ICEC

Food insecurity still a worry

Africa’s Pulse reports that the Sahel region of West Africa is facing a severe food security situation. Less-than-average rainfall, poor distribution, and displaced families due to conflict have left more than 13-15 million people across Niger, Mali, Burkina Faso, Chad and Mauritania vulnerable.

Below average and patchy rainfall in 2011 led to a smaller grain harvest for the 2011/2012 season and less grain production across the Sahel, in particular in Mauritania, Chad, Niger and the Gambia. Total grain production in the Sahel is at least 25 percent below the previous season (2010/2011), with Chad and Mauritania recording shortfalls of at least 50 percent compared to last year. There are concerns the food crisis could spread to Senegal and northern parts of Nigeria and Cameroon.

Returning emigrants from North Africa and fewer remittances from migrant workers left in neighboring countries have deepened the effects of the crisis. The current conflict in Mali has also forced thousands to flee their homes to safety in Burkina Faso and Mauritania, putting pressure on food markets and increasing the strain on already vulnerable communities.

“The famine in the Horn of Africa last year and the drought in the Sahel this year are cruel reminders that Africa, the continent that contributed the least to greenhouse gas emissions, is likely to be the most hurt by climate change,” says the World Bank’s Oby Ezekwesili.

The new Africa’s Pulse devotes a special section to fuel price subsidies in Africa, reporting that in 2010-11 over half of all African countries had some subsidy in place for fuel products, and these in turn cost on average, 1.4 percent of GDP in public revenues. Of the 25 countries with fuel subsidies, the fiscal cost of subsidies in six countries–primarily oil exporters–was at or above 2 percent of GDP in 2011. The fiscal cost in oil exporters was almost two-and-a-half times the levels observed for oil importers. These costs have grown sharply in some countries in recent years.

However, fuel subsidies overwhelmingly benefit better-off families, with survey results for 12 countries worldwide showing that the top 20 percent of households receive about 6 times more in subsidy benefits than the bottom 20 percent.

As world oil prices remain high, a number of African countries have raised domestic prices of fuel. For example, Ghana raised fuel prices by 30 percent in January 2011. Similarly, Mozambique raised fuel prices in 2011 (10 percent in April and 8 percent in July) and Guinea also introduced measures to reduce the fuel subsidy. On January 1, 2012, the Nigerian government removed the fuel subsidy on gasoline. Following week-long protests, a portion of the subsidy was reinstated.

 

“That poor people protest the removal of fuel subsidies that benefit the rich shows how deep the continent’s governance problems are. They simply don’t trust the government to spend the savings on them,” says Shanta Devarajan, the World Bank’s Chief Economist for Africa and author of Africa’s Pulse.

As Africa’s Pulse notes, rolling back fuel subsidies is a politically sensitive issue. Removing subsidies and raising prices needs to be well managed. For one thing, social assistance programs need to be strengthened so as to help poor and vulnerable households weather the price shock. Another is to increase public understanding and support for subsidy reform by having a transparent and evidence-based discussion and scrutiny of subsidies: the full cost of the subsidy, the distribution of the subsidy and who is benefiting from the subsidy, and the implications for public spending on priority areas.

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