A Consuming Need

The global food crisis could not have come at a worse time for Africa. After 30 years of collapse and stagnation, African economies are finally growing at the same pace as the global economy — 5.4% a year for the last three years. This is not only due to high mineral and oil prices. Virtually all African countries have stabilized their economies, undertaken major reforms in trade and industrial regulation, and made progress in improving governance. Some 18 non-mineral-exporting countries, home to a third of all Africans, have been growing at 4% a year for more than a decade.

That growth reflects great promise, but it is under grave threat from the staggering rise in food prices. Families in the bottom fifth of the population in Burkina Faso and Ethiopia now spend more than half of their budget on food; even a small price increase may mean children going to bed hungry for days. The urban poor are worse hit because they can only buy food; in rural areas at least some people benefit from higher prices for the food they sell, although most poor, rural households remain net buyers of food. My colleagues at the World Bank estimate that rising food prices could push more than 100 million people back into poverty, wiping out seven years of progress.

Governments are under pressure to act. Over the last month, riots have broken out in Burkina Faso, Cameroon, Guinea, Mozambique and Senegal. Heavy rains and floods in southern Africa have exacerbated the situation. Together with other development partners, the World Bank is supporting governments in protecting the poor from this severe threat to their well-being. In Ghana and Niger, we are putting additional money into existing social-assistance programs to help poor people pay for food. In Guinea, we are preparing an emergency budget-support operation to help the government manage the sharp rise in food and oil prices. In Ethiopia, the wage rate of a major public-works program has been increased to reflect the higher price of food.

These quick infusions of cash do more than help poor people buy food. They also help the governments of these countries avoid rash and ultimately counterproductive policies that could undermine the economic progress of the past decade. Controls on the price of food, for example, are politically tempting when people are rioting in the streets, but they have been shown time and again to lead to even worse food shortages; they discourage farmers from planting and squeeze the poor out of the production process. Some 28 countries around the world have also reacted to food-price hikes by placing restrictions on food exports. Such measures lead to even higher world prices, greater smuggling across borders and, once again, depressed prices for domestic farmers. At least two countries, India and Ukraine, have recently relaxed their restrictions. Others, such as South Africa, have resisted the pressure to introduce any new distortionary trade policies.

While trying to cushion the impact of high food prices on the poor, African governments and their partners are also trying to make sure Africa's long neglected farmers can benefit from the price increases. The World Bank is working with African countries and institutions to improve agricultural productivity and reverse the underinvestment in food production. We are spending to improve irrigation and water management in Ethiopia, fertilizer use in Malawi, market access for smallholders in Senegal, and crop diversification in Mali and Uganda. The benefits of many such investments may only be seen in a few years. But even this year, we can do a lot by ensuring that Africa's farmers get affordable fertilizers on time, reliable weather forecasts and water where it can be most productive.

If the world's richer countries really want to help poor African farmers, they could make a massive difference by eliminating their own agricultural subsidies. Is it really acceptable that while the average African lives on $2.30 a day, cattle in Europe draw an average subsidy of $2.20 per head a day? Past distortions in global agricultural markets have contributed to historic underinvestment in Africa's agriculture. Cheap maize, wheat and rice from global markets have displaced locally produced staples such as cassava, plantains, sweet potatoes and sorghum.

Now imports are neither cheap nor readily available, and domestic production has to increase quickly to fill the gap. With a New Deal for African farmers — better advice, improved seeds, affordable fertilizer, the efficient use of water and fairer trade — Africa can more than meet the current challenges.

Okonjo-Iweala is a managing director of the World Bank and former Finance Minister and Foreign Minister of Nigeria