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Food prices, elections squeeze Africa

Apr 28 2011 15:48
Dakar - Food price hikes are hitting Africa's urban populations harder now than in 2008 and pose a serious challenge to some of the continent's leaders, who face elections this year, a World Bank official said.

Policymakers across the globe are fighting rising food prices, currently 36% higher than this time last year and near peaks from 2008, according to the World Bank's food price index.

"This time, because it is a more broadly based price increase, because it brings in fuel prices as well, the impact is more urban-based," the bank's Africa agriculture sector manager Karen Brooks told Reuters, citing increased pressure on wheat and maize costs.

"It is also coming at a time of many elections in Africa, and so this goes into a political context which makes it very challenging for governments to manage," she said.

The 2008 spike in food prices led to violent demonstrations across much of Africa. Protestors have returned to the streets of some capitals, while tense elections are due later this year in Cameroon, Liberia and Democratic Republic of Congo, among others.

Brooks said the bank was particularly worried about the situation in Uganda, where the opposition has latched onto complaints over rising prices and organised protests, some of which have turned violent.

"It is not on the scale that we are seeing in North Africa, but there are very great concerns," she said.

In the aftermath of the 2008 crisis, world leaders in 2009 pledged about $20bn to spur agricultural investment in poor nations and fight hunger.

Brooks said investors were excited about African agriculture but that the continent was still missing out due to lingering fears over land rights, taxation and stability as private funds flow into Latin America and Central Asia.

African leaders have committed to devoting 10% of their budgets to agriculture as part of efforts to bridge investment gaps. But Brooks said results were mixed.

"There were substantial commitments made, but it has been very difficult for the donors to actually follow up on the commitments as the financial crisis hit," she said, adding that complex accounting methods by donors meant it was a puzzle to work out what had been delivered by whom so far.

Four pillars

Meanwhile, some African nations have made progress in adopting policies and most have recognised the urgency, but just a handful are meeting the 10% budget target.

Better weather has supported harvests this year, but the deficit remains vast.

"Of course they aren't doing enough. There is such a deficit of investment in agriculture that has accumulated over the last 20 years that there is quite a lot that has to be done."

Brooks said the bank was focusing on four main issues: land and water management, technology, agricultural markets and infrastructure, and food security and vulnerability.

"There are so many accessible advances in science that could be applied in Africa, but they require the participation of African scientists in order to figure out the best varieties," she said, citing as an example the choice of best hybrid maize for different conditions.

Rising food prices have ramped up investor interest in agriculture, with Boston-based farm consultancy HighQuest seeing inflows of private capital in the sector more than doubling to about $5bn to $7bn in two years.

Africa is still only partially cashing in.

"What we are finding is that there is a high level of excitement. However, because the business climates in many African countries are less well-advanced ... Africa is still lagging," Brooks said.

Poor infrastructure, weak financial services and concerns over land rights are among the key concerns the World Bank is trying to tackle to encourage investors to turn to Africa, rather than other regions where returns are quicker, she added.

africa  |  food prices  |  elections


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