Food costs to top agenda in Maputo
May 14, 2008
By Gordon Bell
Johannesburg - African finance ministers today and tomorrow will seek ways to keep momentum in economic growth and thrash out strategies to tackle surging food prices threatening to drive up inflation.
Economic growth remains robust in Africa, bolstered by oil producing nations, but slowing world growth may stifle expansion and sharply rising global food and fuel costs could ignite inflation and push up interest rates.
About 1 500 delegates, including ministers and central bank officials from 53 African countries and 24 non-African members, are in Maputo for the annual meeting of the African Development Bank (AfDB), where food prices are expected to be a key issue.
Food costs have sparked riots and protests across the world. The poor, who spend the bulk of income on food, are the hardest hit.
With almost half of Africa's 900 million people living in poverty, this is a burning issue.
"Besides the rising price of crude oil, in the last three months since January prices of some major food crops have nearly doubled," said the AfDB.
"These large and sudden price increases have now started to have severe implications in many African countries."
The price of rice, a major staple crop, had increased to a record high of $760 (R5 838) a ton last month from $373 in early January. The average maize price had increased by 29 percent to $220 a ton, it said.
The official programme for the meeting revolves around poverty, urbanisation and equality, but ways to tackle the food price crisis are likely to be high on the agenda.
"Expect the issue of food price inflation and its impact on African economies to be in focus," said Razia Khan, the regional head of research for Africa at Standard Chartered.
"With food dominating CPI [consumer price index] baskets in Africa, the region is likely to see an end to the recent disinflation trend."
Ghana's central bank raised its key interest rate by 75 basis points to 14.25 percent in March to try to tame inflation.
Price pressures are likely to hit investment and growth in non-oil producing countries.
Kenya's expansion has slowed to 3.8 percent from 7 percent last year, partly due to inflation as well as political unrest.
"The shock relating to the high energy and food prices presents a more serious threat to Africa," said AfDB chief economist Louis Kasekende.
"We need to focus on increasing productivity within the agricultural sectors."
Earlier this month the bank added $1 billion to its portfolio of agricultural loans to help address the food crisis, bringing funding to $4.8 billion.
Lack of infrastructure and rapid urbanisation are also likely to be hot topics.
"A lot more needs to be done in the area of funding infrastructure," said Margaret Chemengich, the chief executive of the Institute of Economic Affairs in Kenya.
Kasekende said infrastructure in cities was simply not expanding fast enough to cope with the influx of people.
"We want this issue on the table; we want it to be included in the poverty reduction strategy papers of countries as a development challenge."
|
|
