Africa’s leaders must learn hard lessons from global food crisis
Food prices have jumped but African countries do not have a fiscal cushion to weather the crisis as they have assumed too much foreign debt again, writes Jason Mitchell.
The food crisis in Africa underlines how the region desperately needs long-term, joined-up thinking.
Fourteen African countries depend on Russia and Ukraine for more than half of their wheat imports, while almost half depend on them for more than one-third. Since Russia invaded Ukraine, global food grain prices have shot up by more than 25%. Prices of Nola urea – one of the easiest fertiliser commodities to track – are also up 60%.
The World Food Programme reports that the cost of a food basket in Ethiopia has jumped by 66% and in Somalia by 36% in the wake of the Ukraine invasion. A prolonged disruption to the global trade in cereals and fertiliser would make the affordability and availability of staple foods across the region significantly worse.
Africa bears brunt of food insecurities
Africa is particularly vulnerable: approximately 21% of its population suffered from hunger in 2020, a total of 282 million people. Between 2019 and 2020 – in the aftermath of the Covid-19 pandemic – 46 million people became hungry in the region. No other continent presents a higher share of its population suffering from food insecurity.
Furthermore, households in sub-Saharan Africa spend a greater proportion of their income on food than people in other regions: 40% compared with 17% in advanced economies.
The causes of the food crisis are multifaceted: droughts in the Horn of Africa and east Africa; a locust swarm in the same sub-region; the internal conflict in Ethiopia; and flood, drought and conflict in west Africa. However, the international shocks unleashed by the Covid-19 pandemic and the war in Ukraine are the biggest factors.
Unfortunately, the crisis could get a lot worse before it gets better. The global economy is entering a perilous time, with the prospect of pronounced ‘stagflation’ for a number of years. Many millions of Africans could be on the verge of starvation. A heartless Vladimir Putin seems determined to use hunger and famine as a weapon of war, as a way to blackmail governments around the world.
The food crisis has been largely precipitated by terrible, external events but it has been exacerbated by the fragile economic circumstances in many African countries. Most economies just don’t have any savings for a ‘rainy day’ and most governments undertake very little in the way of contingency planning. They have no fiscal cushion whatsoever to help weather the current crisis. They lack a long-term strategy and their governments have no sense of mission.
Their poor economic position has been made worse by short-sighted and corrupt African elites, more concerned about feathering their own nests than improving their people’s welfare. The International Monetary Fund (IMF) forecasts sub-Saharan Africa will grow at only 3.7% in 2022, yet under-developed countries require economic growth of between 6% and 7% to reduce poverty significantly.
Africa requires elusive economic growth
What Africa really requires is growth, trade and foreign investment. That is the only way that poor countries can become more prosperous and millions of people can be lifted out of poverty. Instead, most African countries have bloated and overmighty bureaucracies that ensnare businesses in red tape, and governments that tax their enfeebled private sectors to the bone. These countries have been following a failing statist economic model for far too long.
Moreover, most African countries have become way too indebted again since they enjoyed $100bn of debt relief under the Heavily Indebted Poor Countries Initiative and the related Multilateral Debt Relief Initiative two decades ago. Sub-Saharan Africa’s total external debt reached $702bn in 2021 – an increase of 130% since 2010 – and the average government debt-to-GDP ratio stands at 56% in 2022.
More than 20 low-income African countries were in debt distress or at risk of debt distress in late 2021, according to the IMF. For example, Kenya, Angola, Egypt and Ghana were paying 20%, 25%, 33% and 37%, respectively, of their collected tax revenues towards interest repayments on debt in 2019. The average African country is using one-fifth of its tax revenue to service its debt. It is a ridiculous sum of money for a low-income economy. Short-sighted African governments must be held accountable for assuming the debt in the first place, which in many cases is used for dubious ends.
How the West contributed towards Africa’s food crisis
The Western world must also share a proportion of the blame. It became apparent quite soon in 2020 that Covid-19 was not going to cause a catastrophic number of deaths in Africa due to its very young population (the median age is 19.7 years). In the end, 255,000 Africans are reported to have died from the virus but Africa loses about nine million people every year. Nonetheless, international organisations still pushed African countries into draconian lockdowns that exacted a severe economic toll. Many people live hand to mouth and poverty is the number one killer in Africa.
Western governments and organisations are also punishing Africa now for pursuing an industrialisation agenda. The region requires large-scale industrialisation – similar to what the West has enjoyed for the past 200 years – if it is to have economic growth of around 7% and lift millions of its people out of poverty.
There must be a balance in Africa between the green energy transition and poverty reduction. For example, many African countries must be allowed to use their abundant natural gas reserves to generate baseload power and to drive economic growth. Africa has 1.3 billion inhabitants and a total GDP of only $2.7trn. It has a similar size economy to the UK, which has a population of only 67 million people.
The region contributes only 4% to global carbon emissions and the Western world would do better to turn its attention to China – which accounts for 27% – than castigate the world’s poorest region. Foreign investment in the continent’s natural gas industry is drying up as Western investors pursue environmental, social and governance (ESG)-friendly strategies at the very moment when African countries need energy the most. Most ESG policies have no place for poverty reduction.
Africa faces a tough few years. Immediate debt relief is needed, otherwise millions of people could starve. However, African governments must learn hard lessons from this crisis. They must stop mortgaging their people’s futures and start to undertake some proper long-term, strategic planning to secure foreign investment and expand their economies substantially. Only then will they be in a position to deal with external shocks such as the current food crisis.