AfDB responds with $1.5bn African emergency food production facility
BY MADUABUCHI EFEGADI & JACINTA ENEJE
Ahead of a looming food crisis across Africa, arising from the effects of lingering Covid-19 and the ongoing Russian-Ukraine war, the African Development Bank (AfDB) says it has put in place a response plan – a $1.5 billion African emergency food production facility approved by the bank group’s executive board.
Nigeria, and other conflict-harassed and fragile countries on the continent stand to benefit most. With a burgeoning population, shrinking resources and food shortages have thrown up high food inflation in Nigeria and other African fragile countries.
The AfDB, in its African Economic Outlook 2022 report, noted that Africa’s gross domestic product (GDP) had recovered strongly last year, growing by an estimated 6.9 percent in 2021, after the continent suffered a pandemic-induced contraction of 1.6 percent in 2020. But this appears to be blighted by the ongoing Russian invasion of Ukraine, which ensuing war poses considerable challenges in the medium term.
“Rising oil prices and global demand have generally helped improve Africa’s macroeconomic fundamentals. But growth could decelerate to 4.1 percent in 2022, and remain stuck there in 2023 because of the lingering pandemic and inflationary pressures caused by the Russia-Ukraine war. Both countries are major grain suppliers to Africa,” the report noted.
The economic outlook report indicated that the pandemic and Russia-Ukraine war could leave a lasting impression over several years, if not as much as a decade. Around 30 million people in Africa were pushed into extreme poverty in 2021 and about 22 million jobs were lost in the same year because of the pandemic. The trend is expected to continue through this second half of 2022 and into 2023. The economic disruptions stemming from the Russia-Ukraine war could push a further 1.8 million people across the African continent into extreme poverty in 2022; the number could swell with another 2.1 million in 2023.
By far, Ukraine exports 40 percent of its wheat and corn to Africa. According to the United Nations, 15 African countries import more than half of their wheat, and much of their fertilisers and oil from Ukraine and Russia. As the Russia-Ukraine conflict rages, Africa is also dealing with a 30-million metric tonnes loss of wheat and corn that won’t be coming from Russia. The cost of bread is now beyond the reach of many Africans, a development finance expert noted.
For Akinwumi Adesina, AfDB president, the Russia-Ukraine conflict is a “huge factor in fertiliser prices hiking upwards of 300 percent. Our analysis is that Africa faces a fertiliser shortage of 2 million metric tonnes this year. We estimate it will cost about $2 billion – at current market prices – to source new fertiliser to cover the gap. If we don’t mitigate this shortage rapidly, food production will decline by at least 20 percent. This horrific ‘perfect storm’ will see Africa lose more than $11 billion in the value of food production, according to our analysis.”
However, Adesina said, international efforts, including those of the AfDB Group, the G20 common framework for debt treatment, and $650 billion in special drawing rights (SDRs) issued by the International Monetary Fund, are supporting the continent’s recovery. Despite all this, the AfDB boss said the recovery will still be costly, as Africa will need at least $432 billion to address the effects of Covid-19 on its economies and on the lives of its people — resources it does not have.
The theme of the 2022 African Economic Outlook is “Supporting Climate Resilience and a Just Energy Transition in Africa,” which highlights a growing threat to lives and livelihoods on the continent. The continent’s additional financing needs for 2020-22 are estimated at $432 billion. Financing African countries’ nationally determined contributions—public pledges from countries on how they plan to play a part in post-2020 collective action on climate change—will require up to $1.6 trillion between 2022 and 2030. Though the least emitter of climate forcing emissions, Africa is disproportionately affected by climate change, with the continent losing between five percent to 15 percent of GDP to climate change. Collectively, African countries received only $18.3 billion in climate finance between 2016 and 2019, leaving a climate finance gap of up to $127.2 billion annually from 2020 to 2030, the AfDB said.