promote food security. One way is that countries experiencing a food deficit can rely on the importation of food. Another way is that countries can take a path of maximizing food production by boosting the agricultural sector 15 A speech titled “Transforming Nigeria’s Agriculture” delivered by Nigeria Minister of Agriculture at the inauguration o f the Agriculture and Food Security Centre o f the Earth Institute of Columbia University, New York, USA. 55 and also attracting large players such as multinational corporations into the food and retailing sector. Both scenarios have their pros and cons, nevertheless, both have the potential to promote the availability and access to food. For example, allowing FDI in the agricultural sector would enhance agricultural practices and provide farmers the technology in improving crop yield. In addition, inflow of FDI into the manufacturing sector and retail sub-sector, MNCs such as Wal-Mart would bring domestic prices and inflation on par with international trends which will ensure price stability for the poor and vulnerable sections of the society hence assure food security. As more FDI flows into the host country, as canvassed for by modernization, the result is rapid urban growth. The growth of urban centres can be attributed to individuals migrating to urban centres in search of employment, higher wages, and a better living standard. As a result urban growth is not only resulting in urbanization but to changes to food systems. Due to urban lifestyle changes, traditional preparation and consumption of meals at home is increasingly being replaced by street and fast food consumption. Also, the location of MNCs predominantly in urban and semi-urban areas has resulted in the availability and access to a wider variety of food. Needless to say, urbanization as a result of FDI inflow is causing changes not only to food systems, but also to the adaptation and convergence of food. 56 Figure 2: Channels of Sectoral Foreign Direct Investment (FDI) Impact on Food Security i C Foreign Direct Investment (FDI) : % • PrimaryHX 1 1 little spNfover beneftts for other sectors ten t easily captured by elite*. rareiy reinvested in pubMc goods or towards sustainable dawlopmini Reduced human capital SacMMtoyfOl • NCfMMO (f lV fo W M f ltll a n d yvfl&uMirf land from tufettatence agriculture to otharfonm of oammerc*at use HMtfM tu n l dfvciofMMfll ta fiifo il for atiivieting poverty IncreiMd market competition Technofogy and knowledge sp * o v t improving human capital I my Hgphe? employment wages Lower pnces of tneefmediate and Anal good* Improved sluffr that puts workers in a better bargafcung position Positive ettemebtes more evenly distributed* trickles down and reaching the poor I Tertiary FOt Dtae-nnted. better end more attttH bicM m cci Technology ami know-how spdtove n Iftfiltt of MNCt teailafoiry of a wider vanery of food at relative paces Mfr»tio«t to city ifomi, therefore foregoing sidHistonce agriculture and paying higher prices for food e w tia n m a rle a % 51 Higher angri Mfratton to urban oties were skilled fobs are located Extra training increases workers' bargaining power D i e t ar y Convergence Di et ar y Adaatation , FO O D ACCISS f t AVAAAMLfTV CHAMMEl c = 3= Adapted from MtdMacheO-Xccf A li, 201 X C C O riO M C OHOWTW C H A * * £ l 4.2 Literature Review This section serves as an in-depth exploration of the existing literature relating to food security and foreign direct investment in Nigeria. The food security situation in Nigeria as discussed in chapter 2 is significantly different from the in-depth review of existing literature in this section in that the food security situation earlier discussed provides a general understanding of the food security situation in Nigeria and serves as a context upon which this section builds upon. The definition of food security is multifaceted and has evolved over time. The literature review begins with an examination of the evolution of FAO definitions and 57 measures of food security. The global economic crisis of the 1970s, sharp rise in food prices caused by famine and drought and the focus on human development are some of the many dimensions that have influenced the evolution of the definitions. This evolution has resulted in the varying approaches to measuring food security and its causes. The literature presents varying perspectives explaining the causes of increases or decreases in food security. Over time, Nigeria has witnessed an increased interconnectedness with the rest of the world, which is evidenced by the growth of FDI. Against this backdrop, I will discuss the inflows of FDI into Nigeria on a sectoral level, that is, inflow of FDI into the primary, secondary, and tertiary sectors. Further, I will examine what effect each sectoral FDI has on food security. 4.3 Food Security Food security is a multidimensional concept that has evolved overtime and space (Liverpool-Taise, Kuku, & Ajibola, 2011). Food security has become a means of describing food deficits through the exploration of the characteristics of individual households (Biggerstaff, Moris, & Nichols-Casebolt, 2002); the impact of location and transport to food outlets on food availability and food access (Coveney & O’Dwyer, 2009); and the global factors influencing the production and supply of food (Magdoff & Tokar, 2009). Amber Bastian and John Coveney (2013) argue that food security has become a term used across individual, household, and national levels. Most commonly, food security has been used by state and non-state actors to describe, monitor, analyse, and intervene in a food system that has not met the needs of the world’s population for sufficient and nutritious foods (McMillian & Dowler, 2011). 58 The term “food security” has been used overtime to mean different things, but what is “food security” and how can it be measured? The former will first be addressed by examining the evolution of food security within the literature and its implication on food security. In its narrowest definition Per Pinstrup-Andersen explains that “food security means that enough food is available, whether at the global, national, community or household level” (2009, 5). This narrow definition in itself throws up further debate as to what “enough” means. Does enough food imply the ability to meet the economic demand, or does it imply enough food to meet dietary needs associated with hunger and nutrition? Originally, the term food security was used to explain a country’s ability to have access to enough food to meet its dietary energy requirements (Maxwell, 1996; PinstrupAndersen, 2009; Ruel, 2003). National food security was used by some scholars (Kent, 2002; Porkka, Kummu, Siebert, & Varis, 2013; Shutao, 2010) to mean self-sufficiency, or a countries ability to produce the food it needs to meet the food demands of the population. Again, the term “self-sufficiency” needed clarification. It is unclear whether self-sufficiency relates a country’s ability to meet the quantity of food demands or its ability to meet the energy and dietary requirements of its population. In addition to this the debate on selfsufficiency has also explored a country’s ability to generate enough hard currency to meet any shortfall in the domestic production of food (Huang, Fu, & Chang, 2009). The use of the term food security at the national and global level tends to focus on the supply side of food equation (Pinstrup-Andersen, 2009). This is not surprising as food security is first used in the international development literature of the 1960s and 1970s to refer to the ability of a country to assure the adequate supply of food for its current and projected population (Ramachandran, 2013). During this period, the Malthusian theory of 59 population growth exceeding food production implied that there would have been catastrophic consequences for food security, a theory that was widely accepted. The catalyst was a critically weakened world food supply. The global food crisis from 1972-1974 was characterized by a global net food deficit. World food production declined by 32 million metric tonnes (19%) within this period in comparison with food production performance in the same period prior to the world food crisis (Van Rooy, 1997). Therefore, the initial focus of attention was primarily on food supply problems and ensuring the availability of food at both the international and national level (Overseas Development Institute, 1997). The initial focus on food supply is reflected in the 1974 World Food Summit definition of food security as the “availability at all times of adequate world food supplies of basic food stuffs... to sustain a steady expansion of food consumption... and to offset fluctuations in production and prices (FAO, 1974, 9). The focus of the food security was on strengthening food production and to increase availability and stability both at the global and national levels of basic foodstuff. In order to mitigate the risk of global food shortages the “Green Revolution” was popularized. The Green Revolution was based on the genetic improvement of particular productive plants in order to boost domestic production, hence world supply (Glaeser, 2010). The most significant factor that led to the revision of the definition of food security was experiences from the Green Revolution. The Green Revolution helped increase production of staple crops (supply side), but did not guarantee food security (Nzimiro, 1985). The inability to access food became a major concern stemming from a lack of effective demand (demand side). If individuals are to be food secure, access to food must 60 also be addressed. A.J. Donkin et al. (1999), Amartya Sen (1982), and Per PinstrupAndersen (2009) argue that availability of food does not assure access to food, nor does enough food calories assure a healthy and nutritional diet. This brought about a whole new dimension to the issue of food security, implying that demand is just as important as supply for food security. As a result, the Food and Agricultural Organization (FAO) redefined and expanded the concept of food security to: “Ensuring that all people at all times have both physical and economic access to the basic food that they need” (1990, 13, italics in original). This definition was revised to include the individual and household level, in addition to the regional and national level of aggregation in food security analysis (Clay, 2002). In 1986, the World Bank report “Poverty and Hunger” focused on the nature and characteristics in the decline of food security (also referred to as food insecurity). It introduced a clear distinction between chronic food insecurity and transitory food insecurity. The former is characterized by poverty, low national and household incomes, while the latter are periods characterized by natural disasters, conflict or economic collapse. Therefore, the concept of food security was further broadened to explain: “access of all people at all times to enough food for an active healthy life” (World Bank, 1986, 12). The World Food Summit of 1996 adopted a more complex definition to include the aspects of nutritional value and food preferences. The agreed upon definition states: “Food security, at the individual, household, national, regional, and global levels [is achieved] when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for a healthy and active life'1'’ (FAO, 1996, 8, italics in original). The addition of “safe and nutritious” emphasized the importance of food safety and the nutritional composition of food, while the addition of “food 61 preferences” redirects emphasis not just to access to food, but access to food that is preferred (Schmidhuber & Tubiello, 2007). This implies that people with equal access to food, but different food preferences could exhibit different levels of food security. Per PinstrupAndersen (2009) and Van der Veen (2003) argue that as long as “preferences” refer to culturally acceptable foods that meet religious and ethical values rather than the broader interpretation of luxury goods or ostentatious life-style, the addition of “preference” may not be problematic. This definition was further amended by the FAO in 2002 to emphasize the significance and importance of social aspects of food security: “Food security exists when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious foods that meets their dietary needs and food preferences for an active and healthy life” (FAO, 2002, 5, italics in original). As such the 2002 FAO’s definition of food security will be adopted within this study because of its wholistic approach to defining the multidimensional concept of food security. There have been numerous attempts to define the concept of food security in the research and policy arenas. The international community has accepted this increasingly broad statement of common goals and implied responsibilities. However, issues of practicability have led to a focus on narrower, simpler objectives around which to organize international and national public action. The UN Millennium Development Goals and the 1996 World Food Summit (WFS) are examples of policy frameworks illustrating the primary objective of international collective action on food security, which is to halve the number of people hungry and undernourished by 2015 (FAO, 1996; World Bank, 2011). 62 4.4 Unit Of Analysis: Individual Food Security In the early 1980s, there was a shift in thinking about food security influenced by the concept of “food entitlement” or the view as food as a basic right. Attention to issues relating to food security centred on the individual (Sen, 1982). A consequence of this was that an important level of analysis for food security shifted from the household as a collective unit to individual members of a household. It is the nutritional status of individual household members and the risk of that status not being achieved or becoming undermined that is the ultimate focus (Ajani, Adebukola, & Oyindamola, 2006; Maxwell & Smith, 1992). A great deal of attention has been paid to the analysis of food security at this level over the last three decades to determine the number of food secure and the causal effect associated with food security. The focus of this research will place emphasis on the food security of the individual. However, where the term household is used within the thesis and it should be understood to represent intra-household distribution of food. There are two important reasons that justify the focus on the individual as the unit of analysis of food security. First, individuals make up a household or family unit. Second, individuals are primarily responsible for decisions that determine intra-household resource allocation. Lastly, improvements in food security of individuals ensure that welfare of a nation is maximized (Gittinger et al., 1990; Jacobs, 2009; Phillips & Taylor, 1990). 4.5 Dimensions Of Food Security Food security involves four aspects entitled the Four Dimensions of Food Security (FAO, 1996). These four dimensions are extrapolated from the 1996 World Food Summit definition and are, together, equally useful as a tool for food security analysis. 63 4.5.1 1. Food Availability Food availability refers to sufficient quantities of food supplied through domestic production and/or imports. This dimension of food security is succinctly captured by FAO as “The amount of food that is present in a country or area through all forms of domestic production, imports, food stocks, and food aid (1996, 10). Up until the early 1980s, food availability was equated to food security. The conviction that food security consists in the availability of food led to the belief that increasing food production would increase and assure food security. The focus of the debate was on strengthening food production to increase the availability and stability of world food supplies of basic foodstuff. Between 1960 and 1996, food production more than compensated for the growth in world population. The world’s population grew by 90% in this period, while food production more than doubled, growing by 118% (World Bank, 2012b, Khush, 1999). Further evidence showing a collective global action towards food availability shows that per capita grain consumption also grew by 24% over this period (Khush, 1999). 64 Table 2: World Grain Production, 1960 -199616 Year Total grain (million tonnes) 847 1096 1447 1664 1683 1612 1564 1685 1780 1696 1776 1703 1745 1680 1852 1960 1970 1980 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 Grain per capita (kg) 279 296 325 343 341 321 306 324 336 315 316 307 309 293 346 Source: Khush (1999) Yet, despite the increases in global food production and supply, hunger persists. The FAO’s “The State of Food Insecurity in the World 2001” report stated that by the end of 1996 there were still 815 million undernourished people in the world: 777 million in the developing countries, 27 million in transition countries, and 11 million in the industrialized countries. This implies that while food availability is an important dimension of food security in explaining global food supply, it is not a sufficient condition in assuring food security. 4.5.2 2. Access To Food The second dimension to food security is access to food. Amartya Sen observed in his work on famine and poverty, that “starvation is the characteristic of some people not 16 Data in Table 2 are provided up until 1996. The reason for this is that the available data on grain production and utilization from 1960 - 1996 was what influenced many o f the outcomes and decisions made about global food security at the 1996 World Food Summit. 65 having food to eat. It is not the characteristic of there not being enough food to eat” (1982, 1). The 1996 World Food Summit definition refers to having physical, economic, and social access...[to food]” (1996, 11). Access to food is comprised of three elements, namely: physical, economic, and social. Physical access is the ability to reach shops, markets or supermarkets where the required food is to be found (Guy & David, 2004). Physical impediment to access to food occurs where food is available in a country or location and there is shortage in another location due to limited or no transport facilities between both locations (FAO, 2012). Economic access refers to household ability to regularly acquire adequate amounts of food to meet their dietary requirements. For many years, the problem of food security has been perceived as that associated with people living in the rural areas who for reasons such as loss of farmlands, low harvest, loss of income, and climatic conditions are not producing enough to meet their own dietary requirements, hence they suffer famines and malnutrition. Today, many analysts have found that difficulty in accessing food is both a rural and urban problem. Social access to food refers to the notion that food may be available in the required amount and that individuals may have sufficient resources to purchase food, but where there are social impediments such as gender, religion or culture; such barriers could influence an individual’s food security status (Lawton et al., 2008). 4.5.3 3. Food Utilization The third dimension of food security is food utilization. At the end of the 1996 World Food Summit food security referred to safe and nutritious food, which meets their dietary needs (FAO, 1996). For individuals to have safe and nutritious diets certain elements such as preservation, conservation, and selection of food have to be safe and of good quality. 66 The importance of food utilization cannot be overemphasized. The vast amount of the world’s population undernourished are suffering from malnutrition mainly because of incorrect utilization of food Conte & Morrow (2002), further demonstrating the close relationship between food security and nutrition. There cannot be food security without proper nutrition. 4.5.4 4. Food Stability The fourth dimension of food security is food stability. Food stability refers to the ability to obtain food consistently overtime and, “...at all times” (FAO, 1996). This dimension of food security was added to draw attention to the importance of stability in the first three dimensions of food security. Obstacles to food stability exist. They are transitory, seasonal, and chronic food insecurity. Transitory food insecurity is a short-term or temporary food deficit. This may be caused by decreased food availability, drought, or natural disasters (Fan, Torero, & Headey, 2011). Other factors that cause transitory food insecurity include: civil unrest (Suleman, 2009) the market instability resulting in food price hikes (Maxwell, Webb, Coates, & Wirth, 2010); and unemployment (Rempel, 1998). Seasonal food insecurity also referred to as cyclical food insecurity (Derereux, 2006) results from irregular patterns associated with growing seasons (Longhurst & Lipton, 1989). Chronic food insecurity is a long term or persistent inability to meet minimum food requirements (Devereux, 2006). In this situation, households are constantly at risk of being unable to acquire adequate amounts of food for individual members over long periods of time. Transitory, seasonal, and chronic food insecurity are linked. The occurrence of transitory and seasonal food insecurity can put 67 individual household members at risk of experiencing longer and more permanent chronic food insecurity. 4.6 Measures Of Food Security Food security and food insecurity exist at different ends of a spectrum, the higher the propensity individuals to acquire food to meet their dietary and nutritional level the more food secure they are and vice versa (Maxwell, 1996). Louise Cunningham (2005) explains that there are four methods by which food security can be measured (Table 3). These methods explore the different dimensions of food security at the national and/or individual levels. 68 Table 3: Methods for Measuring Food Security •P e rc e n ta g e re p o ttin g ex perien ce o f fo o d in secu rity •In te rv ie w s p ercep tio n s • Comparison o f energy and nutrients requirement norms with usual food consumption expressed in terms o f daily dietary energy per capita energy consumption (DEC) • DEC and DPC per capita for a country, derived from food balance sheets. lo o k in g fo r of energy •In d iv id u a l, po pu latio ns, subgroups, an d n atio n al •A n a ly sis d oes not include inform ation on p rices and q u a n titie s in m arkets o r th e fun ctio nin g o f th e tran sp o rt system . P erception o f d ep riv atio n is in flu en ced by a p erso n ’s relativ e p o sitio n in society. •Q u ic k to ad m in ister, w ell und ersto o d b y policy-m akers a n d sp ecific to co u n try and co n tex t, • National • Roots and tubers are not included in food balance sheets, which may • DEC and DPC give good indication of where also have flawed production and trade data. Only energy intakes are considered, but not that o f micronutrients. individuals are suffering and lacking nutrients and correlates with income to indicate extent o f poverty and daily dietary per capita protein consumption (DPC). • In d iv id u al intak e related to • Depth o f deficiency, dietary diversity and percentage o f and hunger •D ie ta ry h isto ry , food frequency qu estio nn aire, reco rd o f food consum ed, chem ical and n u trien t I- analyses. • Food security questions combined into overall scale •In d iv id u a ls o r po p u latio n sub­ g ro u p s • Population national sub-groups household’s total expenditure on food. Source: Cunningham or •A c tiv ity lev els are largely unknow n fo r assessin g req uirem ents and p o ten tial c u ltu ral co n strain ts. F at an d carbohydrate m ay b e u n d er rep o rted w hile m icro n u trien ts are i m issed. •V a lid , p o licy relevant, m u ltilev el m easure. • Often fails to determine accurate account o f food eaten outside the home. Data collection and computation cost high and households may change after interview • Valid, policy relevant, multilevel measure. (2005). 69 The purpose of this research is not to explore all methods used in the measurement of food security; nevertheless, it is important to measure their strengths and weaknesses. The FAO and the Individual Dietary Survey Methods will be used in measuring food security. First, the FAO method is the most widely used means of measuring food security and gives a national aggregate estimate of food security in Nigeria. In addition, the indicators of the FAO method are derived from the national food balance sheet of respective countries overtime, which is believed to be relatively reliable since most countries keep data on food for budgetary and planning purposes (Lorenzana & Sanjur, 1999; Smith, 1998). Secondly, the individual dietary survey gives a snapshot of food security measured at the individual level. The flexibility and robustness of this method allows for the dynamics such as dietary adaptation and convergence, nutrition, and health of individuals to be captured (Cunningham, 2005; Mason, 2002). 4.6.1 The FAO Method The FAO method of measuring food security is based on a comparison of the energy requirement norms with usual food consumption expressed in terms of dietary energy (Cunningham, 2005). The minimum energy requirement is the amount of food energy needed to balance energy expenditure in order to maintain body size, body composition and a level of necessary and desirable physical activity, which is necessary for long-term good health (FAO, 2004). 4.6.2 Indicators of food security To measure food security as defined by the FAO, the FAO Statistics Division employs two indicators (i) daily per capita energy consumption (DEC), in kilocalories; and (ii) daily per capita protein consumption (DPC), in grams. They measure two important aspects of food security: hunger and nutrition. 70 In general, the national food balance sheets from which the indicators are measured reflect food acquired by households, rather than the actual amount of food consumed by individual household members (FIVIMS, 2002). This method has come under great scrutiny. It is argued that it overstates the prevalence of undernourishment in some regions and understates it in others, placing too much emphasis on mean energy consumption and not enough on energy distribution (FIVIMS, 2002; Svedburg, 1999). Nevertheless, the FAO is viewed as one of the best methods of measuring food security, hence its general acceptability and wide usage. 4.6.3 Individual Dietary Survey Methods (IDSM) Individual dietary surveys are undertaken for the purpose of establishing the existence, strength, direction, and the level of association between dietary exposure and health outcome in the individual (Ferro-Luzzi, 2003). In measuring food security, individual dietary surveys can be used either at the national or individual level (Cunningham, 2005). At the national level, individual dietary surveys have been conducted for the purpose of providing as estimate of national nutritional status. At this level its usage is limited. Several developing countries opt out of using this method for reasons of cost and logistics (Mason, 2002). At the individual level, the individual dietary survey has been reliable in measuring nutrition and health (Radimer et al., 2004). One reason for this is the flexibility in the construction and application of the questionnaires administered to respondents. This method reveals intra-household distribution of food and micronutrient intake (Cunningham, 2005). Anna Ferro-Luzzi (2003) explains further that IDSM captures information such as the daily episodes when specified foods have been consumed, whether they are home produced or purchased, how they were prepared and where the food was consumed. 71 4.7 Causes Of Food Security/Insecurity: Perspectives The literature is replete with varying perspectives as to what causes food security and insecurity. These perspectives influence the food security status of individuals as defined by the 1996 World Food Summit. These perspectives take the following into account when considering the causes of fluctuating food security/insecurity levels: the urbanization perspective (Maxwell, 1999; Matuschke, 2009); military-famine perspective (Messer, Cohen, & D’Costa, 1998; Scanlan, 2001a); and the techno-ecological perspective (Cohen, 1995; Harper, 1996). Understanding these perspectives is of vital importance in gaining an understanding of the causes of food security in Nigeria. They form a synthesis and understanding of how the complex issue of food security in Nigeria can be disentangled and addressed. Population dynamics are considered the primary engine of social change and if left unchecked, has the potential to result in ecological disaster. The techno-ecological approach focuses on human ability to adapt technology to population demands on the global ecosystem. Human ingenuity is important to adaptation, which is essential to confront the potential challenges to Nigeria’s well-being. These perspectives offer much in the way of gaining a greater understanding of the hunger and nutritional issues facing Nigeria today (Micklin & Choldin, 1984). 4.7.1 Urbanization Perspective Over the last half a century, scholars have attempted to describe the forces driving development in developing countries such as Nigeria. Economic modernization stresses the importance of internal, economic characteristics, which has resulted in the rural-push and urban-pull dynamics that has resulted in migration and urbanization. The rural-urban and local-global interrelationships make it impossible to study urban food security issues in 72 isolation. Yet, it is clear that the extraordinary urban growth in the 20th century and the increasing threats to food security for millions of urban dwellers merits particular attention. In an overview of the causes of food security, Sarah J. Atkinson suggests that given the current trends, the question of urban food security may become the “greatest human challenge of the next century” (1995, 152). The United Nations Population Fund (2011) argues that the world population is projected to grow from 6.7 billion to 9.2 billion between 2007 and 2050. Most of this growth will occur in urban areas of less developed countries. H.G. Overman and Anthony Venables (2005) posit that urbanization is often a positive development, as urban areas tend to be more productive than rural areas, therefore acting as catalyst for economic growth and development. Urbanization, especially in developing countries, can outstretch the capacities of cities to absorb and cater for the growing number of households. If unabsorbed, urbanization poses considerable threat to all dimensions of food security in that the majority of urban dwellers are net food buyers, spending a large part of their disposable income on food (Matuschke, 2009). The 2007/2008 food crisis demonstrated the vulnerability of urban dwellers and the strong link between urbanization and food security (UNFP, 2011). When prices of staple food cops like wheat and rice-started to rise at the end of 2007 and reached decades highs in early 2008, the urban poor were hit the hardest, leading to food-related riots and conflicts (UNFP, 2011). Urbanization affects all four dimensions of food security. Food availability in the form of food production will be challenged to meet the demand of a population that is projected to grow and to urbanize. This implies that a population of net food buyers will 73 demand more food and that these demands will have to be met by rural or peri-urban areas and/or by food imports (UNFP, 2011). Having access to sufficient monetary resources to afford a healthy diet is the most important dimension of food security in urban cities. Households are net food buyers (Maxwell et al., 2000) and in many cities in developing countries household buy more than 90 percent of their food (Ruel & Garrett, 2004). The poor spend the largest share of their disposable income on food purchases, compared to their rural counterparts. Urban households are more dependent on cash incomes and employment opportunities. Studies on urbanization have generally found that food utilization is negatively affected by this process and causes an increase in dietary diversity gap and malnutrition in children (Ruel & Garrett, 2004; Maxwell et al., 2000). However, in urban areas the consumption of food outside the home is increasing rapidly. For example, in, Nigeria, Ghana, and Mali it is estimated that 43%, 27%, and 32% respectively of caloric requirements of low-and-middle income groups are bought from street food vendors (Omemu & Aderoju, 2008; FAO, 2004). Urbanization influences food stability, in that more food has to be transported to and distributed within cities placing additional pressure on rural infrastructure, transport and food distribution outlets. Adequate infrastructure tends to be insufficient in urban areas of many developing countries, thus potentially jeopardizing food security. Akinbamijo Bayo explains the challenges facing Nigeria stating, “Without the urban and peri-urban contributions to a city’s nutrient intake, the challenges of feeding the cities will be enormous (2006, 116-117). Today, more people live in and around cities than in rural areas. In Nigeria urbanization is relatively new, but still over a third already live in cities and the rate of urbanization between 74 2000 - 2030 is projected to range from 2% - 3% (United Nations Department of International Economic and Social Affairs, 2004, 5). This trend is also indicative of the rapid rate of urbanization taking place throughout the sub region of West Africa. The number of cities is expected to increase from 2,500 in 1990 to 6,000 in 2020 (Matuschke, 2009). Cities are seen as indicators of humankind’s “progress” into the 21st century, but it remains to determine the ways in which this progress is beneficial to all (UNCHS, 2001). 4.7.2 Impact O f Urbanization On Food System The food system is by far the largest employer and most broad-based economic activity in many developing countries (Staatz, 2000). Urbanization affects all sectors of the food system. As the urban population increases, more food needs to be transported and distributed to cities. Changing the food habits of urban dwellers modifies the food production systems in urban, rural, and peri-urban areas resulting in changes to the food industry. On the production side, urbanization causes rural and peri-urban agriculture to become more market oriented, i.e., more input-oriented and less diverse in terms of the variety of products (Waibel & Schmidt, 2000). In developing countries, market oriented urban agriculture fills the food diversity gap that urbanization has created, through its more demand-oriented production of fresh and perishable products. Where the process is threatened or jeopardized urban households have little alternatives. 4.7.3 Food Supply and Distribution to Cities Urban households purchase food from various sources: urban wholesale and large retail markets, supermarkets, secondary markets, small neighbourhood markets, local shops, street food vendors, and sometimes directly from rural markets (Dia, 1997). Availability and access to food markets is essential for urban food security. Examples from Nigeria show that 75 the urban poor in the townships cannot afford to travel to buy food from supermarkets, fast food restaurants, therefore resorting to street food vendors (Telia & Oguntona, 1999). Thus, urbanization results in street food vending. The purchase of food from street food vendors comes with both positive and negative benefits which will be discussed later. 4.7.4 Techno-Ecological Perspective As Nigeria makes the transition from an agricultural to an increasingly industrial based society, it must address the issues of urbanization, population growth and the strains these place on the environment. One this front, food security can be maintained only through efforts to achieve a sustainable society “that meets the needs of the human population without compromising those of the future generations” (Harper, 1996, 269). Therefore, humankind must balance their food consumption behavior with earth’s capacity to meet such behaviour without adversely affecting the environment. Failure to optimize technology will undermine household food security. This means that agricultural practice must utilize technologies that enhance soil fertility and crop yield while simultaneously ensuring that the soil is not irreversibly degraded and the environment and natural resources are not adversely depleted. Conversely, technology must be adapted to meet growing demands for food, an important challenge for growing and urbanizing populations (Scanlan, 2001a). Failure to adapt and optimize appropriate technology will undermine household food security. The more optimistic technological perspectives offer much with regard to the links between food security and the environment. Technologists claim that the gloomy predictions for the future of the world oversimplify and misunderstand how the planet really works (Harper, 1996). They believe that technology and human ingenuity have always overcome existing securities and will continue to do so in the future. In fact, they argue that the ability 76 for humans to adapt and make necessary and adequate changes is the greatest resource available to humans (Boserup, 1965). Following this logic, developing countries must address the issues associated with increased urbanization and population growth by adapting new technologies. Joel E. Cohen (1995) posits that the utilization of science and technology is an essential tool in achieving efficiency in food production and distribution systems, thus reducing threats to food security. John Bongaarts (1996) argues that technological innovations will offset problems of population growth by increasing the availability of food and reducing the problems associated with access to food. Conversely, inability to efficiently apply technology is one of the leading causes inhibiting household food security. 4.7.5 Military Famine Perspective Many scholars have made the argument for the military famine perspective to be taken into account as a cause of food security because it emphasizes the lack of resources that insure access to adequate food (De Soya & Gleditsch, 1999; Macrae & Zwi, 1994; Messer, Cohen & D’Costa, 1998). Military famine perspective argues that militarism and violent conflict undermines a households’ ability to attain food security. Discussion of the causes of food security from the military famine perspective focuses on hunger as a consequence of internal conflict, war and military spending. Famine and food insecurity are not processes likened only to drought or other natural disasters, but instead are a result of human induced catastrophe that put populations at risk, most notably children, ethnic minorities, and the poor (Bennett, 1987). “Food wars” are conflicts that involve widespread food insecurity that results from the struggle in which hunger has been used as a weapon of war to weaken opposition forces (Messer et al., 1998). Some have argued that military rule, coup, repression, and war can negatively affect food supply and 77 dramatically disrupt food security. Foreign investments may be cut-off, trade may cease, food production could be altered, land mines may hinder farmers from planting or harvesting, or individuals may be actively involved in a war rather than productively growing food (Messer et al., 1998). Others’ point to the tenuous relationship between military rule and the well-being of a state, emphasizing the potential for repression in the allocation of state resources (Wolpin, 1983). The importance of understanding military famine as a cause of food security cannot be overemphasized because it focuses on issues central to food security, particularly food availability, access to food, and food stability (De Soysa & Gleditsch, 1999). Military famine perspective has played an important role in determining food security in developing countries, especially like Nigeria that has experienced several years of conflict and military rule. Together, the above factors have played important roles in determining the food security situation in Nigeria. The result is that for Nigerians to be food secure the government has resorted to various means such as increased food production and imports to meet growing food demand and assure food surety in Nigeria. 4.8 Food Security Situation In Nigeria Nigeria has experienced some rapid changes in demographic and socio-economic environment, which can be associated with food consumption patterns. Changing consumption patterns have influenced nutrition and resulted in both positive and negative health implications (Lopriorea & Muehloff, 2003). In recent times, a diversity of seasonal crops, among them fruits and legumes are becoming more available nationwide due to opening up of domestic markets. This has increased food availability in urban and rural 78 markets (World Bank Group, 2014a). Presently however, food security conditions are still a concern. Higher food prices, relative to the rest of the country, exist in the far north-east due to the drought experienced in the Chad Basin. The issue was heightened because of the activities of armed militia in the Niger Delta regions where households have been displaced from their subsistence livelihoods of farming and fishing due the oil spillage and the explorative activities of oil companies (Amnesty International, 2013; Danjibo, 2009). Disposable income has significantly deteriorated as food prices remain relatively high. It is therefore not surprising that Nigeria is listed by the Food and Agricultural Organization (FAO) among nations that are technically unable to meet its food needs (FAO, 2012). The importance of agriculture to national development is well documented in the literature (Omotor, Orubu, & Inoni, 2008). The ultimate goal is to raise the standard of living and make better the socio-economic well-being of the population. In recent times (Table 4), trade has been relied upon bridge deficits in food supplies. Ironically, at independence in 1960, Nigeria was an agricultural net food exporting country. Food production was achieved by mobilizing small and medium scale farmers, providing infrastructure for the easy transportation of crops for urban consumption and export (Omotor, 2009). Food inadequacy started during the civil war (1967-1970) as importation of agricultural inputs and machinery was curtailed in order to conserve foreign exchange. In addition, farmlands were destroyed as the production base of the country was equally disrupted and threatened (Akinyele, 2009). This resulted in Nigeria relying on the importation of food to meet the growing demand. Consequently, to reverse this trend, national development plans were initiated to boost food production. Examples include National Accelerated Food Production Programme (NAFPP) in 1972; River Basin 79 Development Authorities (RBDA) and Operation Feed the Nation (OFN) in 1976; the World Bank-funded Agricultural Development Projects in the 1980s, and the National Food Crisis Response Programme (NFCRP) in 2008 (Demeke, Pangrazio, & Maetz, 2008). Table 4: Food production (Million tonnes), net trade (N’million) in Nigeria, 1980 - 2010 Trade Food Production Net Trade Year (2004=2006=100) Oil Non-oil Total Net trade (% of GDP) 1 8 , 7 8 3 ^ 1 25.9 1995 166.6 I 1,083,391 2005 | 99.9 I 2,109,513 1^705^789 I 59.8 10,047,391 I 50/ Source: CBN Statistical Bulletin, several years These programmes have yielded positive results in boosting food production, nevertheless, with the population growth rate outpacing the rate of food production (Table 5 below) it becomes increasingly glaring that reliance on food production cannot assure Nigerian food security. Hence, over the years, Nigeria has turned to the global market as an alternative means of assuring food security. The loss of food sovereignty and the dependence on food importation is making the country quite susceptible to fluctuations to global food crisis. Table 5: Food production, food import and population growth rate in Nigeria (1979 - 2012) Food production, imports, and population Growth (Average annual rate of change %) Food imports Food production Population 1979-1981 1990-1992 1995-1997 2001-2003 to to to to 1992-1995 4.2 4.8 2.9 1995-1997 5.1 2.7 2.9 2001-2003 8.2 2.6 2.7 2009-2011 9.7 2.9 3.7 Source: FAO STATS, CBN Statistical Bulletin (several years) 80 In spite of the significant rise in food production and food imports, it appears that there is still not enough food available to feed the Nigerian population. This is reflected in the Food and Agriculture Organization’s Report (2012) where it is reported that almost 30 million Nigerians are hungry and as discussed in Chapter 1. At the national level, since the reemergence of democracy in 1999, the Nigerian government has gone to great lengths to attract foreign direct investment (Maji & Odoba, 2011). The government has stated that it alone does not have the financial resources to invest equally in all sectors of the economy to stimulate economic growth and improve human welfare measured by food security. Hence, emphasis has been placed on attracting foreign capital to complement government efforts. The rationale for taking this modernization approach is that an increase in FDI inflow would further increase food production for domestic consumption and increase agricultural exports to boost foreign earnings. The implication is that Nigeria would have enough food to feed its population and when there are shortfalls in domestic supply, it would have sufficient funds to purchase food on the international market to meet these food deficits (Idowu & Ying, 2013). The modernization approach of the Nigerian government has often been criticized by critics (opposing political parties, labour union) of the government who argue that over­ reliance on FDI crowds out domestic firms, stifles local food production and worsens food security (Idowu & Ying, 2013; Olayiwola, Soyibo, & Atinmo, 2004). This research therefore places emphasis on the central role FDI plays in either increasing or decreasing food security in Nigeria. The next section will therefore focus on foreign direct investment. Specifically, by disaggregating FDI into different sectors of the economy, namely the primary, secondary, and tertiary sectors respectively, one takes a closer look at how FDI into each sector affects 81 food security. In addition to disaggregating FDI, one explores whether FDI into each sector increases or decreases food security. 4.9 Foreign Direct Investment (FDI) Foreign direct investment is an important element of global economic integration and interdependence. This new wave of integration and interdependence, which some have argued started in the 1980s onward is termed globalization (Hoogvelt, 2001; Comia, 2001). According to the Balance of Payments Manual: fifth Edition (BPM5): “FDI refers to an investment made to acquire lasting interests in enterprises operating outside of the economy of the investor (IMF, 1993, 86). The lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence by the direct investor on the management of the enterprise. FDI can be in the form of stocks or flows. However, analysis will focus on the flows of FDI. Broadly speaking, FDI creates direct, stable, and long lasting links between countries, and allows the host economy to promote its products more widely in international markets. In addition, FDI acts as a source of funding investment and a catalyst for development. Some have argued that the benefits of FDI are immense (OECD, 2013; Firebaugh & Beck, 1994; Alfaro, 2003). Many countries have sought to attract foreign direct investment to spur economic growth and development and reduce hunger. However, the underlining question is: how does foreign direct investment inflow affect food security? Existing literature based on the dependency and modernization arguments as shown in Chapter 3 offer opposing arguments as well as conflicting evidence. It is therefore imperative to resolve this dilemma by disaggregating FDI (Mihlache-O’keef & Li, 2011). Assessing the impact of FDI on food security as a whole does not reflect the dynamic causal relationship, hence the need 82 to disaggregate FDI into distinct economic sectors and explore the contrasting attributes that produce different consequences for food security. Foreign direct investment flows into three sectors of an economy: primary sector- primary foreign direct investment (PFDI); manufacturing sector- secondary foreign direct investment (SFDI); and service sectortertiary foreign direct investment (TFDI) (Mihalache-O’keef & Li, 2011). 4.10 Primary Foreign Direct Investment (PFDI) Primary foreign direct investment (PFDI) is the flow of capital into the primary sector of an economy. The primary sector includes the production of raw materials and basic foods. Activities associated with the primary sector include agriculture (subsistence and commercial), mining, and forestry, grazing, fishing, and quarrying (Ilorah, 2006). Specifically, primary FDI can be explored from the oil and non-oil sectors. Primary FDI comprises FDI into the oil (petroleum) and non-oil (agriculture) sectors. Analysis of this study with respect to Nigeria is limited by the inability to further disaggregate primary FDI due to paucity of data. Nevertheless, it appears that FDI into both the oil and agricultural sector affects the food security status of individuals differently and have both positive and negative effects. In specific cases of FDI into the agricultural sector: FAO (2011), Gerlach & Liu (2010) and Hallam (2011) provide pieces of evidences. Hallam (2011) noted that with FDI into agriculture, benefits should arise from capital inflows, technology transfer leading into higher domestic productivity, and production and employment creation. Additionally, there could also be multiplier effects through local sourcing of labour and other inputs, as well as a possible increase in food supplies for the domestic markets and for exports. Gerlach & Liu (2010) document that foreign investors in floriculture in Uganda have introduced more 83 environmentally friendly production methods, suggesting that foreign investment is not always environmentally damaging17. Also, greater local availability of palm-oil in Nigeria and Ghana, horticultural products in Senegal, and rice in Uganda are as a result of FDI inflows. Additionally, FAO (2011) reports that FDI in Nigeria is estimated to have generated annually up to 80,000 jobs directly and over 200,000 jobs indirectly between 2000 and 2008. These positive benefits are predicated on the absorptive capacity of domestic agriculture. The desirable benefits will not accrue if investments results in the creation of an enclave of advanced agriculture in a dualistic system where traditional smallholders can neither compete nor emulate (Hallam, 2011). Agricultural FDI undermines the mechanism for improving rural infrastructure through government subsidies, which should result in encouraging the development of local markets for the products of small farmers (Ng & Aksoy, 2008). Such a mechanism, in the view of Mihalache-O’keef & Li (2011), is a recommended pathway that alleviates hunger. Additionally, expansion of foreign investor operations through the purchasing of land from smallholders thwarts subsistence activities, forcing them to rely solely on incomes too low to purchase sufficient quantities of food (Ng & Aksoy, 2008). Current trends show that Nigeria has consistently attracted large inflows of FDI, especially after its return to democracy in 1999, which resulted in the opening up of its economy. However, despite the increased level of FDIs in Nigeria, FDI in the oil sector in comparison with other sectors has benefited substantially. Over the past two decades, the share of oil FDI inflows accounts for over 93% of total FDI into the primary sector of the Nigerian economy. This sector employs less than 2 percent of the Nigerian population. The 17See Bhagwati (2004) on Multinational Corporations operating higher standards. 84 end product distributed by this sector is more oriented towards external consumption. The ability of such investments to have a linkage effect on other sectors of the economy, particularly the agricultural sector becomes very minimal (Akinyele, 2009). Table 6: Agricultural composition of PFDI in Nigeria, 1999 - 2007 Year Cummulative (N'millions) PFDI Percentage of Agriculture in PFDI Percentage Crude-Oil PFDI of in 20001157^08 2002 1 166,631 2004 | 249,220 2006 I 481,239 2008J67U 89 | 0.2 Source: CBN Statistical Bulletin, Various Issues, 1999 - 2009 Table 6 shows that less than one percent of total FDI in the Nigerian economy between 1999 and 2009 was in the agricultural sector. Despite this scenario, Nwankwo (2013) observes that the average annual growth rate of the agricultural sector between 1999 and 2009 stood at 8 percent, superceding the annual average growth rate of the Nigerian economy, which stood at 7 percent within the same period. The growth rate of the agricultural sector is well below the targeted 12 percent average annual growth rate projected by the government in order to tackle hunger through self-sufficiency in food production. When one considers the level of investment both the agricultural and oil sectors receive, it appears that the decline in Nigerian food security is the result of FDI inflows to the oil sector. 85 It is because of the above-mentioned analysis and influence of the oil-sector on primary FDI that the writer adopts the position of scholars such as Mihalache-O’keef (2011), Scanlan (2001b), Akinyele (1998), Aykut & Sayek (2007) among others that primary sector as a whole (oil and non-oil PFDI) is not contributing to improving food security in Nigeria. Most flows of FDI in the primary sector are foremost for exports to developed countries (Mihalache-O’keef & Li 2011), thus reinforcing the dependency arguments of exploitation and colonial links between countries at the core and periphery. By focusing on the mechanism by which primary FDI impacts food security, one observes that large projects in the primary sector use intermediate inputs and export most of the output (Aykut & Sayek, 2007). Albert O. Hirschman argues that “...this ability for primary products from mines, wells, and plantations slip out of a country without leaving much trace in the rest of the economy” (1958, 110). The flows of FDI into the primary sector tend to be volatile and also to have insignificant spillover benefits for the other economic sectors by diverting domestic resources to foreign markets (World Bank, 2005). In Nigeria, Xavier Sala-i-Martin & Arvind Subramanian (2003) point out that an increase in oil revenues from $33 per capita in 1965 to $325 per capita in 2000 had no effect on per capita real GDP, which amounted to $325 in 2000, unchanged from its 1965 level (2003, 45). These figures are consistent with the World Bank estimate. Further, the World Bank now estimates that GDP per capita in 2012 had increased fourfold to $1,555 from 2000 levels. This significant rise is connected to the rise in the value of crude oil, which accounts for over 95 percent of Nigeria’s foreign exchange (World Bank, 2005; World Bank, 2012b). Nevertheless, benefits from PFDI tend to be concentrated and therefore easily captured by the elite in society. The resource flow to the primary sector tends to increase the rent-seeking 86 behaviours of individuals and weaken existing institutions (Sachs & Warner, 2001; Sala-iMartin & Subramanian, 2003). As a result, the benefits of PFDI rarely trickle down nor are they reinvested towards sustainable development (Mihalache-O’keef & Li, 2011; UNCTAD, 2001; World Bank, 2005). Alfaro (2003), Aykut & Sayek (2007), and Mihalache-O’keef & Li (2011) show using cross-national empirical analyses that PFDI hurts economic growth and development in developing countries. For example, Nigeria with its abundant natural resources ranks among the 35 poorest countries in the world. According to the United Nations Human Development Index, 60 percent of the Nigerian population lives below the poverty line of $2/day (UNDP, 2013). Primary FDI produces negative environmental externalities harming the livelihood of indigenous peoples. The operations of multinational companies in the primary sector often affect the farmland of indigenous people, pollute water and the environment, leading to loss of income, displacement and migration. The case of Shell Oil in Nigeria is infamous. A recently published 2013 Amnesty report states that Shell recorded about 138 cases of oil spillage- about 16, 000 barrels of crude oil in 2013. It is estimated that in the past 50 years, over 9 million barrels of crude oil has been spilled in the oil-producing region of Nigeria (Finer et al., 2008; Tattersall, 2009). Primary foreign direct investment results in technological spillover. However, when it is not properly managed, as is the case in the agricultural sector it may have negative effects on food security, especially in oil-rich developing countries like Nigeria. Liesbeth Dries and Johan F.M. Swinnen (2004) explain that technology spillover could stifle the growth of local farmers who cannot compete favourably with MNCs, resulting in loss of local and culturally distinct food as well as the erosion of sustainable agricultural practices. 87 Government policies in Nigeria have exhibited a shift from support for traditional forms of food production such as crop rotation, mixed farming, bush fallowing etc. in favour of chemical-dependent forms of food production and genetically modified seedlings to increase yield and boost profits (Clapp, 1998). The resulting consequence is the pollution of farmland and water sources, which has grave consequences for food security, health and nutrition in the long run. Primary FDI contributes little to the human capital development of individuals in FDI recipient countries. Labour hired within this sector is unskilled and little or no training is provided. Due to the unskilled nature of labour in the primary sector, there is excess supply of labour, therefore, workers lack bargaining power and are paid low wages (Echanove & Steffen, 2005). Agriculture and rural development promoted by the FAO is hindered by PFDI. For hunger to reduce, it is important that adequate infrastructure, relevant policies, and implementation of policies that boost rural and local food production be put in place. The activities of agricultural FDI has shown that the mechanisms through which PFDI operates in many oil rich developing countries like Nigeria, often exacerbates food security as the government action is sometimes misplaced as they focus on FDI into the oil sector to the detriment of the agricultural sector (Mihalache-O’keef & Li, 2011). 4.11 Secondary Foreign Direct Investment (SFDI) Foreign direct investment in the manufacturing sector differs from PFDI in significant ways. The effects of SFDI differ from PFDI as the former mirrors those proposed by the modernization approach. The secondary sector deals with the processing of raw materials into finished goods (Lipsey, 2002). Dilek Aykut and Selin Sayek (2007) explain that in many developing countries, a large part of SFDI output remains in the host country, 88 increasing market competition and benefitting consumers. In a 2009 study conducted by Andreea Mihalache-O’keef and Quan Li, they found that in of the 56 developing economies (including Nigeria) they explored, SFDI produced positive effects to the respective countries. SFDI often produces positive technology and knowledge that increase the overall potential of the host economy (Alfaro, 2003). Consistent with the modernization argument, such technology spillovers have the potential to narrow the gap between developing and developed countries. Through the inflow of SFDI, firms in countries at the periphery have the potential to adopt technological expertise of countries at the core. This enhances efficiency resulting in lower food prices (Chakraborty & Nunnenkamp, 2008). Increased efficiency and productivity allow employers to pay higher wages without sacrificing profits (Firebaugh & Beck, 1994, 634-635). All else equal, as workers earn higher wages they can spend more on food. SFDI increases demand for food products. Industries produce higher quality and low priced food products (Jordaan, 2008). Markusen & Venables (1999) find that through competition with domestic firms, MNCs increase demand for domestically produced intermediate goods. This mechanism allows the benefits of SFDI to trickle down, permeate and improve the overall efficiency of the host economy (Lipsey, 2002). The benefits of SFDI are dispersed and difficult to capture coercively by the elites in society hence, SFDI benefits the population as a whole. SFDI increases wages, reduces prices of consumer products and increases the disposable income of households in the host country. These benefits ensure that an adequate level of food security is most likely assured. 89 Very few studies on FDI in Nigeria address the secondary sector. Perhaps this is because the secondary sector is not the main stay of the Nigerian economy. In fact most studies of FDI in Nigeria either lumped together FDI or have focused mainly on the primary sector (oil and agricultural sector). Nevertheless, a few (Akinyele, 2009; Inekwe, 2013; Ukwaba & Adibe, 2014) point to the potential of SFDI to result in the growth of the economy by improving the productive capacity of the country. Their arguments are premised on the absorptive capacity of the Nigerian economy and argue that due to an infrastructural deficit, lack of clear policy guidelines, and underfunding, the secondary sector has in no way reached its potential as an engine for growth and for improving human welfare. Douglas Omotor, Christopher Orubu, and Emmanuel Inoni (2008) argue that there is tremendous potential for the secondary sector to catapult economic growth in Nigeria. They point to the country’s heavy reliance on imported goods, and state that if the secondary sector’s manufacturing capacity could be optimized, it would not only serve domestic demand, but could generate foreign exchange from export of intermediate and finished goods. The Central Bank of Nigeria observed an increased inflow of SFDI since 2004 similar and sometimes surpassing trends witnessed in the primary sector - specifically the oil sector. If this level of investment is sustained, as argued by the modernization approach, the Nigerian economy could benefit tremendously. Since this sector in the past has not gained as much attention as the oil sector, there is the need for the government not only to increase the level of funding, but to create and promote policies that entice investment within this sector (Kennedy, Nantel, & Shetty, 2004). In spite of the potential for SFDI to positively influence economic growth and human welfare, one does not completely discount the relevance of the dependency argument-type 90 claims for SFDI. In some cases, employees in the manufacturing sector are often price takers in the labour market and government may take sides with MNCs rather than domestic labourers (Inekwe, 2013). The negative effects, coexist with the positive effects mentioned earlier, and may reduce food security. 4.12 Service/Tertiary Sector FDI (TFDI) Within the tertiary sector, neither the dependency nor modernization approaches speak extensively of TFDI as it is not until recently that developing countries started to receive significant amounts of foreign direct investment into the tertiary sector. The World Bank explains “FDI [to developing countries] ha[s] evolved from focusing primarily on natural resources, infrastructure, and manufacturing (export driven or “tariff jumping” investment) to covering banking, retail, construction, tourism, and offshore services” (Palmade & Anayiotos, 2005, 3). The tertiary sector, in comparison with the primary and secondary sectors, has received the least inflow of foreign direct investment into the Nigerian economy. In the past, tertiary FDI has been centred on the banking sector. Since the reemergence of a democratic government in 1999, value of TFDI in Nigeria has more than tripled (CBN, Statistical Bulletin). In recent years, sectors such as telecommunication, hospitality, food retailing and distribution have also received substantial increases in TFDI. Relative to the primary and secondary sectors, Evans & Timberlake (1980) explain that the tertiary sector is highly heterogeneous in terms of skill and capital intensity across countries. Here lies the ambiguity of tertiary FDI in explaining food security. Within this sector exists both the specialized and highly paid workers such as: the engineers, medical doctors, and CEOs and the low-skilled workers such as the waiters/waitresses, service 91 workers or cleaners, many of whom are paid the minimum wage. Hence, to explain the mechanism through which TFDI influences food security one must first understand the types of workers, skilled and unskilled, within this sector as well as the different sectors in which these workers are employed (for example, it is important to understand which tertiary sectors [i.e., food retailing, banking, telecommunication sub-sectors] the workers employed in as these sectors command different wages) (Evans & Timberlake, 1980; Palmade & Anayiotos, 2005). For the unskilled labour, TFDI has the potential to reduce food security. Unskilled workers in developing countries often have low incomes which are insufficient in purchasing food in sufficient quantities. Therefore, there have been several cases in developing countries like Nigeria where individuals in rural areas have migrated to urban and semi-urban centres in search of higher incomes (Bayo, 2006). The flow of FDI into the tertiary sector leads to the growth of the sector, or vice versa. One resultant effect TFDI has on a countries’ economy is the growth of urban cities (Evans & Timberlake, 1980; Wimberley, 1991). However, the growth of urban cities and its propensity to create jobs does not necessarily result in higher wages. Often, there is an excess supply of unskilled labour therefore, unskilled workers cannot bargain for higher wages that would assure their food security (Matuschke, 2009). Wages offered in urban cities are often times higher than rural and semiurban areas, nevertheless, such wages cannot adequately compensate for the higher cost of living in urban cities. Unskilled workers experience a situation where income is inadequate in purchasing food in sufficient quantity and that exposes them to a declining food security status (Matuschke, 2009; Maxwell et al., 2000). 92 The effect is different for skilled labour in the tertiary sector. TFDI often increases wages. This is on the premise that labour is not only skilled but also in short supply (Wimberley, 1991). Therefore, as FDI flows into this sector, and growth and expansion occurs the demand for skilled labour outpaces supply. Firebaugh & Beck (1994) argue that competition for skilled labour results in workers being able to bargain for higher wages. As skilled workers earn enough income to meet the minimum dietary intake, improvements in diet and nutrition leading to increased food security. In addition to these effects, as the tertiary sector expands the variety, quality, and accessibility of services improve. For example, transportation and telecommunication becomes more accessible; education and healthcare become reliable and credit systems become more dependable. Such challenges in the tertiary sector are likely to improve the overall economic performance of the host country (Chakraborty & Nunnenkamp, 2008). Palmade & Anayiotos (2005) explain that one of the benefits directly related to growth of TFDI in host countries is “[host countries are] now becoming important sources of export “(2005, 3). In focusing on the mechanism through which TFDI influences food security in Nigeria, the discussion is only one side of the conversation. To truly understand the impact of TFDI on food security, one must also explore the availability and ability to access food. It is one thing to have the income to purchase food, but the availability and access to sufficient food is equally important. Therefore, the importance of MNCs in the food and retailing sector, which ensure availability and access, cannot be overemphasized. Specifically, the influx of MNCs in the food and retailing sector also ensures that food is not only available, but that it is available in a wider variety at relatively cheaper prices. For example, assume one uses skilled workers to make an illustration. Say, they receive incomes ‘X’ number of 93 times above the minimum wage. This privilege they enjoy does not amount to much if the variety of the foods they have access to is diminished or too narrow. Although they may meet the required food intake as measured in calories, not much is improved by way of nutrition. MNCs in the food and retailing sector provide a wider variety of food choices at relatively affordable prices. This implies that at these prices a wider variety of food is not only available to skilled workers in Nigeria, but non-skilled workers can take advantage and access to some degree a wider variety of food as well. In summary, because of its ambiguity, TFDI can influence food security through several mechanisms that generate varying effects. While the direction of each effect may be assumed, the magnitude of these effects is not. Although, this goes beyond the scope of this study, understanding empirically the dynamic workings of the different mechanisms through which TFDI influences overall food security is important. 4.12 Theoretical Framework, Data And Methodology And Empirical Analysis 4.12.1 Theoretical Framework Empirically, in exploring the channel through which FDI impacts food security I use the production function framework to identify the determinants of food security (FS). A “production function” describes an empirical relationship between input and output. A production function can be used to represent output for various economic agents such as for a single firm, for an industry, or for a nation. For example, a production function of determining the impact of inflow foreign direct investment on food security for a nation might have the form: FS = F(PFD1, SFDI. T F D I ) (1) 94 That is, in a nation, the level of food security (FS) measured in kilocalories and/or grams depends on the inflow of primary foreign direct investment (PFDI), secondary foreign direct investment (SFDI), tertiary foreign direct investment (TFDI) into an economy. At any given set of inputs {PFDI, SFDI, TFDI), the production function may show decreasing, constant, or increasing “returns to scale”: I f F{ kPFDI, kSFDI, k TFDI) < k F{PFDI, SFDI, TFDI), there are decreasing retu rns to scale. I f F{ kPFDI, kSFDI, k TFDI) = kF{PFDI, SFDI, TFDI), there are constant retu rns to scale. I f F{ kPFDI, kSFDI, k TFDI) > kF{PFDI, SFDI, TFDI), there are increasing retu rns to scale. Numerous production functions can be applied in macroeconomic models. Here, I consider the Cobb-Douglas production function that has been used extensively in the empirical literature. The Cobb-Douglas function plays an important role in determining the impact of an input on output. Hence, relevant for policy analysis and intervention because it is easy to work with and gives simple closed form solutions to many economic problems. 4.12.2 The Cobb-Douglas Production Function A production function for a 2-independent variable model y = f ( x 1,x 2) is a CobbDouglas production if it can be written in the form y = Ax (2) Where A, a, and b are positive constants; a and b represen ts the respective m arginal products. So the partial derivatives of a Cobb-Douglas production functions are: (4) MP2 = p - = bAXx x\~x OX2 The absolute value of the slope of an isoquant is the technical rate of substitution, or TRS. This TRS equals MP1/MP2 so that (3) and (4) imply that TRS = ^ = Hi mp2 bx2 (5) v’ Equations (3) and (4) imply that the Cobb-Douglas technology is monotonic, since both partial derivatives are positive. It is clear that substitution among all inputs is always possible with Cobb-Douglas production functions, provided all inputs are taken as being in positive quantities. 4.12.3 Econometric Model Given the multidimensional nature of food security, two indicators were selected for the purpose of this research integration. This study will use the daily per capita energy consumption (DEC), which measures hunger, and the daily per capita protein consumption (DPC) which measures nutrition. I use a Vector Autoregressive (VAR) estimated approach for each model. The VAR model is widely used in empirical integration as each variable model is assumed to be endogenous. The impact of each variable in the VAR model can be studied on other variables. Moreover for confirmation ordinary least squares can be used (Sims, 1980). 4.12.4 VAR model Given the AxYt = C(L)xTt_! + D(V)xXt + pxZ t below system: (6) Where A matrix includes all coefficient describing simultaneous relationships between variables, the C(L) matrix includes all coefficients that describe relations between 96 variables lags. The D(L) matrix includes all coefficients describing relationships between endogenous and exogenous variables, the B matrix isadiagonal matrix and the Evector includes the residuals. By multiplying the VAR system withtheinverseof the A matrix, I obtain the followings: Yt = A ^ x C ( L ) x Y t^ + A ^ x D ( L ) x X t + v4(~%/?£t (7) That can be re-written as: Yt = axYt_! + bxXt + nt ( 8) Where: a = A^~^xC(L) b = A(_1)xC(L) H = A^^xfixs Equation (6) describes the structural model and equation (8) is the reduced form of the model; the latter can be empirically observed. Consequently, the considered VAR model has the following representation in the reduced form: Yt = ajcYt_x + bxXt + pt (9) Where: Yt is the vector of endogenous variables, Xt is the vector of exogenous variables fit is the vector of the residual terms (white noise), a is matrix comprising coefficients that describe the relationship between all the variables, and b is an endogenous matrix comprising all the coefficients that model the relationship between endogenous and exogenous variables. Hence, for the estimation of VAR (VAR 1) model, which estimates the impact of foreign direct investment on daily per capita energy consumption and captures an aspect of food security- hunger, would have the representation shown in equation (10): 97 dect dec ' Pfdi_ gdp p f d i _ g d p t_t - = ax s fd i_ g d p s f d i _ g d p t_! ( 11) In this case, the vector of endogenous variables for hunger comprises the Daily per capita Protein Consumption (DPC), Primary Foreign Direct Investment (PFDI), Secondary Foreign Direct Investment (SFDI), and Tertiary Foreign Direct Investment (TFDI). 98 Table 7. Endogenous variable descriptions and apriori expectations Variables Variable Description Expected signs of impact + DEC Daily per capita energy consumption (Proxy for hunger which measures food security) DPC Daily per capita protein consumption (Proxy for ~h nutrition which measures food security) PFDI_GDP Annual inflow of primary foreign direct investment relative to annual real Gross Domestic Product (GDP) SFDI_GDP Annual inflow of secondary foreign direct + investment relative to annual real Gross Domestic Product (GDP) TFDI_GDP Annual inflow of tertiary foreign direct +/investment relative to annual real Gross Domestic Product (GDP) Exogenous variables for equations 10 and 11 are primary-sector exports as a percentage of merchandise exports (lprsec_exp), manufactures exports as a percentage of merchandise exports (lmsecexp), and real GDP per capita (lgdp capita). Log values of exogenous variables are included to control for other determinants of food security other than foreign direct investment. Economic growth is measured by the change in the annual economic growth rates. This variable helps to control for the indirect impact of FDI on food security via development and growth. Trade and FDI correlate and sometimes even overlap, yet they also differ and capture the varying aspects of Nigeria’s integration into the global economy. Trade concerns the flow of goods and services, whereas FDI involves the flow of economic spillovers. I follow previous research (for example, Jenkins & Scanlan, 2001) and include two trade variables to ensure that my findings are not spurious. Primary-sector exports may reduce food security, based on the dependency arguments, whereas manufacturing exports may increase food security, based on the modernization arguments. Treating these variables as exogenous implicitly presumes, that there is no impact of endogenous on exogenous variables. At the same time, it allows for a contemporary impact of exogenous variables on endogenous variables. In the case of a VAR, the identification of shock implies imposing zero restrictions on the A and B matrices coefficient in the relation fxt = A^^BE. is achieved through Cholesky decomposition. In the case of identification, the Cholesky A matrix has a triangular structure, with elements above the main diagonal equal to zero. Given that, one notes that the ordering of variables as highlighted by equations (10) and (11) requires implicit assumptions about which variables respond or do not respond simultaneously to food security situations. Nevertheless, since there are no economic theories serving to guide the ordering of variables, the ordering that produced the best result as highlighted in equation (10) and (11) was chosen. Thus, for the VAR model (VAR 1), a shock to the residuals is identified by a standard Cholesky decomposition with variables ordered as in (10). The shock identification scheme is reflected by equation below: _dec VAR 1 -| -P fdi_gdp fct -Sfdi_gdp tfdi_gdp *- t J n t ec 1 0 0 O' a 21 1 0 0 a 31 a 32 1 0 .a 41 a 42 a 43 1. 1 fdigdp P X lt sfdigdp (12) n• l t tfdlgdp The ordering implies that when examining the impact of foreign direct investment on food security, the authorities consider the current level of FDI inflow. At the same time, the implicit assumption is that variables respond contemporaneously to their respective shock. For the VAR model in the context of determining the impact of FDI on daily per capita protein consumption (DPC) (VAR 2), a shock is identified by a standard Cholesky 100 decomposition with variables ordered as in (11). The scheme of identifying the shock is illustrated by equation below: c dpe I c Pfdi_gdp VAR 2 : 4 rc ' 1 °21 c sfdi_gdp tfdi_gdp L tt J a 31 a 4i 0 1 0 O' 0 0 a 32 1 0 a 42 a 43 1. Pfdigdp r-t sfdigdP (13) Pt tfd ig d p ■Vt The ordering implies that when examining the impact of foreign direct investment on food security, the authorities consider the current level of FDI inflow. At the same time, the implicit assumption is that variables respond contemporaneously to their respective shock. 4.13 Data Data provided by the Food and Agriculture Organization (FAO) and Central Bank of Nigeria from 1960 to 2009 are used to estimate the impact of disaggregated foreign direct investment on food security in Nigeria based on the time series VAR models presented in the previous section of this chapter. As mentioned in chapter 2 data reliability is a constraint to carrying out data analysis. Nevertheless, data provided by the Food and Agriculture Organization (FAO) and the Central Bank of Nigeria (CBN) were used in the present study because data provided by the FAO captures two important indicators of food security namely: hunger and nutrition while the CBN provide data on FDI inflows into Nigeria at the sectoral level. The variables include daily per capita energy consumption (DEC) measured in kilocalories, daily per capita protein consumption (DPC) measured in grams, primary foreign direct investment (PFDI), secondary foreign direct investment (SFDI), and tertiary foreign direct investment (TFDI). The quality of data (i.e., test for normality) was tested before use in the VAR model and results are attached in the appendix. 101 4.13.1 Dependent Variables To measure food security as defined by the FAO, the FAO Statistics Division employs two indicators: (i) daily dietary energy consumption (DEC) measured in kilocalories; and (ii) dietary protein consumption (DPC) measured in grams. The DEC and DPC represent two aspects of food security: hunger and nutrition respectively. Energy and nutrient consumption estimates are garnered from an individual country’s food balance sheet, which is comprised of food production, food imports, and changes in food stocks, minus food exports to arrive at total energy consumption. Conversely, dietary protein consumption refers to the amount of protein in food, expressed in grams per day. This is achieved by summing domestic food utilization from protein consumption. Per capita consumption is then estimated by dividing the total energy and protein consumption (respectively) by the number of individuals partaking of the food supply during the reference period, which is usually one year. 4.13.2 Independent Variables In testing the impact of foreign direct investment on food security in Nigeria, I construct three FDI variables: primary foreign direct investment (PFDI), secondary foreign direct investment (SFDI), and tertiary foreign direct investment (TFDI). Each variable measures the respective type of annual FDI inflow as a share of real GDP. Data are collected from the Statistical Bulletin of the Central Bank of Nigeria (CBN Statistical Bulletin, 2009). The share of annual FDI inflow over corresponding annual real GDP measures the relative size of FDI in the economy, consistent with my research question of how the relative importance of FDI in each sector of Nigeria economy impacts food security. Hence, the explanatory variables are transformed to PFDI GDP, SFDI GDP, and TFDI GDP respectively. 102 4.13.3 Control Variables Building on previously published empirical studies and control for various other determinants of food security all control variables, other than primary-sector exports (% of total merchandise), are normalized by estimating their log values. This was done as a result of skewed data. Data on control variables are provided by the World Bank’s World Development Indicators. All data used as dependent variables are obtained from the food balance sheet of Nigeria as computed by the FAO Statistical Division, while data for independent variable are obtained from the CBN Statistical. The data are annual data cover the periods 1962 - 2009 and E-views 8.0 and Stata 13 statistical packages are used for data analysis. There is considerable controversy as to whether variables included in the VAR model should be stationary or not. Sims (1980), argued against differentiation, even if the series contain a unit root because differentiation causes information losses. What matters for the robustness of VAR results and the overall system is the stationarity of the VAR model (Lutkepohl, 2006). Moreover, the use of variables in levels and not as first differences has the ability to maintain long-term relationships (if present) and do not affect the statistical inferences (Sims et al., 1990). 4.14 Lag Selection Criteria And The Determination Of Lag Length The choice of lag numbers was based on the Akaike and Schwartz informational evaluation criteria, suggesting in all cases between lag 1-3, that the optimum lag length for the VAR models be lag 1 (see table 8). I verified the results by applying the lag exclusion test to eliminate lags that were not significant. The lag exclusion Wald test confirmed the Akaike and Schwartz criterion. 103 Table 8: Lag length determination Lag length = 3 Lag Log L 0 -25.38022 1 43.99619 2 56.4577 3 73.57807 LR NA 122.9854* 19.82513 24.12416 FPE 4.47E-05 3.96e-06* 4.75E-06 4.74E-06 AIC 1.335465 -1.090736* -0.929895 -0.980821 SC 1.497664 -0.27974* 0.529896 1.127767 HQ 1.395616 -0.78998* -0.38853 -0.19886 Lag length = 2 Lag Log L 0 -24.64568 LR NA FPE 4.20E-05 AIC 1.273141 SC 1.433734 HQ 1.333009 1 46.24912 126.0352* 3.96e-06* -1.166628* -0.36367* -0.86729* 2 58.73525 19.97779 4.37E-06 -1.010455 0.434875 -0.47165 Lag length = 1 Lag Log L LR 0 -23.55028 NA 1 49.01461* 129.3548* FPE 3.89E-05 3.34E-06* AIC 1.197838 -1.261505* SC 1.35685 -0.46644* HQ 1.2574Q5 -0.96367* ♦indicates lag order selection criteria LR: Sequential modified LR test statistic (each test at 5% level), FPE: Final prediction error, AIC: Akaike information criterion, SC: Schwartz information criterion, HQ: Hannan-Quinn information criterion. 104 4.15 Descriptive Statistics Table 9: Descriptive Statistics DEC DPC PFDIJGDP SFDIJGDP TFDIJGDP Mean 2138.10 48.39 0.10 0.08 0.09 Median 1953.50 45.25 0.11 0.05 0.08 Maximum 2791.00 66.40 0.21 0.36 0.32 Minimum 1619.00 31.90 -0.00 0.01 0.01 Standard Deviation 401.64 9.18 0.08 0.08 0.08 Skewness 0.39 0.42 0.03 1.95 1.00 Kurtosis 1.47 1.93 1.46 6.42 3.35 Jacque-Berra 5.84 3.72 4.74 53.77 8.19 Probability 0.05 0.16 0.09 0.14 0.12 Sum 102629.00 2322.90 4.69 3.79 4.39 Sum o f Squared Deviation 7581954.00 3956.97 0.26 0.32 0.28 Observations 48 48 48 48 48 105 Table 10 :Bi-variate Scatter Plots 3.000 3 .' 2. 2 .' 2. 2 .2 0 0 - 2 ,000 1 .800 1 .800 PFDI GDP SFDI GDP TFDI GDP PFDI GDP u a. o SFDI GDP TFDI GDP DEC = Daily Dietary Energy Consumption; DPC = Dietary Protein Consumption; PFDI GDP = Inflow of primary FDI in relation to GDP; SFDI GDP = Inflow o f secondary FDI in relation to GDP; TFDI GDP = Inflow of tertiary FDI in relation to GDP. 4.16 The Soundness Of Analysis VAR 1 and 2 considered models are confirmed if they are stable and the residuals are white noise. I verified the stability of the model by applying AR unit root tests, with results indicating the stability of all VAR models at the optimized lag length of 1, also, the modulus of the subunit root shows that no root lies outside the unit circle for all respective VAR models. Residual serial non-correlation hypothesis testing is based on Portmanteau test and the null hypothesis of no residual serial correlation at 95 % critical value cannot be rejected 106 implying the absence of serial correlation in the residual of the variables. Also, the residuals of the VAR 1 and VAR 2 models were respectively bootstrapped and the root mean square deviation was estimated with minimal bias. Further, I checked for normal distribution of errors with the help of Jarque-Berra test, using the Cholesky of variance orthogonalization method, and also for the residuals homoscedasticity by applying the White test statistic. The findings reveal a normal, homoscedastic distribution of the residuals. Overall, the models are able to provide a good picture of the dynamics of variables interactions. The results of the aforementioned test can be found in the appendix. 4.17 Empirical Results Standard practice in VAR analysis is to report results from Granger-causality tests, impulse responses, and forecast error variance decompositions. Because of the complicated dynamics in the VAR, these statistics are more informative than the estimated VAR regression coefficients or R2s, which typically go unreported. Granger-causality statistics examine cause-effect relationships and whether lagged values of one variable helps predict another variable. For example, if primary foreign direct investment does not help predict daily per capita energy consumption, then the coefficients on the lags of primary foreign direct investment will all be zero in the reduced form daily per capita energy consumption equation. Table 11 summarizes the Granger-causality results for the four variables in VAR 1 and VAR 2 models respectively. 107 T able 11: G ranger C ausality T est18 VAR 1 MODEL Dependent Variable in Regression Regressor DEC P FD IG D P SFD IG D P T F D IG D P DEC 0.00 0.02** 0.27 0.05* PFD IG D P 0.80 0.00 0.22 0.13 SFD IG D P 0.10* 0.02** 0.00 0.16 TFD IG D P 0.07* 0.09* 0.86 0.00 VAR 2 MODEL Dependent Variable in Regression Regressor DPC PFDI_GDP SFDI_GDP TFD IG D P DPC 0.00 0.71 0.85 0.79 PFD IG D P 0.46 0.00 0.43 0.20 SFD IG D P 0.89 0.87 0.00 0.30 TFD IG D P 0.89 0.73 0.85 0.00 Notes: DEC and DPC denote daily per capita energy and protein consumption respectively, PFD IG D P denotes Primary FDI as a ratio of GDP, SFD IG D P denotes Secondary FDI as a ratio o f GDP, and TFDI_GDP denotes Tertiary FDI as a ratio of GDP. The entries show the p-values for the F-Test that lags of the variables in the row labeled regressor do not enter the reduced form equation for the column variable labeled Dependent variable. The results were computed from a VAR with 1 lag and a constant term over the 1962-2009 sample periods. Table 11 shows the p-values associated with the F-statistics for testing whether the null hypothesis of the relevant sets of coefficients are zero. The primary foreign direct investment does not help to predict daily per capita energy consumption at the 5% significance level (the p-value is 0.795, or 79.5%), while secondary foreign direct investment (the p-value is 0.099, or 9.9%) and tertiary foreign direct investment (the p-value is 0.069, or 6.9%) do not help to predict daily per capita energy consumption at 5% significance level, at a less stricter level of 10% significance level both secondary and tertiary foreign direct investment help to predict daily per capita energy consumption. Conversely, both daily per capita energy consumption and secondary foreign direct investment help predict primary foreign direct investment at 5% level of significance, while tertiary foreign direct investment 18 In Table 11 only p-values are reported and these indicate statistical significance o f granger causality. 108 helps to predict primary direct investment at 10% level of significance. Lastly, of all the regressors, only daily per capita energy consumption helps predict tertiary foreign direct investment. Observations from table 11 show that neither of the regressors helps predict the dependent variable. 4.17.1 Impulse Response Function Impulse responses trace out the response of current and future values of each of the variables to a one unit (one standard deviation) increase (a shock) in the current value of one of the VAR errors, assuming that this error returns to zero in subsequent periods and that all other errors are equal to zero. The implied thought experiment of changing one error while holding the others constant makes most sense when the errors are uncorrelated across equations, so impulse responses are typically calculated for structural VARs. 4.17.2 Impulse Response Function of VAR 1 Model The impulse responses for the VAR 1, ordered DEC, PFDI GDP, SFDI GDP, TFDI_GDP, are plotted in Figure 3, while the impulse responses for the VAR 2 and, ordered DPC, PFDI_GDP, SFDI_GDP, TFDI_GDP are plotted in figures 4. For example, figure 3 shows the response of DEC to an unexpected one percentage point increase (shock) to itself and to all other four variables, as it works through the VAR system with the coefficients estimated from actual data. Also plotted are ±1 standard error bands, which yield an approximate 66% confidence interval for each of the impulse responses. These estimated impulse responses for VAR 1 and VAR 2 models show patterns of persistent common variation. Each variable responds positively to its own contemporaneous shock. Further, in the VAR 1 model, the response of DEC to a shock fades away over 4 - 5 years, and it is associated with initial positive response to shocks to SFDI GDP and TFDI GDP while DEC 109 responds negatively (marginally) to shocks PFDI GDP. DEC marginally responds negatively to shocks to PFDI GDP. DEC is unresponsive to shock to SFI_GDP in the first year and only at the start of the second year does DEC begin to positively respond to shocks to SFDI GDP. In contrast, DEC responds positively to shocks to TFDI GDP in the first year, also DEC response to shocks to all variables is most felt in shocks to TFDI GDP, which peaks at the start of the second year. 110 Figure 3: Impulse response from the VAR 1 Ordered as DEC, PFDI_GDP, SFDI_GDP, TFDI GDP RESPONSE TO DEC Resoonse of DEC to DEC Response of DEC to PFDI GDP 10 0 - 100 3 2 1 S 4 6 a 7 Response of DEC to TFDI_GDP Response of DEC to SFDI GDP 1 5 0 - 1 ---------------------------------------------------------------------------------------------------------------------------------- 1 5 0 iooso - „----------^ 5 0 50 - 8 0 - - 1 0 0 - | ---------------- 1---------------- , --------------- , --------------- , ---------------- , ---------------1 2 3 4 5 0 100 IP— 7 8 DEC = Daily Dietary Energy Consumption; PFDI GDP = Inflow of primary FDI in relation to GDP; SFDI GDP = Inflow of secondary FDI in relation to GDP; TFDI GDP = Inflow o f tertiary FDI in relation to GDP. 4.17.2 Impulse Response Function o f VAR 2 Model Similarly, in VAR 2 model, the response of DPC to a shock to all variables also fades away over 4 - 5 years, and it is associated to an initial negative response of DPC to shocks to PFDI_GDP which last for the first year and half followed by a year in which DPC responds positively to shocks to PFDI GDP. In addition, in the first year DPC responds positively both to shocks to SFDI GDP and TFDI_GDP and response to shocks to SFDI GDP peaks at the start of the third year, while DPC responds to shocks to 111 TFDI GDP is steeper and peaks in the second year, implying that DPC responds positively faster to shocks to TFDI GDP in comparison to SFDI GDP. Figure 4: Impulse response from the VAR 2 Ordered as DPC, PFDIJJDP, SFDI_GDP, TFDI GDP RESPONSE TO DPC Response of DPC to DPC Response of DPC to PFDI_GDP 2- -2 1 3 2 4 e S i a 10 -2 1 2 Resoonse of DPC to SFDI GDP 3 « 4 r a Response of DPC to TFDI GDP oi 2 2 4 & 7 a B 10 1 2 S a 7 e 10 DPC = Dietary Protein Consumption; PFDI_GDP - Inflow of primary FDI in relation to GDP; SFDI GDP = Inflow of secondary FDI in relation to GDP; TFD IG D P = Inflow of tertiary FDI in relation to GDP. 112 4.17.3 Variance Decomposition An alternative of impulse response, to receive a compact overview of the dynamic structures of a VAR Model, are variance decomposition sequences. In contrast to impulse response, the task of variance decomposition is to achieve information about the forecast ability. The idea is that even a perfect model involves ambiguity about the realization of the error terms because the error terms associate uncertainty. According to the interactions between the equations, the uncertainty is transformed to all equations. The aim of the decomposition is to reduce the uncertainty in one equation to the variance of error terms in all equations. 4.17.4 Results o f Forecast Error Variance Decomposition To further examine the dynamic effects of daily per capita energy consumption (DEC), daily per capita protein consumption (DPC), primary foreign direct investment (PFDI GDP), secondary foreign direct investment (SFDI GDP), and tertiary foreign direct investment (TFDI_GDP) in Nigeria, a VAR 1 and VAR 2 models were set up and I examined the Forecast Error Variance Decomposition (FEVD). The results for the variables in each model in the first four horizons and the seventh and tenth horizon that capture the dynamic effects in short and long run respectively were obtained, presented and fully analyzed. 4.14.5 Variance Decomposition from the VAR 1 model An examination of the variance decomposition of DEC in table 12 shows that a substantial amount of the variation experienced by DEC is attributed to its own shock (100%) in the first period, but the shock fades out gradually to about 78.3% at the end of the horizon. The contribution of TFDI_GDP relatively follows an increasing trend from the first to the second period, but decreases at an increasing rate up until the end of the fourth period. At the end of the horizon TFDI GDP contributes about 17.2% to shocks to DEC. Meanwhile, PFDI GDP and SFDI_GDP both marginally follow an increasing trend till the end of the horizon. 113 Table 12: Variance Decomposition of DEC Ordered as DEC, PFD1 GDP, SFDI GDP, TFDI GDP ♦Variance Decomposition for DEC Forecast Horizon Forecast Standard Error Variance Decomposition (Percentage Point) PFDI GDP SFDI GDP DEC TFDI GDP 1 91.198 100.00 0.000 0.000 0.000 2 105.625 0.488 108.065 108.362 108.370 0.475 0.474 0.476 0.102 3.964 3.964 3.994 17.574 3 4 7 81.837 78.387 78.396 78.324 10 108.370 78.324 0.475 3.994 17.207 17.157 17.166 17.207 ♦Note that only the tables containing the variance decomposition o f DEC is presented. For a review of the variance decomposition of all other variables, see appendix (Table 21-23). 4.18 Variance Decomposition of PFDI_GDP, SFDI_GDP, and TFDI GDP An analysis of the variance decomposition of PFDI_GDP shows that a large amount of the variations experienced by PFDIGDP is attributed to its own shock ranging between about 84.3 to 54.7 percent within the time horizons. The contribution of DEC also follows an increasing trend till the end of the period where it stood at about 21.3 percent. Meanwhile, SFDI_GDP and TFDI_GDP moderately follow an increasing trend from having no shock to PFDI GDP in the initial period to contributing 14.9 and 9.1 percent respectively at the end of the horizon. Similarly, the assessment of the variance decomposition of SFDI_GDP shows that over half amount of the variations witnessed by SFDI GDP is attributed to its own shock ranging between 59.3 and 55.7 percent within the time horizon, but the shocks were noticed to fade out gradually towards the end of the horizon. In the initial period PFDI GDP contributed a substantial amount of the variations witnessed in SFDI_GDP which ranged between 39.9 and 36.1 percent within the time horizons, but the shocks were noticed to fade out gradually towards 114 the end of the period. The contributions of DEC and TFDI_GDP marginally follow an increasing trend till the end of the horizon, but the shocks were noticed to fade out after the fifth period. Further, an investigation of the variance decomposition of TFDIGDP shows moderate amount of the variations experienced by TFDI_GDP is attributed to its own shock ranging between about 25.3 and 21.7 percent within the time horizon. PFDI_GDP and SFDI_GDP moderately follow a decreasing trend till the end of the period where it stood at 20.3 and 44.8 percent respectively. Meanwhile, DEC increases substantially from 0.04 percent in the first period to 13.2 percent at the end of the horizon. 4.18.1 Variance Decomposition from VAR 2 model An examination of the variance decomposition of DPC in table 13 shows that a substantial amount of the variation experienced by DPC is attributed to its own shock (100%) in the first period, but the shock fades out gradually to about 67.9% at the end of the horizon. The contribution of SFDI_GDP and TFDI_GDP relatively follows an increasing trend from the first to the second period, while TFDI GDP decreases at an increasing rate up until the end of the time horizon, SFDI GDP increases at an increasing up until the end of the time horizon. At the end of the time horizon SFDI GDP and TFDI GDP contribute about 12.4% and 18.6% to shocks to DEC, while the contribution of PFDI_GDP follows an increasing trend and marginally (1.2%) contributes to shocks to DEC. 115 Table 13: Variance Decomposition of DPC Ordered as DPC, PFDI GDP, SFDI GDP, TFDI GDP ♦Variance D ecom position o f DPC Forecast Horizon Forecast Standard Error 1 2.353 Variance Decomposition (Percentage Point) PFDI GDP SFDI GDP DPC TFDI GDP 100.00 0.000 0.000 0.000 2 2.731 75.524 0.787 3.290 20.399 3 4 2.937 2.986 70.190 68.560 1.191 10.906 1.158 11.582 17.713 18.699 7 10 3.016 3.017 67.913 67.889 1.166 1.167 12.355 12.365 18.566 18.579 *Note that only the tables containing the variance decomposition o f DPC is presented. For a review of the variance decomposition o f all other variables see appendix (Table 24-26). 4.18.2 Variance decomposition ofPFDI_GDP, SFDI_GDP, and TFD1JGDP An analysis of the variance decomposition of PFDI_GDP shows that a large amount of the variations experienced by PFDI_GDP is attributed to its own shock (69%) in the first period, but the shock fades out gradually to about 36% at the end of the horizon. The contribution of DPC marginally holds steady (about 31%) from the initial time horizon to the end of the time horizon. Meanwhile, SFDI_GDP and TFDI_GDP both increase at increasing rate from the first time period till the end of the time horizon. In addition, an assessment of the variance decomposition of SFDI_GDP shows that a large amount of the variations witnessed by SFDI_GDP is attributed to its own shock ranging between about 65.9 and 56.5 percent within the time horizons, but the shocks were noticed to fade out gradually towards the end of the horizon. In the initial period PFDI GDP contributed a substantial amount of the variations witnessed in SFDI_GDP which ranged between 33.9 and 25.8 percent within the time horizons, but the shocks were noticed to fade out gradually towards the end of the period. The contributions of DPC and TFDI_GDP marginally follow an increasing 116 trend (13.8% and 4.0% respectively) till the end of the horizon, but the shocks were noticed to fade out towards the end of the period. Lastly, an investigation of the variance decomposition of TFDI GDP shows moderate amount of the variations experienced by TFDI_GDP is attributed to its own shock ranging between about 26.7 and 20.3 percent within the time horizons. The contribution of SFDI GDP is substantial in the first time period (57%) and decreases at an increasing rate (48.6%) at the end of the time horizon. The contribution of DPC substantially follows an increasing trend till the end of the period where it stood at 22.2 percent. Meanwhile, PFDI GDP moderately follows a decreasing trend and stood at 8.9 percent at the end of the time horizon. 4.19 Findings Figures 3 and 4 and Tables 12 and 13 present results from the Vector Autoregressive (VAR) models. For each food security indicator, I estimate impulse response function and variance decomposition. Overall, the models demonstrate explanatory power in determining the impact of sectoral FDI on explaining calorie and protein intakes. In the two models (DEC and DPC), in the initial periods PFDI has a significant negative effect on calorie and protein intakes, and reduces food security. SFDI has a positive impact on calorie and protein intake, and the impact of TFDI is positive on calorie and protein intake across the models. The empirical results suggest that on average, the effects of PFDI, SFDI, and TFDI appear consistent over the same time period. The effects of sectoral FDI inflow on protein intake are much weaker than those on calorie intake. This perhaps is due to the fact that the first step to alleviating hunger is to increase energy consumption first and afterwards tackling the issue of adequate nutrition. This is not to say that both should not be addressed at the same time, but 117 given a choice to make, it may be logical to say that FDI in Nigeria appears to impact energy consumption more than it impacts protein intake. This same logic explains the rational expressed by the modernization approach that the influx of MNCs would provide greater availability and accessibility to a wider variety of foods, which can improve nutrition. Substantively speaking, how large the direct impacts of PFDI on both calorie and protein intake may not be reflected in the analysis. This is because available data shows that over the past three decades the oil sector has been accounting for over 90 percent of FDI injected into the primary sector. It may be fair to say that oil is impacting food security negatively in Nigeria. In instances such the one described above, proponents of the dependency approach have criticized the modernization approach, arguing that the exploitative nature of FDI, especially in natural resource rich developing countries like Nigeria, reduces human welfare. Having said that, it appears that to fully understand the impact of PFDI on food security in Nigeria, one would have to further disaggregate PFDI into the oil and non-oil sectors. The positive effects of SFDI on calorie and nutritional intake may have to do not only with the increase of investment to the sector, but also the marginal growth the sector has experienced. Though the impact of SFDI is positive, its impact is marginal when compared to the arguments posited by the modernization approach, which states that a country stands to gain substantially by attracting FDI into the secondary sector. One plausible reason for its relatively low impact may be that the absorptive capacity of this sector is not optimized. An upgrade in infrastructural capacity in Nigeria would mean that the secondary sector can further contribute to the production of intermediate and finished goods, while significantly contributing to human welfare. Thus, as the government tackles the infrastructural deficit and attracts more SFDI, the potential abounds for SFDI to positively impact calorie and protein intake. 118 In the empirical results the TFDI has the most impact on calorie and protein intake. It appears that the government’s effort to open up the market to foreign capital is paying dividends. The country enjoys one of the fastest growing telecommunication sectors in the world. Food retailing and distribution has witnessed significant growth with the influx of MNCs, resulting in the creation of employment. All of these have attracted individuals to urban cities in search of higher incomes. As this continues to occur there will be the continued growth of the middle class, persons who have more disposable income to meet their required calorie and protein intake. It is important to reiterate the importance of calorie and protein intake in order to assure food security. However, in terms of public health, it is worth noting that protein is crucial for growth and healing. Thus children and sick individuals have greater protein needs, in excess of the usual daily recommended protein needs estimate. Considering that Nigeria features large percentages of underweight children (25 percent of children) and about 15 percent in adult women, any variation in protein consumption, however small could have a large public impact. Needless, to say, that a small increase in calorie intake too could potentially improve food security and reduce the number of hungry Nigerians. 4.20 Conclusions Over the years, Nigeria has been experiencing large increases in the inflow of FDI into the country. This is understandable given that the government has gone to great lengths to attract investment into the country. Building on the modernization and dependency approaches, limited previous research produced contradictory predictions and conflicting evidence of the impact of FDI on food security. The Vector Autoregressive (VAR) model is used in estimating the impact of foreign direct investment on food security. The evidence of the empirical results is captured 119 by the impulse response function and the variance decomposition. The impulse response traces out the response of food security - calorie and nutritional intake, to a one unit shock in the current value of primary, secondary, and tertiary FDI. The variance decomposition enables one to achieve information about the forecast ability and to reduce the ability to minimize uncertainty in the estimated model. This research study shows further proof that FDI in different sectors (primary, secondary, and tertiary) influence food security differently. Over the past few decades, focus of government attention from the non-oil to the oil sector and resource exploitation and misallocation, has resulted in primary FDI reducing food security in Nigeria. The negative impact of primary FDI on food security is more felt in calorie intake (DEC) than in protein intake (DPC). In fact, the analysis shows that primary FDI is causing a decline in food security in Nigeria. The inability of primary FDI to be further disaggregated into the oil and agricultural sectors due to the paucity of data is a limitation of this study and makes it difficult to examine how each component of PFDI is impacting food security. Analysis of this in the future for further research will be of interest. Nigeria, an oil-rich developing country has attracted substantial amount of primary FDI particularly into the oil sector but this has not improved food security. For primary FDI to provide the level of food security required to reduce hunger in Nigeria, emphasis should be placed on revitalizing the agricultural sector towards the goal of selfsufficiency in food production. The agricultural sector in Nigeria has all the prospects to assure food security. It is the single largest employer of labour in Nigeria, employing over 40 percent of the Nigerian population. The country enjoys a substantial amount of arable land as well as conducive climate for food production. What appears to be lacking is a concerted and sustained 120 effort by the government to focus, invest, and implement policies in providing the platform for assuring food security in Nigeria. In contrast, secondary FDI in Nigeria improves net food security, albeit, not to the degree those proponents of FDI have predicted. Secondary FDI improves calorie intake but this impact on food security is delayed and not felt until a year after the introduction of secondary FDI. Secondary FDI has an unstable effect on nutrition. SFDI improves nutrition in the first -three years it is introduced into the Nigerian economy but this effect is soon short-lived but again shows positive impact on nutrition in the long run. What is quite revealing is the minimal positive impact SFDI has on food security. Proponents of the modernization approach argue that the benefits of SFDI should considerably improve food security. SFDI has had a minimal positive impact when compared to the evidence provided by the proponents of the modernization approach. While the secondary sector has not enjoyed as much FDI inflow as the other sectors in Nigeria, nevertheless, SFDI inflow as is the case for PFDI and TFDI has witnessed substantial increases over the past three decades. Why this observation is worthy of note is because proponents of the modernization approach and increased FDI inflow have argued that benefits of SFDI have the potential to trickle down and permeate society because the benefits of increases in productivity, economies of scale, and technological spillovers remains within the country. It appears that in the case of Nigerian SFDI, it marginally impacts food security positively. The reason for this may not be farfetched. Perhaps, the level of SFDI in Nigeria is at a level that is insufficient in producing the required level of contribution to food security. Also, another mitigating factor may be as a result of the inadequate infrastructure such as roads and power supply. Specifically, power supply is still irregular in Nigeria. Without adequate political will on the part of government in improving 121 power supply and distribution, adequate food production, processing, packaging, and storage would be a tall task. Policies of government must be focused on improving infrastructure and also geared local production and consumption. Attracting foreign capital in the form of MNCs is premised on the Nigerian government’s ability to sufficiently provide adequate infrastructure for MNCs to operate and generate profit. The effect of tertiary FDI on net food security shows similar patterns as the effect of secondary FDI, but with a greater impact. Similarly, tertiary FDI has an unstable effect on nutritional intake but overall improves food security. This research study shows that food security- both calorie and nutritional intake is beneficial to the Nigerian population when Nigeria attracts FDI into the tertiary sector. In recent years, Nigeria’s ability to attract TFDI has provided employment directly and indirectly. Specifically, in the food-retailing sector it has resulted in the greater availability of a variety of food at relative prices. In sum, TFDI has provided a source of income for individuals and improved the availability and access of food. The inflow of FDI into the Nigerian economy appears to be net beneficial to the population. It appears that for food security to be improved more has to be done on the part of government to attract FDI into the agricultural sector. Emphasis has been placed on the oil sector, which is important to the growth of the Nigerian economy, nevertheless, its inability to diversify the economy and equally focus on the agricultural sector as a vehicle for assuring its population of food security must be addressed. Over dependence on the oil sector for foreign exchange and the global food market has not provided the Nigerian population an adequate level of food security. As more FDI is attracted into the Nigerian economy more should be done on the part of the government to ensure that investment is not lopsided in favour of the oil sector, rather, it is spread out to all sectors of the economy that can improve food security. 122 As more FDI is attracted into the country one see the growth of urbanization. The modernization approach lays claim to FDI leading to urban growth, even, critics of the dependency approach have argued that the dependency approach also results in the rural-urban push. This scenario is evident in the urban city of Lagos State Nigeria, which accounts for over 10 percent of the country’s population. As urbanization occurs so also do changes in the variety and manner of consuming food. This is resulting in dietary adaptation and convergence, which is occurring at a faster rate in urban centres than rural areas. Urbanization is causing changes to dietary patterns in urban centres. Foods once traditionally prepared at home are increasingly being purchased from street food vendors and fast-food restaurants. Similarly, the influx of MNCs into the food and retailing sector has increased the availability and access of a wider variety of food. In the next chapter, which contains essay 2, I will explore to what extent foreign direct investment is influencing food systems with a view to capturing a snapshot of how much dietary adaptation and convergence is occurring in the Nigerian population. 123 5.0 Chapter Five Essay 2: Impact Of Tertiary Foreign Direct Investment On Food Systems In Nigeria 5.1 Introduction I travelled to Lagos State in Nigeria to administer questionnaires in two Local Government Areas (LGAs) namely: Eti-Osa LGA and Alimoso LGA. These two LGA vary distinctly in terms o f concentration o f white and blue-collar jobs. It is observable that Eti-Osa with its skyscrapers, multinational companies, luxury hotels and resorts as well as the many expatriates and foreigners that reside there enjoyed a larger proportion o f FDI than Alimoso LGA, which did not boast similar characteristics. Although these two LGAs differed in the level o f FDI they attracted and the income households generated, one thing I found similar among indigenes/citizens was the content o f their diet. Local and culturally distinct foods still played important roles in household daily nutrition. With the spread o f fast food restaurants and a restriction in the time available for leisure oftentimes associated with urban cities in developing countries like Nigeria, home cooking and street food vending still played central roles in individuals’ ability to access food. One resounding theme that echoed throughout my “questionnaire experience” was captured succinctly by an elderly woman in her late 40s exclaiming that her “take home pay (income) could not take her home! ” A phrase used to imply that her income was insufficient to resort to fast food restaurants and supermarkets to meet her daily food requirements. Hence, home cooking, street food vending and street markets were cheaper alternatives for meeting her household food requirements. Observing participant reactions to questions on their food and nutritional intake, I realized that there was a disconnect at least with a vast majority o f my participants. The riddle lay in the apparent growth of supermarkets and fast food chains and my participants ’ preferences fo r street food vendors. Something did not add up. This essay gives an overview which highlights the impact inflows of tertiary FDI has had on food systems and nutrition levels and how these changes are mirrored in the dietary adaptation and convergence taking place in the Nigerian population. As more FDI flows into the tertiary sector, changes in food systems and dietary lifestyle are expected to occur. Controversy exists as to whether these changes are beneficial to all in terms of assuring food security and nutrition. If changes are beneficial, not only would food security and nutrition be enhanced, but the health and welfare of the Nigerian population would be enhanced. Within this essay is a review of the existing literature relating to the impact of FDI on food systems in Nigeria, and the effect of changing food systems on the health and nutritional 124 status of individuals, particularly women and children. A descriptive and thematic analysis is applied to the data collected in order to observe the kinds of dietary adaptation and convergence occurring in the Nigerian population. 5.2 Literature Review When reiterating the ambiguity of TFDI on food security, it is important to explore the positive and negative effects of TFDI on food systems, as there is a connection between TFDI and food systems. Food systems play an important role in determining a household’s food and nutritional status as they have a direct impact on individuals’ overall health (Stuckler & Nestle, 2012). To understand this linkage, one must understand the mechanism through which foreign direct investment shapes food systems. As the flow of investment permeates every strata of an economy, global food systems become more and more homogenous. Godffay et al. (2010) explain that changing food systems affect household diet and nutrition and have a wide range of impacts on health. On the one hand, they argue that changing food systems can result in good health. On the other hand, changing food systems can result in adverse health resulting in stunting, wasting, and underweight or overweight. Overall, FDI influences food systems, which affects the health and nutrition of households and ultimately influences food security. A positive impact of FDI on food systems increases the assurance of food security, while a negative impact of FDI on food system reduces the assurance of food security. 5.3 Food Systems Food systems describe all of the activities involved in food production, processing, distribution and consumption, that are integrated to enhance the environmental, economic, social, and nutritional health of a particular place (Steinhart & Steinhart, 1974). As food systems change 125 there is greater availability and diversity of food, nonetheless, this does not necessarily translate into food security (Kennedy, Nantel & Shetty, 2004). Many of these changes have arisen from the flow of TFDI, which has increased incomes and sped up the process of globalization (Weatherspoon & Reardon, 2003). The entry of large MNCs competing for a market share of food purchases has advanced the growth of supermarkets and fast food chains. The losers tend to be the traditional food markets and the street food vendors. Supermarkets bring with them competitive prices as well as improvements in food standards and quality, factors that are appealing to an increasingly growing sophisticated urban middle class (Kennedy, Nantel & Shetty, 2004). Consequently, changes occur to the food production, procurement, and distribution systems. This brings about a shift in food systems towards a more universal one with consequent changes in dietary consumption patterns and nutritional status that vary with socio-economic strata (Reardon et al., 2003). Global food systems are converging. The pace and depth of change in food systems is occurring at different rates across countries. The question scholars have asked is, “would the growing homogenous global food system assure food security?” Whatever answer one proffers will be largely determined by the dependency or modernization arguments. Changes in global food systems as a result of TFDI have both positive and negative effects on food security. For food security to be deemed culturally appropriate, locally determined food systems and food distribution must be actualized. In recent years, due to changing global food systems dietary adaptation and convergence have been two important, but divergent outcomes of TFDI. 126 5.4 Positive And Negative Impact Of Tertiary Fdi On Food Systems In Nigeria 5.4.1 Dietary Adaptation Dietary adaptation is influenced by dramatic changes in lifestyle that are driven by increased exposure to advertising, availability of new foods, and the emergence of new food retail outlets (Ordovas & St John Sutto, 2010). Dietary adaptation is characterized by an increased consumption of brand name processed and store-bought foods, an increased number of meals eaten outside the home and consumer behaviour driven by the appeal of new foods available (Kennedy, Nantel & Shetty, 2004). Urban households are the first to undergo lifestyle changes, but these eventually filter down into less urbanized areas. Working hours and commuting times are often long, and with growing numbers of household members entering the workforce, there is less time available to prepare food hence, the growing necessity to consume meals outside the home. In Nigeria, the official average working hours a day is 8 hours (World Bank Group, 2014b). In Lagos State, one of the world’s mega cities, Nwaka reports that the informal sector accounts for between 45 percent and 60 percent of the urban labour force (2005, 3), with many having to work above the official working hours. In a survey of the urban transportation system in Lagos, many workers spend several hours commuting to and from work and have to extend their working hours in order to avoid commuting for long hours (Ibitayo, 2012). These factors have resulted in the demand for supermarkets and fast food chains. Traditionally, in Nigerian households, the process of meal preparation has always been delegated to one household member usually the mother/wife, but with the growth of urban cities this process has been fractured and is being substituted by street food vendors, supermarkets and fast food chains (Anyanwu & Jukes, 1991; Reardon et al., 2003). As a result, dietary balance and 127 dietary quality, which was traditionally “intuitive”, is now subject to cultural changes and external influence (Kennedy, Nantel & Shetty, 2004, 11). For food security to be adequately assured, culturally appropriate, locally determined food systems must be taken into consideration. Dietary adaptation results in the erosion of culturally distinct foods as a result of external influence originating from the impact of TFDI. Consequently, this causes a decline of household food security (Kennedy, Nantel & Shetty, 2004; Ordovas & St John-Sutton, 2010). 5.4.2 Home Cooking and Street Foods Traditionally, home cooking has been the most common practice of accessing food in Nigeria, but in recent decades street food has grown in popularity and complemented home cooking as both a cheap and quick meal option (Arambulo et al., 1994). Religion and ethnicity play one of the most influential roles in the choices and subsequent selection, preparation, and consumption of foods. For example, in Nigeria, Muslims account for almost half of the Nigerian population, prohibit the consumption of pork and other carnivorous animals, as this is considered ‘unclean meat’. In stark contrast, Christians allow the consumption of any type of meat without the imposition of restrictions (Akinyele, 2009). In traditional Nigerian cultures, food tends to be prepared at home for a large number of people, which may include the nuclear and extended family at regular times of the day. Traditionally Nigerian foods consist of relatively large amounts of starchy foods that consist of tubers, grains prepared with herbs and palm-oils. Depending on what ethnic tribe one belongs to the preparation of foods differs. Nevertheless, as a result of exposure to different social, cultural, and environment factors such as migration, inter-ethnic marriages, and the growing interaction among the various ethnic tribes in Nigeria, the diversities witnessed in the past are beginning to narrow especially for urban dwellers (Olayiwola, Soyibo, & Atinmo, 2004). 128 The purchase and consumption of street food has become a welcome and convenient alternative to home cooking for many households as a result of the changing economic and social lifestyles (Opare-Obisaw, 2007). The popularity of street food is widespread due to its low cost and convenience. Gideon Yaniv, Odelia Rosin, & Yossef Tobol state that meals prepared at home are safe and more nutritious than street and fast foods as they are closely monitored so as to retain as much nutrients as possible. They state “you would be hard pressed to make the food you cook yourself as unhealthy as the frozen pizzas, pre-prepared veggie burgers and fried egg rolls touted to make your life “easier”” (2009, 826). Also, they argue that the more you process food, the less nutritious it becomes, further stating that people who prepare food at home (versus food prepared outside the home) do eat healthier, “they [people who prepare food at home] consume fewer calories, less saturated fat and sodium, and more fibre micronutrients per eating occasion” (827). An estimated 2.5 billion people worldwide consume street food each day (FAO, 2010). It is projected that street foods sold by vendors account for up to 40 percent of the daily diet of urban consumers in developing countries (FAO, 2010). Street foods are most commonly sold in low-and-middle income countries and the types of food sold vary according to socio-economic status of buyers and the food culture of the local people. There are four categories of street food items typically sold; whole meals, snacks, beverages, and fruits (Steyn & Labadarios, 2011), and they form an essential part of the diet of low-and middle-income families in Nigeria. In sub-Saharan Africa, street food accounts for about 32 percent of urban household spending, an indicator of the important role street food plays on household food security (Matuschke, 2009). 129 The growth of tertiary foreign direct investment has led to a rural-urban push, which has had severe consequences on food security in Nigeria. One implication is a high illiteracy rate amongst street food vendors in Nigeria (Opare-Obisaw, 2007). According to studies conducted in some Latin American and African countries, the average wage of an urban street food vendor is higher, sometimes as much as 3 or even 10 times higher than the average wage in rural areas. These higher wages appear to be attractive because street food vending is not gender-specific and requires no education. This has some severe and adverse socio-cultural consequences. Street food vendors in Nigeria are predominantly mature, married women with several children. These children have become active participants in street food vending (Walker, 1991; Opare-Obisaw, 2007). In the southern parts of Nigeria (this region accounts for the highest school enrollment), Irene Tinker (1997) estimates that 60 percent of street food vendors are illiterate and among those that did some schooling, 74 percent did not go beyond primary school. While Tinker does not go as far as to say that street food vending is the root cause in rising illiteracy levels, she does point to the inability of street food vendors to access quality education due to their long work hours (Opare-Obisaw, 2007). Street foods are a major public health risk. There have been several documented cases of food poisoning outbreaks due to street food vending in Nigeria. Due to a lack of basic infrastructure and the inability to regulate vendors’ activities, street foods are unhygienic (Kennedy, Nantel & Shetty, 2004). The paucity of national data on street food consumption makes it virtually impossible to provide accurate statistics (Simopoulous & Bhat, 2002). In many parts of Nigeria, this informal sector appears to be drifting progressively farther away from effective institutional regulation (Akinyele, 1998; Omemu & Aderoju, 2008). Arambulo et al. (1994) suggests that there is need to promote the orderly operation of street food vendors and 130 deal with the undesirable effects that will eliminate the potential threats to household nutrition and health. In summary, tertiary foreign direct investment results in rapid urbanization and households complementing their home cooking with street food vending. Street food vending can generate income and a means of livelihood for those involved. Critics of street food vending have argued that government regulations bordering on food quality and safety are a major concern as they are not enforced by government. Hygiene they argue is sometimes below safety standards and results in health externalities that threaten household food security. 5.4.3 Supermarkets And Fast Food Industry Dietary adaptation is leading to growth of supermarkets and fast food restaurants as alternative sources to home cooking and street food vending. Reardon, along with others, has documented the phenomenal increase in supermarkets and fast food restaurants such as McDonalds, Kentucky Fried Chicken (KFC), Wal-Mart, Shoprite, Ahold, and Carrefour in developing countries (Reardon et al., 2003). Development economists traditionally view supermarkets as the rich world’s place to shop. In recent years, supermarkets are no longer just niche players for rich consumers in wealthy capital cities, but have spread to Nigeria through tertiary foreign direct investment and the rise of the middle class (Weatherspoon & Reardon, 2003). The catalyst in the growth of supermarkets and fast food industry is the growth of foreign direct investment in the tertiary sector. Reardon et al. (2003) states that “FDI was crucial to the take-off supermarkets...” (2003, 1141). FDI inflows occurred in the 1990s when Nigeria was experiencing economic growth. The United Nations Conference on Trade and Development (UNCTAD) (2001) explains that growth of FDI in food retailing mirrored the overall growth witnessed in Nigeria. 131 In past research examining demand for Food Away From Home (FAFH), supermarkets and fast food restaurants have been referred to as convenience food. The term ‘convenience’ is defined as “arising from time saved by avoiding meal preparation” (Jekanowski, Binkley, & Eales, 2001, 59). Consequently, emphasis is placed on urbanization, the changing role of women in society and time constraints as factors responsible for the increasing demand and desire for supermarkets and fast food restaurants. What distinguishes fast foods from other types of FAFH is that they are indeed fast, near immediate service providing a consistent popular product. Due to standardized menu and consistent quality, only minimum time is required in obtaining food. Fast food in the traditional sense is not new to Nigeria. The comer store seller of local food is an age-old feature of many Nigerian cities serving food on the go for everyone from children to working adults (Inekwe, 2013). What has contributed significantly to the growth of fast food restaurants in Nigeria has been the inflow of FDI, which has resulted in urbanization, the growth of the middle class, and more women entering the labour force. Fast food in Nigeria is one of the fastest growing sectors in the country, growing from a total size of $168 million in 1994 to $1.27 billion by 2009, which translates to a compounded annual growth rate of 40 percent over a fifteen-year period (Carew, 2010). Fast food brands such as Kingsway Snacks, Leventis Snacks, and Kas Chicken were the dominant fast food brands in the 1970s and 1980s. In the last decade and half, Mr. Biggs, Tantalizers, Tastee Fried Chicken, Sweet Sensation, and Chicken Republic account for 70 percent of the industry annual turnover. In addition many of the aforementioned received some form of foreign capital injection within this period (Inekwe, 2013). The remaining 30 percent industry annual turnover have solely featured new players into the fast food sector like KFC, Pizza Hut, and Domino Pizza (Carew, 2010; Inekwe, 2013). 132 The Nigerian fast food sector has been experiencing a boom, which can be attributed to the hectic lifestyle of many urban city dwellers who cannot afford the luxury of home cooked meals. With one out of every two Nigerians now living in cities, a number totalling about 85 million, the time to prepare meals in crowded and congested cities has become more demanding (Awofeso, 2010). Further, fast food restaurants have experienced rapid growth because of the rapid expansion of tertiary foreign direct investment. With more individuals joining the middle class in Nigeria, tastes and preferences have changed considerably. Hence, it is becoming commonplace to find individuals in urban centres patronizing fast food restaurants as they appear cleaner, more hygienic and comfortable than street food vending shops (Isara & Isah, 2009). In spite of the profound impact supermarkets and fast food restaurants have had on dietary adaptation, it is not until recently that the adverse health implications have been highlighted. Food plays an important role in the development and prevention of many diseases (WHO, 2003). A change in dietary patterns affects the nutrition and health of households. Duffey et al. (2007) posits that consumption of fast food has shown to have adverse health effects. The majority of studies exploring the relationship between dietary adaptations have focused on health implications such as malnutrition, obesity, under and over nutrition (Bowman & Vinyard, 2004; Duffey et al., 2007). Fast foods have been linked with increases in the consumption of saturated fat, sweeteners and a lower consumption of fruits, vegetables, and whole grains that are essential for a healthy life (Paeratakul et al., 2003). Meals purchased from fast food restaurants tend to be energy dense and contain approximately 236 kcal/lOOg, which is twice the recommended energy density of a healthy diet (Jaworowska et al., 2013, 312). Also, due to the influx of MNCs in food retailing, food provided by fast food restaurants and supermarkets are becoming homogenous 133 (i.e. a Kentucky Fried Chicken burger sold in London is similar to that sold in Lagos). This has grave implications for local food, most notably a decline in cultural food for the Nigerian population (Kuhnlein & Receveur, 1996). In light of this, dietary adaptation does appear to go hand in hand with the growth of urban cities. The growth of urban cities exerts its influence on dietary lifestyle, through the availability and consumption of food from other sources (such as street and fast foods) to complement home cooking. The availability and access to various other sources of food is imperative to the food security of urban dwellers, but care must be taken that dietary adaptation does not erode the local cultural food. The FAO has stated that the preservation of cultural food is necessary for assuring food security. In essence, food security is threatened if dietary adaptation results in the decline or loss of culturally distinct foods. Dietary adaptation may expose individuals to new and sometimes less healthy foods - foods that are high in calories and low in nutrition. For food security to be adequately assured the quality of nutrition is vital, because not only does adequate nutrition likely assure individuals of food security, it ensures that health implications linked to diets are minimized. 5.4.4 Dietary Convergence Dietary convergence refers to the increasing similarity in diets worldwide. Tertiary foreign direct investment plays a significant role in dietary convergence. As the food-retailing sector modernizes in developing countries like Nigeria, newer products similar to those sold in high-income countries are introduced, in turn promoting dietary convergence. Drenowski & Dermon (2005) explain that the inflow of FDI into the food and retail industry increases the dietary supply from grains, fats and oils, and animals’ source foods and results in dietary convergence. Dietary convergence plays an important factor in determining nutritional status. 134 According to Kennedy, Nantel & Shetty dietary convergence is an “increased reliance on a narrow base of staple grains, increased consumption of meat products, dairy products, [and] edible oil...” (2004, 9). Analyses by the FAO suggest that diets in Nigeria are converging (Bruinsma, 2003). 5.4.5 Dietary Energy Supply From Grains Dietary supply from grains in Nigeria has witnessed a steady rise from 1980 onwards due to FDI and technological spillover effects, which have improved dietary energy supply. Dramatic food production increases, which have driven down costs, were made possible due to improvement in yield and the adoption of intensive agricultural practices (FAO, 2013b). Low prices of three dominant staple grains in Nigeria: rice, wheat, and maize as well as the growth of the middle class have meant that caloric intake has also increased. Similarly, the integration of Nigeria into the global system has helped augment any shortfalls in domestic grain production with imports (see Table 14). In spite of an average population growth rate of 2.6 percent (World Bank, 2012a) over the last three decades, domestic utilization of grains in food consumption per capita has also increased, a testament to dietary convergence taking place in the Nigerian population. 135 Oats Mille t Sorghu m Cereals , other kcal/day 774 145 7 52 0 0 184 276 2 Food 7,084 1,147 1,080 76 448 0 0 1,725 2,592 15 Import 2,005 1,179 451 174 168 0 0 30 1 1 kcal/day Prod. 7,425 24 727 - 612 - - 2,354 3,690 18 1,061 21 207 0 280 0 0 306 243 3 12,098 291 1,975 4 3,142 0 0 3,073 2,905 32 487 256 225 4 0 0 1 0 0 2 16,846 50 1,167 - 5,768 - - 5,136 4,185 39 1,151 127 221 0 153 1 0 288 354 6 17,032 2,185 2,699 1 2,176 16 1 4,418 5,541 86 3,098 2,230 794 25 7 16 1 0 0 26 20,272 73 2,200 - 4,107 - - 6,105 7,711 76 1,199 153 213 0 256 0 0 279 295 2 22,032 32,036 3,222 1 4,545 0 2 5,345 5,673 41 1,528 1,134 219 129 29 0 2 0 13 2 19,849 37 2,270 - 7,339 - - 4,885 5,271 Import Food kcal/day Prod. Rye Import Food 109 Maiz e kcal/day Prod. W heat RiceMilled Equivalen t Import Food CerealsExcludin g Beer y Prod. 1,000 metric tonnes (2009) 1,000 metric tonnes (2000) 1,000 metric tonnes (1990) 1,000 metric tonnes (1980) Table 14: Dietary energy supply from grains in Nigeria (1980 - 2009) Source FAO Stats (2012) Barle 49 136 Dietary energy supply from cereals has been the dominant supply of energy from grains in Nigeria for the past three decades, with sorghum, millet, wheat and rice playing significant roles in meeting energy supply from grains. Data from the FAO Statistical Division reveals that energy supply from cereals, which stood at 774 kcal/day, increased by 55% to 1,199 kcal/day between 1980 and 2009. Energy supply from millet, rice, and wheat have all increased by 51%, 47%, and 40% respectively within the same period. The energy supply from sorghum has not increased by the same margins as the other grains mentioned above. It grew by 7% between 1980 and 2009, nevertheless, by 2009 sorghum accounted for 295kcal/day, next only to cereals as highest supplier of dietary energy supply from grains in Nigeria. Sorghum is a traditional food in Nigeria and has been a mainstay for Northern Nigerians. Sorghum is an arid-resistant crop that survives in the climates similar to those experiences in the North. Individuals in the southern parts of the country, due to food preferences and ease in food preparation, have often preferred the consumption of cereals, wheat, and rice. In recent years, its consumption has increased due to larger corporations finding innovative ways to process sorghum into flour, bean cake etc. This is resulting in increased sorghum consumption across the country as it can be readily made into meals (Akinyele, 2009). Dietary energy supply from maize has witnessed rapid growth and utilization in diets in Nigeria over this period. In 1980, the energy supply from maize was 52 kcal/day, considerably lagging behind the energy supply from cereals, sorghum, and millet. But by 2009, the consumption of maize as a means of supplying dietary energy was 256 kcal/day and had shown to also be a mainstay in dietary convergence. It appears that barley, rye, and oats do not provide significant dietary energy supply. Consumption of barley has decreased over the years from 7 137 kcal/day to 0 kcal/day, while rye and oats have not provided any dietary energy supply within this period. A look at the figures of grain production and imports in 2009 would reveal sharp decreases in the volume of some major grains. In some cases imports of cereals (excluding beer) and wheat fell by as much as 100%, in other instances imports of rice and other cereals fell by a wider margin. This is not unconnected with the 2007/08 global food crisis. Poor people living in developing countries like Nigeria, “who spend some 50-80 percent of their income on food” (Clapp, 2012, 127) were especially hit hard by rapid rise in food prices. The global recession that followed in 2009, not only witnessed a period of mismatch between global supply and demand for grains with demand outstripping supply, but also a drop in agricultural productivity and an unwillingness of major exporting countries to export sufficient grains, as they too were worried about meeting domestic consumption. The implication for Nigeria was that imports for major grains fell sharply in 2009. Also, dietary energy supply from grains (kcal/day) fell in 2009. While the volume of grain imports fell, the encouraging sign was that grain production in Nigeria saw its highest peak in three decades. An indication that with growing fears of a decline in grain imports more attention was paid to local grain production. Overall, the available data shows that dietary energy supply from grains is increasing in Nigeria and has the propensity to increase food security in Nigeria, and lends credence to the dietary convergence occurring in the country. Nigeria’s dependence on imports to complement domestic grain production meant that it was adversely affected by the global food crisis in 2009. Nevertheless, grain production increased domestically and it is believed that with the worst of 138 the global food crisis over, sufficient levels of the importation of grains would be attained to complement local production and raise the level of food security in Nigeria. 5.4.6 Dietary Energy Supply From Fats And Oils Consumption of fats and oil is a phenomenon of dietary convergence (Kennedy, Nantel & Shetty, 2004). The most basic nutritional function of dietary energy from fats and oils is a concentrated source of calories to meet the energy requirements of individuals (Ong, Niki, & Packer, 1995). The need for fats and oils is for nutrition. The various sources of fats and oils are primarily from animals and plants. The major animal sources are lard, butter, and fish oils derived from cattle, sheep, pigs, and marine animals respectively (FAO, 1994). Fats and oils from plant sources are obtained from either oil seeds or fruits of oil-bearing trees. Examples include fats and oils obtained from groundnut, palm kernel, coconut, and cottonseed to mention a few (Ong, Niki, & Packer, 1995). In the past, consumption of fats and oils was based on local availability. However, with globalization and increased changes in taste and preference, demand for vegetable and other sources of fats and oils has grown (FAO, 1994). In Nigeria, the dietary energy intake from fats and oils ranges from 10-20 percent of daily diets, whereas diets in developed countries consist of 35-40 percent (Kennedy, Nantel & Shetty, 2004). Oil crops and vegetable oils are the main sources of dietary energy supply from fats and oils in Nigeria and their consumption have increased by 54.4 percent and 37.4 percent respectively between 1980 and 2009. Dietary energy from fats and oils rendered from animals has remained unchanged over the same period. 139 Table 15: Dietary energy supply from oil sources in Nigeria (1980 - 2009) Oil Crops Vegetable Oils Animal Fats 2009: 1,000 Metric tonnes consumed 5508 Dietary energy kcal/day 88 2986 364 7 2000: 1,000 Metric consumed Dietary energy kcal/day 4230 78 1771 307 36 7 1990: 1,000 Metric tonnes consumed 2230 Dietary energy kcal/day 38 1401 296 7 842 265 19 7 45 tonnes 1980: 1,000 Metric tonnes consumed 1074 Dietary energy kcal/day 57 Source: FAO STATS (1980 - 2009) 25 5.4.7 Dietary Energy Supply From Animal Source Foods The adoption of “Western” consumption habits involves the transition away from predominantly plant-based foods, typically roots and tubers and a convergence of diets towards animal source foods. Economic and socio-cultural factors affect consumption of animal source foods. Popkin (2001) explains that as countries develop and attain higher levels of affluence, their citizens acquire a more meat-and-dairy intensive diet. Low income is associated with low intake of more expensive animal source foods (meat, fish, diary, and eggs). However, where animal source foods are available, religious proscriptions or cultural taboos may further restrict their use in Nigeria (Agostoni & Brunser, 2007). Using data from the early 1960s and late 2000s, IFPRI (2012) illustrates how animalbased food consumption has grown in developing countries compared to relatively stable consumption patterns in developed countries. Developing countries’ demand for animal source foods nearly doubled from 1996 to 2007 (Ambler-Edwards et al., 2009), with China accounting 140 for the majority of the total increase in meat consumption. However, the case with Nigeria is different in that the volume of animal source food consumed in Nigeria has increased. Table 16: Dietary energy supply from animal source foods in Nigeria (1980 - 2009) Meat 2000: 1,000 Metric tonnes consumed eneri kcal/day Dietary energy 1053 38 1980: 1,000 Metric tonnes consumed 753 Dietary energy kcal/day_______ 43 Source: FAO STATS (1980 - 2009) Fish, Seafood 370 10 748 9 819 13 184 1064 25 984 23 8 In spite of this, dietary energy supply from animal-source foods has not increased as much. It appears that in Nigeria, dietary convergence from animal source foods is not occurring at the same rate as some developing countries, like China. One factor that accounts for this is that animal sourced foods are relatively expensive and are not categorized as staple food in Nigeria (Gittelsohn & Vastine, 2003). 5.5 Nutrition And Nutritional Related Challenges Food systems and dietary patterns affect the nutrition and health of households. Diet related factors such as obesity, stunting, and malnutrition rank high among the nutritional challenges experienced both by children and adults (WHO, 2003). A limited or excessive intake of dietary energy supply from grains, fats and oils, and animal sourced foods (WHO, 2003) causes nutritional challenges related to diet. The most recent WHO global estimates indicate that as many as 1.4 billion people (20 years or older) could be overweight or obese. Of that amount, 200 million men and 300 million women are obese, and 40 million children under the age of five 141 are thought to be overweight (WHO, 2013). The majority of these people live in developed countries. However, dietary adaptation is resulting in increasing cases of obesity in Nigeria (Popkin, Adair, & Ng, 2012), while high levels of undemutrition in children and adults in Nigeria remain a concern (Kennedy, Nantel, & Shetty, 2004). The spectrum of malnutrition encompasses the entire range of problems that can occur when dietary energy and/or nutrient intake are insufficient, excessive or simply imbalanced. In countries where household food security is precarious it is women and children who are often more vulnerable than men to malnutrition because of their different physiological requirements. Women are smaller and have lower metabolic rates and fewer muscles on the average than men, which means they require about 25 percent less dietary energy per day (FAO, 2012). Yet, women require the same amount or more of many nutrients. Conversely, children have high metabolic rates and require lots of nutrients and dietary energy per day (ibid.). In spite of this, in many developing countries in Africa, many women do not have access to productive assets (FAO, 2013b). The FAO states that “the most vulnerable household members are women and children” (Women: different needs, greater risk section, para. 1). Yet, women carry out most home food processing, which ensures a diverse diet and minimizes losses (FAO, 2013b). Women are more likely to spend their income on food and children’s needs. The FAO (2012) explains that research has shown that a child’s survival increases by 20 percent when the mother controls the household budget. Women therefore play a decisive role in food security, dietary diversity and children’s health. It is for this reason that this section of the research will focus on the most vulnerable household members - women and children. Diet-related nutritional challenges necessitate more attention. Availability of adequate food does not ensure food security. Variety of adequate and quality safe food is required to be 142 nourished and healthy. Jonsson & Toole (1996) observe that persistent undemutrition and malnutrition have negative consequence of leaving the most vulnerable in society, children and women, prone to stunting and wasting. Malnutrition in adult and adolescent women can lead to decreased energy levels, growth failure, and inability to resist infections. Using various health and nutrition surveys carried out in Nigeria, the following section highlights some salient nutritional challenges facing women and children in Nigeria. 5.6 Nutritional Challenges In Children In Nigeria Undemutrition in children appears in three ways namely: stunting, wasting, and underweight. All three of these conditions occur in children as a result of malnutrition. According to the literature, an increase in dietary adaptation and convergence has not had a commensurate impact on the prevalence of stunting, wasting, and underweight in Nigeria. Figures from several Demographic and Health Surveys show fluctuating, but high levels of stunting, wasting, and underweight continue to plague Nigerian children. 5.6.1 Stunting Stunting (or stunted growth) is what happens to a child’s brain and body when they do not get the right kinds of food or nutrients in their first 1,000 days of life (UNICEF, 2013). Nigeria has the third highest number of children who are stunted. A survey undertaken by the Federal Office of Statistics Nigeria (FOS) in 1992 found that 43 percent of preschool children were stunted. In addition, it reported that a higher proportion of children in rural areas are more malnourished than those in urban cities. The Federal Ministry of Health (FMoH) and Social Services and USAID (1993, 107) showed that the prevalence of stunting among children declined from 43 percent in 1990 to 40 percent in 1993. FOS & UNICEF (2000, 164) indicated that the prevalence of stunting decreased to 32 percent by 1999. Further, 41 percent of children 143 under the age of five are stunted while 14 percent of infants are bom with a low birth weight due to dietary adaptation and lifestyle changes resulting from a shift from breast-feeding of infants to infant formula. As more urban women have entered the productive labour force, artificial infant milk, low in nutritional content has replaced infant breastfeeding. Together, this is causing the stunting in children from a diet that is insufficient in nutrients for the proper growth of the child. Progress in Nigeria in curbing stunting has not been sufficient and the analysis of data shows that the situation has not improved in the past two decades. This is probably the result of the problems of lack of adequate nutrition and food security in Nigeria. Stunting has worsened, particularly in rural areas in Nigeria (Olayiwola, Soyibo, & Atinmo, 2004). Loss of land in rural areas to large firms has meant that a significant amount of rural dwellers have lost the lands, which had previously been used for subsistence farming. The destination of the products of these large firms set up in rural areas has been urban cities. Similarly, stunting has declined in urban areas. Busy city life and a lack of adequate food to meet the growing demand are two major causes leading to child stunting in urban cities. In addition, the growing demand for food as a result of urban population growth has outpaced food availability (Olayiwola, Soyibo, & Atinmo, 2004). Graph 5 shows that Nigeria has higher rates of stunting than some of its neighbours in the African region and income peers in other regions. 144 Graph 5: Prevalence of stunting among children in low-and-middle income countries 45 in do c cu “O c c 3 3 I/) < D O "O 0J IE u c u bO c > o E CL < £ Gu|pea 40 35 m Liberia Liocna ♦ Nigeria ♦ Uganda b ♦*K„e n y a 4 Cameroon 30 T<|0 25 G hata 20 Nicai%gua ♦ Bolivia 15 10 5 0 0 200 400 600 800 1000 1200 1400 1600 1800 GNI p er capita US $ = 2 008 Source: UNICEF. (2013). Stunting rates were obtained from the WHO Global Database on Child Growth and Malnutrition (figures based on WHO child growth standards). Data on Gross National Income (GNI), which is the sum o f a nation’s Gross Domestic Product (GDP) plus net income received from overseas, were obtained from the World Bank’s World Development Indicators. 5.6.2 Wasting Wasting, or low weight for height, indicates a severe process of weight loss, which is often associated with acute starvation or malnutrition (WHO, 2013). A Joint Demographic and Health Survey carried out by the Federal Office of Statistics (FOS) and the Institute for Resource Development (IRD) shows 9 percent of children wasted, with high prevalence in rural areas (FOS & IRD/MACRO, 1992). The prevalence of wasting reported by FMoH and Social Services, USAID (1993) data was 21 percent, twice as high as 1994 and 1990. Olayiwola, Soyibo, & Atinmo (2004) explain that this increase reflects short-term deficiencies in nutrition and suggests worsening food insecurity. FGN et al. (2003) also indicates a decline in the national prevalence of wasting to the 1990 level o f 9 percent. The rate of wasting in Nigeria is regarded as serious. The World Health Organization states that “unless there is no severe food shortage, the prevalence of wasting is usually below 5%, even in poor countries... [with] prevalences between 10-14% are regarded as serious, and above or equal 15% as critical” (Child Growth Indicators and their Interpretation section, para. 2). UNICEF (2009a) report estimates that 14 percent of children below the age of five are 145 wasted. High rates of micronutrient deficiencies in Nigeria indicate that while dietary adaptation is occurring within the population dietary diversity and convergence is low (UNICEF & Macronutrient Initiative, 2004). Table 17: Trends in Stunting and Wasting in Children, 1990-2008 Sources: The Surveys used in the analysis include the 1990 Nigeria Demographic and Health Survey (NDHS) undertaken by the Federal Office of Statistics and IRD/MACRO International published in 1992; the 1993 National Micronutrient Survey (NMS) published by the Federal Ministry o f Health and Social Services and USAID in 1993; the 1994 Participatory Information Collection Study (PICS), published by the Federal Government o f Nigeria (FGN) and UNICEF in 1994; the 1999 Nigeria Demographic and Health Survey (NDHS), published by the National Population Commission, UN Population Fund and US Agency for International Development in 2000; the 1999 Nigeria Multiple Indicator Cluster Survey (MICS), published by the Federal Office o f Statistics and UNICEF in 1999; and the Nigeria Food Consumption and Nutrition Survey published by the Federal Government and partners in 2003 (most recent); the 2009 ‘Improving Child Nutrition’ published by UNICEF; and the 2009 State o f the Word’s Children published by UNICEF. Trends observed in the patterns of urban and rural wasting are similar to those observed in the prevalence of stunting in Nigeria (Olayiwola, Soyibo, & Atinmo, 2004). The prevalence of wasting in rural areas appears higher than in urban areas. The reasons are similar to those proffered for stunting by Kolawole Olayiwola, Adedoyin Soyibo, and Tola Atinmo (2004). The prevalence of wasting has fluctuated over the past two decades, but overall, by 2008 its prevalence was 14 percent of children population, which is almost three times higher than the WHO’s acceptable level of 5% and below. The high levels of prevalence of stunting have 146 significant implications because they show that significant numbers of children are not food secure in Nigeria. 5.6.3 Underweight Data on the prevalence of underweight children in Nigeria are obtained from the Demographic and Health Survey published by various government agencies in collaboration with international agencies. Due to the different methodologies applied in conducting and analyzing the results by these agencies sometimes appear contradictory. Nevertheless, results from these surveys show a common pattern of declining, yet steadily high levels of underweight among children in Nigeria. FOS et al. (1992) finds 36 percent of children are underweight with a prevalence rate about 50 percent higher in rural and northern areas of Nigeria. The FMoH and Social Services, USAID (1993) survey reports that 39 percent of children in Nigeria were underweight. The northern parts of Nigeria had the highest incidence of underweight in children with one out of every two children being considered underweight. With the FGN and UNICEF (1994) survey, the rate of underweight declined to 28 percent, while in FOS and UNICEF (2000) survey, there was a decline in the prevalence of underweight in children from 36 percent in 1990 to 30 percent in 1999. The National Population Commission (NPC), UN Population Fund Agency for International Development (2000) survey found that 27 percent of children under three were underweight. FGN et al. (2003) survey shows that the rate of decline from 36 percent in 1990 to 25 percent in 2003. UNICEF (2009b) survey reports that 23 percent of children below the age of five are underweight. In summary, from the various Demographic and Health Surveys carried out in Nigeria, the prevalence of underweight among children has reduced considerably over the past two 147 decades. Nevertheless, progress in Nigeria has not been sufficient to meet the MDG of halving 1990 rates of child underweight by 2015 (UNICEF, 2009b). 5.7 Nutritional Challenges In Women 5.7.1 Undernutrition Under-nutrition is a consequence of severe malnutrition in Nigeria. Cases of under­ nutrition are rampant and often severe (Legg & Alabi, 2005). Nationally, about 12 percent of women suffer from chronic under-nutrition (Skolnik, 2008, 130), with micronutrient deficiency such as Vitamin A, iodine, and iron the main deficiencies. The root cause of these deficiencies is the quality of diet, nutrition, and changing lifestyle (Muller & Krawinkel, 2005). Three regions in Nigeria possess the highest prevalence of under-nutrition in women, namely: South-West, North Central (including Abuja-Nigeria’s capital), and far Northeast (Lindsay, Gibney, & McAuliffe, 2012). Malnutrition is highest for poor uneducated women in these regions. Inadequate accesses to nutritious foods as well as inaccessibility to sanitary water are among the contributing factors for high malnutrition in the South-West. In addition, Hausa women (in reference to women who come from the northern parts of Nigeria) particularly in rural areas enter early arranged marriages and by customary Sharia law practiced in many northern states are not expected to work but remain at home and cater for the home and thus rely solely on the male for the provision of food (ibid.). The close link between maternal undemutrition, low birth weight, and childhood stunting and underweight is only now being realized with its implications. The national surveys provide little information about undemutrition in women in general. 148 Table 18: Prevalence of undemutrition among women in Nigeria Urban | 6 Source: National Population Commission, UN Population Fund and US agency for International Development (2000); FGN et al. (2003). FOS and IRD/MACRO International (1992) report an annual prevalence of undernutrition in 7 percent of women with considerable regional variation, but very few urban-rural differences. In the Northeast, 25 percent of mothers had a low BMI, compared with 20 percent in the southwest, 18 percent in the northwest, 8 percent in the central zone, and 7 percent in the Southeast (Olayiwola, Soyibo, & Atinmo, 2004). Further, FGN et al. (2003) used BMI data from women (aged 15 to 49) as an indicator of their nutritional status. Twelve percent of women were undernourished and there were no significant urban-rural differences, although the prevalence of the under-nutrition of women in the north is almost twice the rate of that in the southern parts of Nigeria. 5.7.2 Overweight And Obesity There are several classifications and definitions of overweight and obesity. However, the one commonly adopted is by the World Health Organization (WHO), which classifies overweight as a BMI of 25-29.9kg/m2; and obesity, BMI of > 30kg/m2 (WHO, 2003). The nutritional status of women is relatively poor in Nigeria. As shown in Table 18, prevalence of malnutrition in women of 15-49 years in Nigeria depicts that over 20 percent of women on a national average are overweight. The urban areas have a record of 27.7 percent, while rural areas recorded 16.6 percent (Omotor, 2009, 15). The high rates of overweight and obesity in urban female women is due to sedentary lifestyles, changing food systems, and the quality of food. In 149 Nigeria, two-thirds of household daily meals are bought from street food vendors and fast food restaurants, which is more prevalent in urban cities (Akinyele, 1998). Olayiwola, Soyibo, & Atinmo (2004) corroborate this and provide empirical evidence showing that the number of registered fast food chains in Nigeria has tripled between 1998 and 2003. Graph 6: Prevalence of obesity among women in Nigeria ■ Overweight ■ Obesity National Rural Urban Source: FGN et al., 2013. The prevalence of obesity in women is higher in urban areas than in rural areas. The 2003 report states that the national level for obesity in women stood at 5.9 percent, with the urban rate of 9.6 percent almost doubling it. National figures on obesity in women in 2013 reports that 7.1 percent of women are obese, a figure that is slightly below the sub-Saharan Africa average rate of obesity of 7.5 percent (FAO, 2013b). In summary, evidence from the FAO’s Statistical Division on Nigeria’s Food Balance Sheet show increased energy supply from grains, fats and oils, and animal source foods that could improve nutrition and result in dietary adaptation and convergence. It therefore becomes imperative to explore how much dietary adaptation and convergence is taking place within the 150 Nigerian population with a view in determining whether changing food systems as a result of tertiary FDI is resulting in improvements or decline in food security in Nigeria. 5.8 Methodology 5.8.1 Introduction This section focuses on the methodology applied to this research study, which utilizes a mixed methods approach involving the quantitative and qualitative gathering and analysis of data, an approach that is largely descriptive and interpretative in nature. The approach draws upon several methods, such as descriptive statistics analysis and thematic analysis. 5.8.2 Descriptive research William Neuman states, “a descriptive study presents a picture of types of people or of social activities” which focuses mostly around the “how” and “who” kinds of statements (Neuman, 1997, 20). These principles are applied to this research to highlight the considerations in how much dietary adaptation and convergence is occurring in the Nigeria population. This process encourages the utilization of a descriptive and thematic analysis approach to find information and stimulate new explanations. David Royse (1991) describes descriptive research as a means of building on exploratory methods, which aim to survey larger groups in an attempt to appropriately represent the population being studied. He states that “descriptive studies can provide precise information on the characteristics of a group of respondents” (Royse, 1991, 44), which in this instance is an exploration of the Nigerian population. The purpose of this research is not to make generalizations, but rather to provide a snapshot of the dietary adaptation and convergence taking place within Nigeria. In furtherance to the multidimensional nature of food security, descriptive 151 study allows the researcher to explore the salient features in which other quantitative research may not reveal. Royse compares quantitative and qualitative methods by stating the following: Quantitative researchers sometimes employ standardized scales or instruments; they may sample from available respondents or attempt in other ways to provide some confirmation that their findings are reliable. Quantitative researchers seek to establish reliability in other ways. Sometimes they have those who were being studied read the report in order to ferret out inaccuracies or misrepresentations (Royse, 1991,224). David Royse (1991) furthers his discussion by stating that qualitative researchers tend to create good reliability by verifying responses to interviews, several times if required, to ensure that the meaning assigned to respondents is correct. Although this research is descriptiveinterpretative in its design, Royse’s observation aligns with the interviews conducted in which the responses provided were thoroughly scrutinized in the presence of the respondents with their approval for inaccuracies or misrepresentations. 5.9 Method Most qualitative research includes some demographic data. In this study, this includes gender, age, and geography. The completed research data consists of 80 administered face-toface semi-structured questionnaires with children between the ages of 5-12 years and women between the ages 15-49 years in the urban city of Lagos State in Nigeria. The children included in the sample were not necessarily children of the interviewed women. Parents or guardians of the children administered the questionnaires were present during the interview process and clarified responses provided by the children and in some cases responded on behalf of the children to ensure that the information collected was clear, concise, and not misrepresented. 152 The geographical area includes Eti-Osa Local Government (LGA) and Alimosho Local Government Area (LGA). The participants/respondents were divided equally between each LGA and between age brackets within each demographic location. 5.9.1 Rigour of Method The rigour of this research is guided by the concepts of validity and reliability in qualitative research. As outlined by Neuman (2003), validity consists of three parts, the first of which states the importance of claims needing to consist of plausible data, not statements of absolute truth, but rather inter-subjectivity. The concept of inter-subjectivity is defined by Neuman as, “...the idea that different people will agree on what they observe in the empirical world through careful use of their senses” (2003, 537). Second, the support of diverse data that takes smaller pieces and creates research that develops strength through linking the pieces together and finally, identifying of connections in the details of gathered data. Allan Kellehear (1993) also highlights the importance of validity and explains the importance of crosschecking the responses with participants to ensure accuracy. With a view to analyzing data, Kellehear states, “...thematic analysis means that rarely is a ‘theoretical framework’ or set of hypothesis used. Instead, the researcher is interested in a topic or set of issues and then approaches an interview or document with these issues in mind” (Kellehear, 1993, 38). Kellehear (1993) applies the terms “etic” and “emic” to the thematic analysis framework. “Etic”, meaning the “outsiders” view of the problems versus the “emic”, which is the focus of thematic analysis and means staying close to the world view of the insider. Thematic analysis focuses on all parts of the problem as being equal and does not necessarily consider frequency of a theme as a component of validity or reliability. 153 5.9.2 Personal Framework Amedeo Giorgi (1985) shares William Neuman’s (2003) stance and includes bracketing as a necessary component of descriptive research, to suspend personal frameworks in order to be present in the gathering of data. This practice addresses the potential of preconceived outcomes and any bias the researcher may hold from influencing the data gathered. Implementing bracketing in the case of this research study required a personal awareness position, not only within the LGAs visited, but the research itself. My personal framework was developed from the perspective of a middleclass, black African male from Nigeria, who is currently in pursuit of further education in a Western country. I was raised in an urban ‘hybridized’ (African and Western) cultural environment. My personal values have evolved based on all of the above privileges, which have been altered with time, age, and personal experience. As an adult, this framework has shifted through personal growth and conscious choices made around how I want to represent myself as a person. My career choice in development economics and the professional framework that comes with this career has also impacted the development of what my personal framework is today. Following the concept of bracketing, it becomes important for the researcher to suspend personal beliefs in order to create openness to all outcomes and possibilities. This study follows Neuman’s (2000) validity structure by creating an interview process through which the data was obtained. Questions presented to the respondents’ were extrapolated from the FAO questionnaire bank on dietary adaptation and convergence. The accurate interpretation of data ensures a solid base from which theme development can emerge. The participants’ questionnaires can then be read and re-read to identify consistent words and/or phrases and also any incorrectly answered or omitted questions. This is reviewed with the 154 participants to ensure accuracy. This process is vital because this research is built from the participants’ experiences. The same set of questions and guidelines were presented to each of the participants. In the case of child participants, parents/guardians were present for the interview process, assisting in clarifying their responses in order to avoid inaccuracies or misrepresentations. The themes will be identified based on the following research question: “How much of dietary adaptation and convergence is taking place within the Nigerian population?” Once the themes have been accurately identified, the process of linking and applying the themes for practical considerations concludes, the research process. Again, the objective of this research is to take a snapshot and not to make generalizations of dietary adaptation and convergence. 5.9.3 Data Analysis of Methods To analyze the data gathered from interviews, a descriptive statistics and thematic analyses were employed. The descriptive data analysis aims to quantitatively provide a snapshot of dietary adaptation and convergence taking place in the Nigerian population. Thematic analysis was utilized in order to gain an understanding of the data by looking for themes that arise in discussions. Bagley Thompson explains that “descriptive statistics are numbers that summarize the data with the purpose of describing what occurred in the sample” (2009, 57). In furtherance to the benefit of descriptive data analysis, Thompson explains that “in contrast, inferential analysis are numbers that allow the investigator to determine whether there are differences between two or more samples and whether these differences are likely to be present in the population of interest (Thompson, 2009, 57). Since the purpose of this research is to summarize and describe what occurred in the data, descriptive analysis is most appropriate. Thematic analysis aims to understand the data by looking for themes that arise in discussions. 155 Jan Fook explains that “thematic analysis...looks for ideas in the data being examined” (1996, 28). In addition, a thematic analysis maintains an inductive approach with a view to exploring new phenomena. Given that this research is based on lived experiences, inductive analysis is the appropriate application. The remaining information in this section will focus on descriptive analyses and thematic analyses and their application in this research. 5.9.4 Descriptive Data Analysis Thompson (2009) explains that descriptive analysis provides the researcher with simple summaries about the sample and the measures. Together with simple graphics, they form the basis of quantitative analysis of data. Eighty questionnaires were administered. Each interview was reviewed immediately after the questionnaires were filled and before each respondent departed in an effort to identify inaccuracies. The steps to applying descriptive statistics analysis are outlined by Peter Bickel & Erich Lehman (2012): 1. Check and edit questionnaires 2. Categorize responses 3. Code data 4. Analyzing data - when using a microcomputer for analysis (a) choose the appropriate software, (b) code and enter data, (c) edit data, (d) carry out analyses 5. Presenting and interpreting data Building on the data collection process as described by Bickel & Lehman, simple summaries of the sample including a diagrammatic representation of analyzed data in the form of bar charts were generated using the SPSS statistical package. 156 To generate themes each response was cross-checked with the respondents for accuracy and as subsequently noted, for any themes that may arise. From this point, the themes were listed or noted and they were highlighted in different colours to organize and create findings for policy and practice consideration. The process of analysis is guided by dietary changes that have occurred to children and women participating in this interview. The steps to applying thematic analysis are outlined by Jodi Aronson (1994) as follows: 1. First step is to collect data 2. Data collected should be verified for accuracy 3. Patterns of experiences can be listed. This can come from direct quotes or paraphrasing common ideas Once the patterns are identified, they can be expounded. Thematic analysis then continues to create sub-themes that are guided by topics. In the case of this research, some of the sub-themes might look like similar phrases, meanings, or feelings that are consistent with all interviewees. Mattheu Miles & Michael Huberman offers an example: Practical principles in thematic analysis 1. Count- look for repetition, recurring events/experiences 2. Note for themes, patterns - look for underlying similarities between experiences 3. Check metaphors, analogies or symbols for what is happening 4. Check to see if single variables/events/experiences are really several 5. Connect particular events to general ones 6. Note differences and similarities 7. Note triggering, connecting or mediating variables 8. Note if patterns in the data resemble theories/concepts (Miles & Huberman, 1984, 215-230) 157 Reflecting on Miles & Huberman’s example, the steps taken in conducting the thematic analysis are as follows: 1. The research issue to be investigated was identified (dietary adaptation and convergence) 2. Interviews with household participants were conducted based on the research question 3. Responses were reviewed with respondents to ensure accuracy and to avoid misrepresentations 4. Patterns of experience and themes were developed from the questionnaires using colour coding approach 5. Research considerations and findings were noted for discussion. The findings area included dietary changes that have occurred in the last 5 years for households with a focus on children and women. The remainder of this section summarizes in more detail the data gathering process of this area of research. 5.9.5 Participants Eighty individuals (40 women and 40 children) participated in this research. The rationale lies in the FAO (2013c) and WHOs (2003) et al. statements that within households’ women and children are regarded as the most vulnerable in society with respect to attaining food security. A list of two Local Government Areas (LGAs) has been purposively selected. These LGAs reflect to varying degrees of households within different income brackets in Nigeria (low to middle income). Information about this research was made available and displayed on the information booth at the two LGAs. The topic and focus of the research was discussed with would-be participants. Participants were asked to signify their willingness to participate, once consent was obtained; questionnaires were administered in person by the researcher to the participants. Further, the contact information of subsequent participants was solicited from the initial respondents through a snowball sampling method. The snowball sampling method employed by the researcher identifies other potential participants who meet the criteria for inclusion in the study, through the recommendation of those already interviewed. One curious observation made by the researcher was that many would-be participants in Alimosho LGA initially were more willing to engage the researcher in a conversation and assumed there would be some monetary compensation attached to completing the questionnaire. While the latter observation was absent in participants in Eti-Osa LGA, they were less eager than the Alimosho LGA participants in engaging the researcher in a conversation. Further research in the future may reveal the underlining cause of such participants’ attitude, but two plausible causes may have been as a result of their levels of income or perhaps monetary compensation had been offered to them for conducting similar interviews in the past. Nevertheless, once the researcher had introduced himself and handed out the research information form outlining the purpose of the research that the participants all felt comfortable and therefore trusted the process. 5.10 Summary The methodology of a descriptive-inductive approach, in combination with the principles of thematic analysis, assisted in clearly highlighting how much dietary adaptation and convergence is taking place within the Nigerian population. As a graduate student this interview process has helped me to articulate personal observations of individuals in the local communities in which I grew up, but never fully grasped the changes to dietary lifestyle that were occurring as a result of the influx of FDI. This research does not make generalizations, as that would require a significantly larger sample size rather, it aims to provide a point in time examples of lived experiences of dietary adaptation and convergence for consideration. 159 The next section of this study will focus on presenting simple summaries about the aggregate of the sample, focusing on the experiences of participants who have witnessed changes to their diets in the past 5 years. Also, emphasis will be placed where significant differences are observed between the aggregate of the sample between the two LGAs as well as any significant differences between the women and children in the two LGAs. This will be followed by an exploration of the completed interviews and the application of thematic analysis to articulate the findings. 5.10.1 Snapshot Of Dietary Adaptation And Convergence Taking Place In The Nigerian Population 5.10.1.1 Descriptive Statistics Table 19: Descriptive Statistics Adult women (15-49 years) Location Number Occupation (number) Alimosho LGA 20 Secondary school teachers (8); Local government staff (10); Other(2) Level of education University degree (Bachelors); University degree (Bachelors, Diploma in education Masters); Diploma in education Income bracket $7,500 - $9,000/annum ** Minimum wage $1,400/annum Children (5-12 years) Number 20 Occupation Student Primary school Level of education Income bracket n/a Eti-Osa LGA 20 Secondary school teachers (10); Local government workers (10) $11,500 - $ 13,000/annum** $l,400/annum 20 Student Primary school n/a * Local government workers on the average fall within the lower income bracket while secondary school teachers on the average fallwithin the upper limit o f the income bracket. ** Income was converted at the prevailing exchange rate o f $1 = N155 Perusal of the analytic reports provided by agencies on food security supplemented by a cursory review of the literature on dietary adaptation and convergence, suggests that most of the 160 analysis conducted by scholars relies on fairly simple analytical techniques. In small samples relative to the population, tables reflecting trends, bar-charts and pie-charts, percentages, and ratios are common in quantitative reports on dietary adaptation and convergence than are regression equations, correlations, or the quantification of externalities. In determining dietary adaptation and convergence the standard practice is to determine how many meals on the average is being eaten within a period by the target audience and if the participants were on a special diet, i.e. vegetarian diet. When asked how many meals in a week were eaten on the average, many of the participants reported consuming between 2-3 meals a day. Thirty-two percent and 34 % of the respondents reported they ate 2 and 3 meals in a day respectively, while 14 % reported eating more than 3 meals a day. Of the latter, all were children implying that children within this survey consumed more than the ‘traditional 3-square meal’ a day. About 92.5% of the population was not on a special diet (only 4 participants (5%) reported they were on a diet). None of the child participants reported being on a diet. Information on the proportion of individuals on a diet is relevant because the results do not significantly influence the kinds of dietary adaptation and convergence taking place in the Nigeria. 5.10.2 Dietary Adaptation Dietary adaptation is influenced by dramatic changes in lifestyle especially in urban areas. It is characterized by a shift away from home cooking, the traditional means of meeting daily dietary requirement in Nigeria, to buying food from street vendors or supermarkets and fast-food restaurants. When asked how much food on the average was eaten at home, 28.8 % of all participants reported eating all their meals at home whereas almost half of the participants (46.3 %) reported eating between 5-9 meals (23.8%) and 10-14 meals (22.5%) at home. This implies that of all 161 meals eaten in a day, 1 in 2 participants (51.3%) reported eating at least 2 meals prepared at home. Graph 7: Number of meals prepared at home (all respondents) 30.0%- C m o 2 0 .0 % - k. • CL 10 .0% - .o% - 0-4 meals 5-9 meals10-14 meals 15-19 meals 20 meals and above In a week, how much food on the average is home cooking? By extension, home cooking, which traditionally has been the primary source of household dietary intake, still plays a significant role in the Nigerian society. The above trend is similar to those witnessed among the children within this survey. In adult women in both LGAs, at least 1 in 3 women (42.5%) reported eating at least 2 meals a day from food prepared at home. Upon closer inspection of the breakdown of adult women, on average it appears that more adult women (15%) in Alimosho LGA reported eating at least 2 meals a day from food prepared at home in comparison to 35% of adult women in Eti-Osa LGA ,who reported eating at least 2 meals a day from food prepared at home. 162 Graph 8: Number o f meals prepared at home (Children in Eti-Osa and Alimosho LGAs) 50 40 30 20 10 0 0-4 5-9 JlI 10-14 15-19 ■ Eti-Osa ■ Alimosho 20+ In a week, how much food on the average is home cooking? In children in both LGAs, about 1 in 2 children (55%) reported eating at least 2 meals a day prepared at home with 65% of children in Eti-Osa reporting eating at least 2 meals a day prepared at home in comparison to 40% of children in Alimosho reporting the same. When asked how much food on the average is bought from street food vendors, 1 in 4 participants (25%) reported consuming at least 1 meal a day from food prepared by street food vendors. Graph 9: Meals boughtfrom streetfood vendors (all respondents) 80.0% - 60.0% w C m o k. Ql 40.0% Q. 17.5% 20.0% - .0% 0-4 m eals 5-9 meals 10-14 meals 15-19 meals In a week, how much food on the average is bought from street food vendors? 163 Interestingly, the results show that in the survey conducted, more adult women consumed food from street food vendors than children. Results show that about 1 in 3 adult women (32.5%) consumed at least 1 or more meals a day from street food vendors (67.5% of adult women consumed less than 1 meal a day from street food vendors), while about 1 in 5 children (17.5%) consumed food prepared by the same (82.5% of children consumed less than 1 meal a day from street food vendors) 19 as shown in graph 10. Graph 10: Meals bought by from street food vendors by adult women and children in Eti-Osa and Alimosho LGAs W o m en vs.C hildren 100.0 % 82^5% 50.0% l At least 1 meal or more a day 0. 0% Women Children I Less than 1 meal a day Percentage of adult women and children who buy meals from street food vendors Observation suggests that as more women enter the productive labour force there are time constraints influencing their ability to prepare all meals at home and as such buying food from street food vendors has become increasingly popular. Buying meals from fast food restaurants and supermarkets appears to be the least popular of the components of dietary adaptation. When asked how much food on the average is bought from supermarkets and fast food restaurants, responded affirmatively. Less than 1 in 10 respondents (8.8%) reported buying 1 meal or less a week from fast food restaurants. A vast 19Overall, the results were similar for both Local Government Areas 164 majority of the respondents (91.2%) revealed that they do not resort to food from supermarkets or fast food restaurants in meeting their daily dietary requirements. Graph 11: Meals bought from supermarkets and fast food restaurants (all respondents) 100.0% - 80.0%• o 60.0V" £ 40.0%- ft. 20 .0% .0%-* 15-19 meals In a week, how much food on the average is bought from supermarkets and fast food restaurants? Nevertheless, when one takes a cursory look at the analysis, it reveals that majority of the food sourced from fast food restaurants is undertaken by adult women. A relatively small number of children (2.5%) reported buying fast food from fast food restaurants weekly while about 1 in 7 respondents (15%) reported in a week buying at least one meal or less. 5.10.3 Dietary Convergence As more foreign direct investment (FDI) flows into a recipient country like Nigeria, one of the many benefits would be an increase in dietary supply from grains, fats and oils, animal source foods. With an increase in these dietary sources one would expect evidence of dietary convergence in foods eaten in the host and recipient countries. In determining the level of dietary convergence taking place in the Nigerian population each participant was asked how often s/he consumed the following —cassava, sorghum, millet, meat, egg, milk, butter, cheese, and cooking oil in their meals. Over 4 in 5 respondents (87.5%) reported that they consumed the above foods regularly. 165 Graph 12: Frequency of varieties of food consumed (all respondents) (My 3-6 times/week 1-2 times/week less than 2 timesJtnonth How often do you consum e any of th e following- cassava, sorghum, millet, m eat, egg, milk, butter, cheese, and cooking oil? Over half of the respondents (65%) reported eating all of these foods except cheese at least 3-6 times per week. A vast number of respondents reported eating the above foods either daily (22.5%) or at least 3 times a week (65%). The most common foods consumed by the participants included cooking oil, milk, egg, meat and cassava. Top of the list of foods consumed by the respondents was cooking oil (92%) as it was revealed as a common ingredient used in the preparation of food. Relatively few respondents (8%) reported eating cheese as it did not constitute part of their daily dietary intake, and in many cases cheese was substituted with the use of butter. Again, this observation is similar to those observed in adult women and children, as 9 in 10 adult women (90.5%) and about 8 in 10 children (82.5%) reported consuming the above foods daily and 3-6 times a week respectively. Within this survey ‘traditional’ home cooking and foods bought from street food vendors appear to be the dominant means of individuals meeting their daily dietary supply with foods 166 from fast food contributing only marginally. Overall, it appears that majority of the participants enjoy adequate dietary energy intake from grains, animal source foods and fats and oils. 5.11 Thematic Analysis When the women and children interviewed in this study were asked whether dietary changes that had occurred over the past 5 years in terms of the types of food they consumed, about 2 in 5 participants (43.8%) responded “Yes”. This section will focus on the themes, which have been identified through a thematic analysis application. A brief discussion will follow each theme in an attempt to create suggestions for further research in this topic area. The themes that emerged are as follows: 1. Consumption of ‘healthy’ foods and improvements in health 2. Availability of ‘healthy’ foods at affordable prices The above themes will be discussed first as the experience of the participant and then reviewed for the purpose of shedding light on what is perceived to be the cause of these dietary changes. 5.11.2 Consumption o f ‘healthy’ foods and health implications The first theme was identified from asking participants who answered in the affirmative to the aforementioned question. Many of the participants reported that they felt healthier since they changed their diets changed and included foods that are considered healthy. Healthy diets and lifestyle improve health. Consumption of healthy foods such as fresh vegetables, fruits, milk, nuts among others, improved the health of the participants. For example, many of the children participating in this interview explained that in the past 5 years, they had starting consuming more of the kinds of foods mentioned above. A common and consistent response from children 167 as a result of the changes to diet included: “I am growing well/taller’, “The food I’m eating is making my body function well’, and “I am experiencing good health.” The above responses are similar and consistent with those provided by adults in the interview in response to dietary changes that have occurred in the past 5 years. “There has been more concentration on eating more fruits and vegetables and against carbs. I have shed some weight and feel much healthy.” “[I] now try to eat more healthy foods (fruits and vegetables]).” “Just being health conscious/particular about food contents and its health impact.” In the above examples, participants made conscious links between improvements in their health and the types of foods consumed. There is evidence that large numbers of meals are still prepared at home, although there are reported instances of meals being consumed from street vendors and fast food restaurants. Some of the participants acknowledge the availability of a wider variety of foods, but mention that the prices of these foods are expensive relative to their income. Some participants attest to a better health status as a result of an increase in the consumption of healthy food. There is evidence that participants are conscious of eating healthy and a large numbers of meals are still being prepared at home. The results of this study cannot conclude whether or not the availability and consumption of a wider variety of healthy foods is what is resulting in participants’ feelings of improved health and well-being or if it is their conscious effort to improve their overall health and nutritional status that has resulted in the 168 increased consumption of healthy foods. These potential links have the potential to be an area of focus in future research studies. 5.11.3 Availability of ‘healthy’ foods at affordable prices Consistent in some of the participants’ responses were concerns about the cost of healthy foods such as fresh vegetables, milk, eggs, and fruits. What I observed as a researcher was that all of the participants that cited the cost of ‘healthy’ foods were Nigerians who had spent some years in parts of Europe and North America and returned to Nigeria. According to these respondents, in the different parts of the world they had lived, foods considered as ‘healthy’ were easily accessible and relatively affordable and did not require one to part with a substantial amount of money to maintain the dietary lifestyle they previously enjoyed. “I moved back from the UK and when I go to the stores here [Nigeria] I cannot find the varieties of foods I used to consume. When I find what I am looking for they seem quite expensive than the ones in the UK.” “[I] moved from Spain back to Nigeria. I eat more Nigerian food now, as I cannot find the types of food and fruits I used to eat. [I] have to drive long distances to supermarkets for fresh healthy foods which I find quite expensive.” “We lived in the States (USA) where we had access to a lot of fruits, vegetables, milk, fishes, nuts, and other healthy foods at a moderate price, but now that we are back in Nigeria it’s very challenging to get these foods and also at affordable prices.” The above segments highlight concerns around the affordability of foods considered healthy. From a dietary adaptation and convergence perspective, these respondents cannot keep up with the dietary lifestyles they had when they lived outside Nigeria. This concern is quite significant, as dietary lifestyle appear to diverge rather than converge. I observed on one hand that barriers such as high transportation cost, proximity to supermarkets, and the actual cost of 169 these ‘healthy’ foods all sum up to making the cost of foods expensive. On the other hand, I observed that the above mentioned barriers were not a major concern for respondents who had not had the privilege of living outside Nigeria. The cost of ‘healthy’ foods was not much of a concern to them. Many I spoke to were just happy that more of these ‘healthy’ foods were available even though there was some considerable distance between them and supermarkets. Also, respondents would welcome cheaper cost of healthy foods, but agreed that the quantity of foods bought was what their income could afford. The crucial component is the understanding that these differences are based on each individual’s exposure. The practical implications need to be focused on the amount dietary adaptation and convergence occurring in the Nigerian population. Differences in dietary convergence occur between individuals that are living in Nigeria and those that have recently relocated to the country. Nevertheless, it is observed from these testimonies that the vast majority of respondents who had been living most or all of their lives in to Nigeria reported an increase in dietary convergence. 5.12 Conclusions Evidence reveals that dietary adaptation and convergence is taking place in the Nigerian population. Home cooked meals remain the dominant means by which individuals meet their daily dietary requirements. Nevertheless, as more adult women enter the paid labour force, street food vending has become a popular means of individuals meeting their daily dietary requirements. Adult women eat an average of one meal a day bought from street food vendors. Food bought from fast food restaurants is the least frequently accessed means of meeting daily dietary requirements, but still remains an integral part of meeting dietary intake. 170 Dietary convergence is resulting in an increase in dietary energy supplies from grains, animal source foods, and fats and oils. The inflow of FDI is not only resulting in urban growth, but to an influx of MNCs to urban cities. The activities of MNCs are providing an increase in the availability and access to a wider variety of food. Foods such as millet, fresh milk, eggs, vegetables, cooking oil, butter, and cheese among others are increasingly being consumed. Some participants within this study have attributed their improved health to better nutritional choices in addition to identifying many of the aforementioned foods as contributing factors. On the strength of their testimonies, one can make the argument that food security and improved well-being would be enhanced when nutrition is improved. It is important to reiterate that this study represents a snapshot of the kinds of dietary adaptation and convergence taking place within the Nigerian population, therefore one should be careful not to make generalizations. As the testimonies of the individuals presented within the present study are those of educated, middle-class, urban Nigerians and may not represent the testimonies and experiences of all Nigerians. While dietary convergence is taking place in the Nigerian population, there remains a disparity between the level of convergence taking place in Nigeria and in other parts of the developed world. The very fact that it is called a dietary convergence implies that as Nigeria receives tertiary FDI from host countries, food security is improved and diets converge towards those in the developed countries. It is evident from the testimonies of individuals who relocated to Nigeria that gaps exist in dietary convergence between Nigeria and countries they had lived in. But while this gap may exist, testimonies of individuals who have lived in Nigeria reveal an increase in the availability and consumption of dietary supply from grains, animal source foods, and fats and oil. In addition to availability of a variety of foods, one other factor that influences 171 dietary convergence is the cost of foods. Further increase in dietary convergence would take place if the price of food is cheaper and affordable. The quantitative analysis of the impact of disaggregated FDI on food security in the previous chapter reveals that attracting FDI into the tertiary sector would by far be the most beneficial in improving food security of individuals in Nigeria. As the government attracts more FDI into sub-sectors within the tertiary sector like banking, telecommunications, and hospitality employment is generated thus leading to the growth of the middle class. Also, attracting FDI into the retail sector ensures increase in competition, supply of food, and a reduction in food prices. Together, this has the resultant effect of improving food security in Nigeria. 172 6.0 Chapter 6 6.1 Conclusion The impact of sectoral FDI on food security is not unique to Nigeria. Rather, it is a global phenomenon through which, human welfare as measured by food security can be examined with a view to determine whether sectoral FDI is increasing or decreasing food security. The Nigerian economy demonstrates the complexity of this phenomenon. In the case of Nigeria, the paradox exists that with large flows of FDI into the economy over the past five decades, human welfare as measured by food security, has not resulted in commensurate improvement. In fact, high levels of hunger remain persistent and have been classified as ‘serious’ by the FAO, with about 20 to 30 million Nigerians remaining hungry within this period. Two factors connect FDI and food security namely: Nigeria’s economic growth and development, and food access and availability. Nigeria’s economic growth has ensured an increase in its wealth, while ensuring that it has the financial capacity to increase food production and importation to fill in the gaps in situations when food production cannot meet demand. This growth has made Nigeria an attractive country for Multinational Corporations to invest in, which can improve Nigerians’ access to a variety of foods at competitive prices. Approaches such as the modernization and dependency have been used in this thesis as a means of explaining the mechanism through which foreign direct investment influences food security in Nigeria. They serve as the foundational building blocks upon which all subsequent approaches used to explore the role of FDI in explaining the patterns of change in human welfare. Moderation approach posits that attracting more FDI into Nigeria is beneficial and would improve its food security. The dependency approach argues the contrary and points to the exploitative nature of FDI, as well as its detrimental effects on food security in Nigeria. 173 Prior studies exploring the impact of foreign direct investment on food security have lumped FDI as a single component, focusing on other regions of the world without placing emphasis on the African continent, let alone Nigeria. Existing studies exploring Nigeria have focused on the Nigerian governments’ ability to attract FDI into the primary sector, particularly the oil sector, while neglecting the interests of the agricultural sector. The emphasis placed on attracting FDI in the primary sector has generated substantial petrodollars from the sale of crude oil, while the agricultural sector lags behind in terms of investment. The present study set itself the goal of examining the impact of sectoral FDI on food security in Nigeria and the extent to which sectoral FDI is influencing the kinds of dietary adaptation and convergence taking place within the Nigerian population. The study analyzes the mechanism through which FDI impacts food security. One of the principal objectives of the present study is to disaggregate FDI into its sectoral components namely primary, secondary and tertiary sectors and examine to what extent FDI into each sector is increasing or decreasing food security in Nigeria. Secondly, the study captures a snapshot of the kinds of dietary adaptation and convergence taking place within the Nigeria population and explores its impact on individuals’ health and nutritional status. In order to achieve these objectives, a mixed methods approach was employed in an effort to capture the multidimensional nature of food security, both at the national and individual level. The study is divided into two essays. The first essay titled “The Impact of Foreign Direct Investment on Food Security In Nigeria” explores at the national level using a Vector Autoregressive (VAR) model the impact of sectoral FDI on food security in Nigeria. In doing so, government and other relevant agencies and authorities can discover what sectoral FDI, if any, is increasing or decreasing food security. This type of exploration can enable bureaucratic agencies 174 to craft appropriate policies for implementation. The overall results of the present study are shown below in Table 20. Table 20: Overall results of the study Type o f Foreign Direct Investment (FDI) Im pact on Food Security Primary Foreign Direct Investment (PFDI) (oil and non-oil sectors) Method Results and explanatory notes Vector Autoregressi ve (VAR) model The empirical results indicate that PFDI has a large negative effect and reduces food security in Nigeria. The inflow o f FDI into the primary sector is comprised mostly o f FDI into the oil sector in comparison to the agricultural sector. Any benefits that may be generated by the inflows of PFDI appear to be captured by few in society and does not trickle down to the rest o f the Nigerian population. The inability to further disaggregate PFDI into the oil and non-oil sectors due to unavailability o f data is a constraint to the present study and an area of interest for future research. Secondary Foreign Direct Investment (SFDI) + Vector Autoregressi ve (VAR) model The empirical results indicate that SFDI increases food security in Nigeria, What is quite revealing is the minimal positive impact o f SFDI on food security in Nigeria when compared to the evidence provided by the modernization approach. One plausible reason for this is the low absorptive capacity of the secondary sector. There is the need for the Nigerian government to tackle infrastructural deficit by attracting more FDI into the country. Tertiary Foreign Direct Investment (TFDI) + Vector Autoregressi ve (VAR) model The empirical results indicate that the effect o f TFDI on food security shows similar patterns as the effect o f SFDI, but with greater impact. The ability of the Nigerian government to attract TFDI and MNCs has not only provided employment and income but specifically, the influx o f MNCs in the foodretailing sector has also resulted in the greater availability o f a variety o f food at relative prices. + Interviews Dietary convergence - Interviews Dietary adaptation The empirical results show that primary FDI has a negative impact on food security in Nigeria. Secondary and tertiary FDI impact Nigerian food security positively, with the latter 175 having a greater magnitude of impact than the former. As an oil-rich producing developing country, Nigeria has attracted large inflows of FDI into the oil sector in comparison to the agricultural sector. Analysis would suggest that the negative impact of primary FDI on food security may be the result of over emphasis or sectoral preference for oil. The inability of primary FDI to be further disaggregated into the oil and agricultural sectors is due to paucity of data is one limitation of this study and an area of interest for further research. While Nigeria has attracted FDI into the oil sector and generated substantial foreign earnings from the sale of crude oil, the persistent levels in the number of hungry Nigerians (about 30 million as of 2013 indicates that the Nigerian governments’ preference to attracting FDI into the oil sector has not produced the desired result of alleviating hunger levels in Nigeria. In this regard, the dependency approach challenges the modernization approach’s drive towards attracting more FDI, pointing to the exploitative nature of FDI especially in natural resource rich countries like Nigeria. The propensity for the agricultural sector to assure Nigerian food security cannot be overemphasized. The agricultural sector is the single largest employer of labour, employing over 40 percent of the Nigerian population (National Bureau of Statistics, 2012). The favourable climates in many parts of the country as well as fertile soil for cultivation make it an ideal sector for increased FDI inflow. The inability of government to attract investment into the agricultural sector as well as its inadequate policies and implementation of strategies are some of the reasons why the agricultural sector is not the mainstay in improving food security in Nigeria. Governments’ inclination in using petrodollars to import food products to meet existing gaps between food production and food demand rather than strive towards self-sufficiency in 176 food production, is myopic and untenable. The fall out of the 2008/09 food crisis has shown that having the financial resources to procure food does not necessarily ensure food security. The goal of importing sufficient food for consumption can only be met if net food exporting countries are willing to sell the quantities of food being demanded. In sum, the negative impact of primary FDI on food security in Nigeria may be as a result of the government’s over reliance in attracting FDI into the oil sector without ensuring commensurate levels of investment in the agricultural sector. The empirical results of the present study also indicate that both secondary and tertiary FDI contribute positively to food security in Nigeria. The magnitude of the impact of tertiary FDI on food security appears greater in comparison to secondary FDI. One reason for this is the low absorptive capacity of the secondary sector in Nigeria. For investments into the secondary sector to optimally influence food security, adequate infrastructure such as paved roads, adequate power supply, and technology, must be top priority of government to ensure the processing of raw materials to semi-finished goods. Evidence of tertiary FDI having a positive impact on food security is a testament to proponents of the modernization approach, who argue that more FDI improves human security as measured by food security. The ability of the Nigerian government to attract MNCs has not only resulted in urban growth, but has also provided increased employment opportunities and income, both of which have bolstered the middle class and provided the financial means for individuals to attain food security. In addition to this, the growth of MNCs has resulted in the availability of a wider variety of food products at relatively cheaper prices. Overall, the outcomes of the empirical study reflect the divergent views of the modernization and dependency approach to tackling food security. Evidence pointing to primary 177 FDI reducing food security would resonate with proponents of the dependency approach, while proponents of the modernization approach would point to the beneficial impact of secondary and tertiary FDI on food security in Nigeria. Both the modernization and dependency approaches have often been criticized for urban bias. The modernization approach is inclined towards rapid urban growth with individuals migrating to urban cities in search of employment and higher incomes. Equally, with the dependency approach, individuals are sometimes displaced from their means of livelihoods and as such there is a rural-urban push. This is not only resulting in rapid urbanization, but to changes in food systems evident in the kinds of dietary adaptation and convergence taking place within the Nigerian population. In light of this, essay two entitled “Impact of Sectoral FDI on Food Systems in Nigeria”, was conducted in an effort to determine the extent to which sectoral FDI is resulting to changes in the dietary lifestyle, nutritional and health status of individuals in Nigeria. One objective of this essay is to capture a snapshot of the kinds of dietary adaptation and convergence taking place within the Nigerian population. Lagos State in Nigeria was chosen because it is one of the world’s megacities that has witnessed rapid urban growth and is home to a wider diversity of ethnic groups within Nigeria. Two Local Government Areas (LGAs) namely Eti-Osa and Alimosho LGAs in Lagos State were puiposively selected. The empirical results reveal the kinds of dietary adaptation and convergence taking place within the Nigerian population. Overall in the aggregate sample, about 51.3% of the total participants reported eating home cooked meals at least 2 times a day (Section 5.10.2). 25% reported consuming at least 1 meal a day from food prepared by street food vendors (Section 5.10.2). Food consumed from street food vendors are consumed by more women (32.5%) when 178 compared to children (17.5%) who reported consuming at least 1 meal a day from street food vendors. The results of the present study suggest that gainfully employed, educated, middleclass, urban women are more likely to provide home-made breakfast and/or lunch for children than for themselves. Of the components of dietary adaptation, consumption of fast foods is the least popular with less than 8.8% of participants reporting consuming less than 1 meal a day from fast food restaurants (Section 5.10.2). While one cannot make generalizations, home cooking appears to largely play a dominant role in individuals meeting their daily dietary intake. The popularity of home cooking is not only enshrined in tradition, but also allows for affordability as individuals can find a right combination of foods for consumption that fall within their food budget. Further, religion and ethnicity and methods of food preparation influence what kinds of foods are consumed. Individuals practicing religions like Islam and other forms of traditional religions prohibit the consumption of certain meats like pork. The tradition of women playing the role of overseeing a household’s daily diet and nutritional intake has meant that a vast majority of households still engage in home cooking in meeting their daily dietary intake. This study supports the claim that there is an increased availability of dietary supply of energy from grains, animal source foods, and fats and oils. Over 87.5% of participants (Section 5.10.3) reported that in the past 5 years they had increased their consumption of and regularly consumed foods like cassava, sorghum, millet, meat, egg, milk, butter, cheese, and cooking oil in their meals. A substantial number of participants within the study reported eating the above foods either daily (22.5%) or at least 3 times a week (65%). The most common of the foods consumed by participants include milk, egg, meat, cassava, and cooking oil. 179 Top of the list of foods consumed is cooking oil (examples include olive oil, palm oil, soya bean oil etc.) with 92% of participants revealing that cooking oil is an essential component of food intake. Cassava, which comes in a variety of prepared local foods such as garri, akpu, and tuwo, remains quite popular with a substantial number of individuals acknowledging frequent consumption of cassava. The least consumed food is cheese with 8 % of participants responding in the affirmative. Many of the participants in the study uniformly reported changes to their nutritional status since they increased their dietary intake from grains, animal source foods, and fats and oils. 43.8% of participants in the affirmative to changes in their diets in the past 5 years. Further research in the future may reveal whether increases in the consumption of these foods is what is resulting in improved health and nutrition or whether a desire to improve their health and nutritional status resulted to an increase in the consumption of these foods. Chief among the reported changes that have occurred to diets in the past 5 years were consumption of healthy foods and improvements in health and the availability of healthy foods at affordable prices. Participants acknowledged and made reference to enjoying improvements to health as a result of eating healthy and nutritious foods. They gave varying responses including feeling healthier, losing excess weight (in adults), gaining weight (in children), feeling stronger etc. These findings confirm what studies by the Food and Agricultural Organization of the United Nations and some scholars have said regarding the link between good nutrition and health. Consistent in some of the participants’ responses were concerns about the cost of healthy foods. Participants who had resided in parts of Europe and North America, revealed that prices 180 of healthy foods relative to income earned were more expensive in Nigeria in comparison to where they resided previously. There is a valid link between the results in essay 1 and essay 2 that should not be overlooked. The empirical results in essay 1 show that depending on the nature of the labour (i.e., skilled or unskilled), the food security status of individuals is increased or decreased. Proponents of the modernization approach have laid claim to the fact that skilled labour within the tertiary sector would have the greater ability to attain adequate levels food security in comparison to unskilled workers within the same sector. But with participants in the study being skilled and earning 5 to 9 times above the minimum wage in Nigeria raising concerns about the affordability of healthy foods, it becomes increasingly worrying for the food security of the vast majority of Nigerians, who earn the minimum wage and in some cases below the minimum wage. Poverty is still rife in Nigeria in spite of the economic growth the country has recorded. Over 84.5% of Nigerians live below the poverty line of $2/day (World Bank, 2012b). Going by the World Banks’ data, this amounts to a minimum annual income of $730, which is about half the minimum wage ($ 1,400/annum) set by the Nigerian government (National Bureau of Statistics, 2012). When the above is factored in and analyzed, it shows that not only is poverty rife in Nigeria, but that the affordability and consumption of healthy and nutritious foods in sufficient quantity may be that of a privileged few. But in spite of this, results from this study shows that dietary convergence in the past 5 years is occurring at a faster rate than previously experienced. Income plays a significant role in the quantity of healthy foods consumed and it is observed that individuals appear to align their consumption of healthy foods to their food budget. Other 181 impediments to the availability of healthy foods is proximity and access to food markets and the transportation costs incurred by individuals, which when factored into the cost of foods makes the affordability of healthy foods a challenge for individuals. To summarize, this study is a valuable contribution to research on sectoral foreign direct investment and food security in Nigeria. First, the growth of the Nigerian economy as evidenced in the substantial inflow of FDI has not resulted in commensurate improvements in human welfare as measured by food security. Studies in the past have failed to disaggregate FDI and explore how FDI into each sector impacts food security. The study thus significantly contributes to limited literature on the impact of sectoral FDI on food security as most of the FDI and food security literature relating to Nigeria has focused on the primary sector with a view to explaining the impact of both the oil and agricultural sectors on food security in Nigeria. Moreover, the study reveals that primary FDI, which is negatively impacting food security in Nigeria, is largely composed of FDI into the oil sector. Therefore, it appears that the negative impact of primary FDI on food security may be as a result of the inflow of FDI into the oil sector. Paucity of data is an impediment in the further disaggregation of primary FDI into agricultural and oil sectors to fully understand how each component of primary FDI impacts food security. Thirdly, the study enriches the empirical evidence on the positive roles secondary and tertiary FDI plays in enhancing food security in Nigeria. The study presents a unique national data set on secondary and tertiary FDI and their multiplier effects on food security in Nigeria that has not been subjected to any research investigation so far. In general, the issue of disaggregated FDI and food security is very seldom analyzed in Nigeria. Lack of sufficient and reliable data or 182 estimates of disaggregated FDI and food security is evident. Other than studies that have focused on FDI into the primary sector in Nigeria, there is no clear standpoint on the impact of secondary and tertiary FDI on food security by scholars or government authorities within the Nigerian context. Fourth, as the inflow of FDI into the Nigerian economy has grown so has urban growth. This study reveals that urbanization is resulting in dietary adaptation and convergence within the Nigerian population. As regards dietary convergence at the individual level, home cooking plays the most significant role followed by street foods and fast foods as means for individuals’ achieving their daily dietary intake. Fifth, the study reveals that the intake of dietary energy supply from grains, animal source foods, and fats and oils is resulting in the convergence of diets within the Nigerian population. This is resulting in the general sense of improvements in nutrition and health. Low income, cost of healthy foods, proximity to markets, and transportation costs serve as impediments to dietary convergence. 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London: Routledge. 202 Appendices Figure 5: Stability of VAR 1 and VAR 2 Stability of VAR 1 and VAR 2 STABILITY OF THE VAR 1 MODEL STABILITY OF THE VAR 2 MODEL Inverse Roots of AR Characteristic Polynomial Inverse Roots of AR Characteristic Polynomial -0.5 - 1.0 VAR 1 MODEL* VAR 2 MODEL* Root Modulus Root Modulus -0.031591 - 0.447763i 0.448876 0.060808 - 0.600293i 0.603365 -0.031591 + 0.447763i 0.448876 0.060808 + 0.600293i 0.603365 0.201112 0.201112 -0.295325 0.295325 -0.081951 0.081951 -0.023277 0.023277 *No root lies outside unit circle*VAR satisfies the stability condition 203 Figure 6: Residual Analysis RESIDUAL ANALYSIS PORTMANTEAU TEST VAR 1 Lags Q-Stat VAR 2 Q-Stat Prob Prob 1 8.231426 NA* 9.857138 NA* 2 18.44946 0.2231 21.01183 0.1226 3 28.49514 0.4839 30.99726 0.3567 4 33.89531 0.8397 37.42170 0.7060 5 37.14537 0.9820 42.67549 0.9145 6 41.96688 0.9972 49.15216 0.9681 7 43.35324 0.9999 52.41235 0.9962 8 44.03432 1.0000 56.73102 0.9993 *The test is valid only for lags larger than the VAR lag order Figure 7: VAR Residual Normality Test VAR 1 JarqueComponent Berra Prob. 1 1.138189 2 VAR 2 Component JarqueBerra Prob. 0.5660 1 0.502923 0.7777 2.385333 0.3034 2 2.255881 0.3237 3 27.16858 0.0000 3 7.868209 0.0196 4 1.563428 0.4576 4 1.851284 0.3963 Joint 18.25553 0.2311 Joint 12.4783 0.1311 204 Figure 8: Bootstrapping VAR 1 RMSE Observed Coefficient 0.04395669 Bias -0.0025225 [95% Confidence Bootstrap Std. Error Interval] 0.00519214 0.0337803 0.0284273 0.0344425 0.0541331 0.050068 0.0509965 (N) (P) (BC) Where (N): normal confidence interval, (P): percentile confidence interval, (BC): bias-corrected confidence interval VAR 2 RMSE Observed Coefficient 0.07893601 Bias -0.0021926 [95% Bootstrap Confidence Std. Error Interval] 0.01917194 0.413597 0.0377134 0.0418587 0.1165123 0.117973 0.1188243 (N) (P) (BC) Where (N): normal confidence interval, (P): percentile confidence interval, (BC): bias-corrected confidence interval 205 Figure 9: Test For Heteroskedasticity (White Test) TEST FOR HETEROSKEDASTICITY (WHITE TEST) VAR I VAR 2 Joint Test Joint Test Chi-square: 166.6218 Chi-square: 167.683 Probability: 0.0619 Probability: 0.0553 Individual Components: Individual Components: Dependent Chi-sq (14) Prob. Dependent Chi-sq (14) Prob. resl*resl 15.89167 0.3200 resl *resl 13.42873 0.4931 res2*res2 12.41228 0.5732 res2*res2 17.03965 0.2541 res3 *res3 12.31983 0.5806 res3*res3 13.44448 0.4919 res4*res4 12.10397 0.5980 res4*res4 15.47878 0.3462 res2*resl 16.70071 0.2725 res2*resl 19.53385 0.1455 res3*resl 16.12274 0.3059 res3*resl 19.39611 0.1504 res3*res2 10.86719 0.6964 res3 *res2 15.88249 0.3206 res4*resl 18.96567 0.1663 res4*resl 19.46360 0.1480 res4*res2 10.57764 0.7189 res4*res2 16.64243 0.2757 res4*res3 12.02052 0.6047 res4*res3 13.67131 0.4745 206 Graph 13: Graph o f Variables at Level DEC DPC 3,000 65 2 .8 0 0 . 2 .6 0 0 55 2 .4 0 0 2 .2 0 0 - 2 ,0 0 0 - 40- 1,800 1.600 1065 1070 1075 1080 1085 1000 1005 2000 1065 2005 1070 1075 1060 1086 1000 1005 2000 2006 SFDLGDP .6 6 .24 .32 .20 .2 0 10 .24 12 .20 .08 .1 0 .12 .04 .00 .00 .04 .04 .00 .32 .61 LPRSEC_EXP .80 .20 .5 0 .24 .50 .20 .57 .50 .12 .55 .00 .54 .04 .53 .00 .52 1000 2005 LM SEC EX P 2 1 O -1 -2 -3 207 Graph 14: Variables At First Difference DDEC LGDP CAPITA 150 4 100 - 3 502 1 0 -5 0 - 100 - -1 5 0 •1 -2 0 0 - •2 1066 1070 1075 1080 1086 1090 1005 2000 2006 1965 1970 1975 1980 1965 1990 1995 2000 1995 2000 2005 DPFDLGOP DDPC .12 8.0 4 4.0 0 - - .0 4 -4 - -.06 -6- -.12- -12 -.1 6 1965 1970 1975 1980 1965 1990 1995 2000 2005 19 9 5 2000 1965 DSFDI GDP .1 5 .1 0 - .0 5 - .0 0 - - .0 5 - -.1 0 - -.1 5 1965 1970 19 7 5 1980 1985 1990 2005 208 1970 1975 i9 6 0 1985 1990 2005 Table 21: Variance Decomposition for PFDI_GDP Variance Decomposition for PFDI GDP Forecast Forecast Standard Horizon E rror 1 2 3 4 7 10 0.033 0.040 0.040 0.041 0.041 0.041 Variance Decomposition (Percental;e Point) PFDI GDP SFDI GDP TFDI GDP DEC 0.000 15.690 84.310 0.000 10.764 8.629 22.279 58.328 14.930 9.082 21.151 54.837 14.912 21.315 54.706 9.068 14.909 21.327 54.649 9.116 14.909 21.327 54.648 9.116 Table 22: Variance Decomposition of SFDI_GDP Variance Decomposition of SFDI GDP Forecast Forecast Standard Horizon E rror 1 2 3 4 7 10 0.035 0.037 0.037 0.037 0.037 0.037 Variance Decomposition (Percentag'e Point) DEC PFDI GDP SFDI GDP TFDI GDP 0.905 39.846 59.250 0.000 6.634 36.880 56.328 0.158 1.152 6.953 36.195 55.700 6.971 36.121 55.730 1.179 6.994 36.104 55.708 1.194 6.994 1.194 36.104 55.708 Table 23: Variance decomposition of TFDI_GDP Variance decomposition of TFDI GDP Forecast Forecast Standard Horizon E rror 1 2 3 4 7 10 0.028 0.033 0.033 0.033 0.033 0.033 Variance Decomposition (Percentag|e Point) DEC PFDI GDP SFDI GDP TFDI GDP 45.872 0.043 28.767 25.318 12.722 21.485 44.950 20.844 13.119 20.435 44.797 21.648 13.158 20.360 44.833 21.649 13.201 20.338 44.798 21.665 13.201 20.338 21.665 44.796 209 Table 24: Variance Decomposition of PFDI GDP Variance Decomposition of PFDI GDP Forecast Forecast Standard Horizon E rror 1 2 3 4 7 10 0.031 0.040 0.043 0.043 0.044 0.044 Variance Decomposition (Percentag>e Point) PFDI GDP SFDI GDP TFDI GDP DPC 30.684 69.316 0.000 0.000 34.240 43.288 14.471 7.732 29.887 37.872 22.593 9.649 31.252 36.715 22.492 9.541 30.987 36.062 22.927 10.024 30.995 36.030 22.950 10.025 Table 25: Variance Decomposition of SFDI_GDP Variance Decomposition of SFDI GDP Forecast Forecast Standard Horizon E rror 1 2 3 4 7 10 0.033 0.036 0.037 0.038 0.038 0.038 Variance Decomposition (Percentag;e Point) PFDI GDP SFDI GDP TFDI GDP DPC 33.942 0.175 65.883 0.000 13.256 28.382 58.085 0.277 12.744 26.757 56.882 3617 13.673 26.111 56.679 3.537 13.793 25.808 56.457 3.942 13.803 25.792 56.456 3.948 210 Table 26: Variance Decomposition of TFDI_GDP Variance Decomposition of TFDI GDP Forecast Forecast Standard Horizon Error 1 2 3 4 7 10 0.025 0.032 0.034 0.035 0.036 0.036 Variance Decomposition (Percentage Point) PFDI GDP SFDI GDP TFDI GDP DPC 16.076 57.020 26.655 0.249 48.789 17.610 22.902 10.699 49.038 20.827 20.709 9.426 48.805 19.909 22.178 9.109 48.566 20.306 22.193 8.936 48.574 22.203 8.927 20.296 211