Here are the economic bombs that are about to explode in Africa. Le Monde Report
Food crisis and food riots: the time bomb of inflation in West Africa. The study of Le Monde
Rising fuel prices and fertilizer shortages are the consequences of the war in Ukraine. But supply chain problems had already been exacerbated by Covid-19 and climate change.
Could the diplomatic twists and turns of the last few days save Africa from the worst case scenario? On Saturday 23 July – writes Le Monde – the African Union (AU) "welcomed" the agreement signed the day before between Russia and Ukraine to unblock grain exports blocked since the war began – a "welcome development" for the continent in the face of the increased risk of famine.
According to the World Food Program (WFP), the slightest breath of oxygen is anxiously analyzed as African countries are threatened by the "worst food and nutritional crisis of the last decade". The urgency is particularly felt in West Africa, where the inflation curves are spiraling out of control: + 30% in June in Ghana, + 22.4% in Sierra Leone, + 18.6% in Nigeria, +15.3 % in Burkina Faso… “The situation is spiraling out of control,” warns Chris Nikoi, WFP regional director for West and Central Africa. In the Sahel, 7.7 million children under the age of five are at risk of severe malnutrition.
However, West Africa is not that dependent on Russian and Ukrainian wheat. “Some countries like Benin, Cape Verde, Gambia, Senegal and Togo import more than half of their wheat from Ukraine and Russia. But this remains marginal in the subregion. The states of ECOWAS [Economic Community of West African States] mainly consume local cereals such as maize, sorghum, millet and tubers, ”explains Alain Sy Traoré, ECOWAS Head of Agriculture and Rural Development.
But the Russian-Ukrainian conflict has led to a spike in fuel prices, which has been reflected in food prices. Local agricultural production has paid a high price since the beginning of the war. Cassava, a staple food in several ECOWAS countries, is priced 30-80% higher, depending on the country, than the average for the last five years. The price of sweet potato, another popular tuber, increased by 60-80% in June, and that of yam by 30-60%.
COUNTERPRODUCTIVE MEASURES
These dizzying increases are also linked to export bans imposed by various producing countries, such as Benin with refined vegetable oils and Côte d'Ivoire with cassava, sweet potatoes, bananas and rice. These measures were taken to contain the surge in prices but, ironically, they have made products more expensive in importing countries. In early July, ECOWAS called on the region's agriculture ministers to remove these trade barriers, which run counter to the principle of free movement that governs the regional organization and risk aggravating the food crisis.
This crisis is fueled by multiple factors: the interruption of production and supply systems due to the Covid-19 pandemic; climate change, with its recurring droughts and floods; insecurity in conflict zones. “When more than 5 million people in the Sahel are displaced by terrorism and banditry, this creates significant pressure for access to food in the areas where they settle. And these are people who can no longer cultivate ”, explains Alain Sy Traoré.
The war in Ukraine made the situation worse. For West Africa, one of the most worrying consequences is the fertilizer shortage. Although the ECOWAS zone consumes less fertilizer than other regions of the world, it remains dependent on imports from the Black Sea. In 2021, Russia provided more than 50% of the potassium needs of Côte d'Ivoire, Senegal, Mali, Niger and Sierra. Lion.
However, fifteen African countries produce and export fertilizers, including Morocco and Egypt. In West Africa, Nigeria has just opened the continent's largest fertilizer factory and could meet the needs of ECOWAS countries. But administrative and logistical bureaucracy hinders intra-regional trade. “Today it is easier for Nigeria to export its goods to Latin America than to the port of Cotonou in Benin,” says Alain Sy Traoré.
The input deficit could deprive the region of 20 million tons of wheat in 2022, a quarter of the production recorded in 2021. Friday's agreement between Moscow and Kiev could change that, however, as Russia has obtained a guarantee that the Western sanctions will not apply to its fertilizer exports.
THE SPECTRUM OF FOOD REVOLTS IN AFRICA
Meanwhile, to cope with pressure on supply chains, West African agriculture ministers are working on a plan for grouped orders and easing of traffic rules in the subregion. This initiative is inspired by the project, currently under construction, of a commercial exchange platform at continental level supported by the United Nations Economic Commission for Africa (ECA). The Africa Trade Exchange (ATEX) intends to allow African governments to "negotiate competitive prices around the world for the purchase of food and fertilizers," says Wafa Aidi, an economist at the ECA.
In the near future, many ECOWAS states have already taken steps to regulate the prices of essential food and energy. In March, the Ivory Coast regulated the prices of 21 consumer products, from breadsticks to beef, from sugar to tomatoes.
There is still one major obstacle: the speculation that traders make due to inflation. “The lowering of customs duties on imported products, the reduction of VAT or the containment of prices are necessary to lighten the burden on families. But this is insufficient until controls are generalized in markets and shops ”, says economist Ibrahima Hathie, director of the Senegalese think tank IPAR (Initiative prospective agricultural and rural).
For leaders, the risk is to see soaring prices spark social unrest. The specter of the 2008 food riots, which spread to some 30 countries around the world, particularly Africa, and the recent collapse of Sri Lanka are of great concern.
"If by October the West African states fail to meet the nutritional needs of their populations, we cannot rule out the possibility that governments will fall," warns Alain Sy Traoré. Urban areas will be the first to be affected by the unrest, as "people there have integrated eating habits that are partly made up of imported products, unlike rural areas, where farmers will still be able to consume what they grow", continues the expert.
NEW DEBT CRISIS
For the countries of the CFA zone, the situation is further complicated by the fall of the euro, which has fallen to the lowest level in the last twenty years against the dollar. This depreciation is fueling price increases through imports paid for in dollars and is impacting countries that use the CFA franc, which is tied to the euro by a fixed exchange rate. "People could pay even more for energy and basic food," says economist Carlos Lopes, a professor at the University of Cape Town in South Africa.
In addition to the food crisis, there is a risk of a new debt crisis. Strangled by inflation and rising cost of loans, Ghana has just turned to the International Monetary Fund (IMF) for help, three years after announcing with great fanfare that it would no longer need the assistance of international donors. In a letter sent to the G20 central bank governors on July 13, African finance ministers asked the IMF to ease the debt service of the poorest countries, as was done during the pandemic, "to avoid social unrest."
Despite everything, there are those who want to believe that the current crisis can also be an opportunity to rebuild the models inherited from colonization, which are largely based on the extraction and export of unprocessed raw materials. “The leaders of the ECOWAS countries can take advantage of this moment to develop a common food policy that favors local production,” says Ibrahima Hathie. This would boost the economy and reduce dependence on the outside world.
(Extract from the foreign press review by Epr Comunicazione)
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/ecco-le-bombe-economiche-che-stanno-per-scoppiare-in-africa-report-le-monde/ on Sat, 30 Jul 2022 05:47:36 +0000.