Rising food prices could ignite unrest and instability in Africa
Governments must act fast to ensure their people are fed and avoid conflict the continent cannot afford.
Published on 28 September 2021 in
ISS Today
By
Menzi Ndhlovu
Signal Risk Senior Country and Political Risk Analyst
Since the onset of COVID-19, global food prices have rocketed, putting pressure on the world’s most fragile countries. The United Nations’ Food and Agriculture Organization (FAO) believes that ‘soaring prices – and growing insecurity – could foment further social unrest in countries already facing political turmoil.’
The pain could be particularly acute in Africa, where purchasing power and social safety nets are limited, and discontent with underperforming governments is simmering. Current conditions – supply chain disruptions, climatic shocks, rapid spikes in commodity prices and lockdowns – have created fertile ground for unrest.
Africa’s informal sector has been ravaged by COVID-19, while fuel prices have risen. Moreover, governments lack the fiscal space to mitigate the impact. As they grapple with hunger, poverty and the pandemic, the risk of violent protest and political instability stemming from rising food prices looms large.
FAO economist Josef Schmidhuber has suggested that people in low-income countries tend to spend more than 60% of their earnings on food, leaving them particularly at risk. As hunger rises, so too does the potential for socio-economic disruption aimed at governments. Abdolreza Abbassian, also an FAO economist, echoed this sentiment, observing that for social unrest to erupt, ‘all you need is a little spark. It can be food prices, or energy prices, or simply bad rain.’
This situation has invoked comparisons to the global spike in food prices of 2007/8 that triggered upheavals in over 30 countries, including 14 in Africa. Does history offer a sign of things to come?
The food price situation today is eerily similar to that preceding the 2007/8 global unrest
The situation today is eerily similar to that preceding the 2007/8 global unrest. One striking parallel is the trajectory of staple foods. The FAO’s Food Price Index – a composite of the monthly change in international prices of a basket of ‘basic’ foods including meat, dairy, cereals, vegetable oils and sugar – increased from 94.2 index points to 117.5 between 2007 and 2008. The index saw an even larger increase between August 2020 and August 2021, going from 95.8 to 127.4.
Key structural and cyclical vulnerabilities were inadequately addressed after 2008, as relief was prioritised over reform. These weaknesses have been exacerbated by the effects of COVID-19 and other emerging factors on the global economy. As was the case in 2007/8, the link between food and commodity prices remains pronounced, with commodity-induced changes in input costs making it pricey to bring food ‘from farm to fork.’
Climate change and natural disasters are other compounding factors. The La Niña weather phenomenon has adversely impacted major food exporting regions, including those in Africa. On 8 September, Kenya’s President Uhuru Kenyatta declared a state of disaster over a drought that scientists attribute to La Niña.
The diversion of food for biofuels also strains general supply, while financial speculation has muddied food production and prices. Perhaps more importantly, though, agriculture and food technology investment has not kept pace with evolving demand and supply patterns.
What makes the present juncture more pressing is the rate of change in food prices. The statistics above indicate that between 2007 and 2008 the FAO’s Food Price Index increased by 25%. This is considerably lower than the 33% rise between August 2020 and August 2021.
Investment in agriculture and food technology has not kept pace with demand and supply
Africa’s harsh set of social, environmental, economic and political challenges make it ripe for unrest. Pressure on the continent’s food system has been worsened by locust outbreaks throughout northeast, east and central Africa when the demand for food is climbing due to a fast-growing population. Farmers have also moderated harvests in light of uncertainty induced by ever-changing COVID-19 regulations.
Unemployment rates in Africa have been upward trending – particularly among the youth, who have borne the brunt of ongoing jobless growth and economic marginalisation. Young people across the continent have become politically engaged, showing a willingness to punish incumbents who are unresponsive to their plight. Zambia’s recent polls are a case in point.
African governments are also in a considerably weaker economic position than their peers since the last crisis. Historical overspending and debt accumulation have eroded public balance sheets while remaining fiscal buffers have been exhausted on COVID-19 responses. This means governments cannot cushion civilians against rising food prices and food insecurity, and stave off associated political risks.
Some countries are more vulnerable than others. South Africa – the continent’s most developed economy – is particularly susceptible to food-related unrest. A mixture of poverty, unemployment, inequality, bad politics and bad economics has kept the country on edge. Nigeria is also at risk, given that it faces similar headwinds.
Violent protest is one way in which a social backlash against food insecurity can manifest. In places like northern and central Kenya, it could exacerbate banditry, and in Ethiopia, armed groups could target humanitarian resources, thereby worsening the problem.
Innovation along the food supply chain should be strongly incentivised and rewarded
How, if at all, can African policymakers navigate this challenge? There is some low-hanging fruit that governments can pick to moderate food prices and improve food security.
The first is policy certainty and a thoughtful approach to any ensuing land reform, which several administrations are currently pursuing. Any political case for land reform must be carefully balanced with economic imperatives to forgo any further loss of productivity or expertise.
Second, governments need to stimulate productivity and investment in the broad food supply chain. Administrative barriers should be reduced and any taxes or subsidies properly targeted to maximise economic gain without straining public balance sheets.
Lawmakers should also consider moderating tariff and non-tariff barriers to intra-African trade between net food exporters and importers. The African Continental Free Trade Area agreement provides a solid groundwork for such an intervention. The establishment and bolstering of national and regional food reserve schemes – linked to credit and insurance systems – would also be well advised to smooth price and demand spikes.
Finally, innovation along the food supply chain should be strongly incentivised and rewarded. Africa is home to myriad start-ups at the forefront of developing climate-resilient crops, creating high-yield but sustainable agriculture and aquacultural produce, and reimagining the food supply chain. The transformative potential of start-ups and other entities that engender positive disruption should be harnessed, and paths opened that channel funding and capital to such businesses.
Resolving the food price hike and associated insecurity is an economic, social and political imperative. Given the tenuous position facing African countries, food insecurity could be the spark that lights the tinderbox. To douse it, governments must act fast.
Ronak Gopaldas, ISS Consultant, Director at Signal Risk and Co-founder of Mindflux Training and Menzi Ndhlovu, Senior Country Risk and Political Risk Analyst, Signal Risk
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