28 April 2022

3 minute read

By: Global Ag Media

Africa

Russia's invasion of Ukraine has delivered a further "huge negative shock" to sub-Saharan Africa, driving food and energy prices higher and putting the most vulnerable people at risk of hunger, the head of the IMF's Africa Department told Reuters.

The food security crisis had piled pressure on countries already grappling with a protracted COVID-19 pandemic, disrupted education, loss of income and serious debt problems, Abebe Aemro Selassie said in an interview. That is making it difficult for those countries to mitigate the impact of inflation, he said.

All those factors also stoked the chances of social unrest, the International Monetary Fund (IMF) said in its biannual regional economic outlook for sub-Saharan Africa, published Thursday.

"It's a recipe for very, very difficult policymaking, but also the social environment," Selassie said. "This is a crisis, which is almost laser-focused on hitting the most vulnerable people in the most vulnerable countries acutely."

Last week, the IMF revised sub-Saharan Africa's estimated gross domestic product growth for 2021 up from 3.7% to 4.5%, but forecast it would fall to 3.8% this year.

It cut its 2022 growth predictions for oil importers by 0.4 percentage points, and by 0.5 percentage points for a group of 20 so-called "fragile states". The region's eight oil exporters had their growth forecast revised up by 0.8%.

The IMF raised its forecast for average regional inflation by a full 4 percentage points, which would be the worst outcome since 2008. Inflation would hit double digits in 11 countries, of which almost half were fragile.

The report said food security was already a critical issue across the Sahel area, in the Democratic Republic of the Congo, and Madagascar, with food accounting for about 40% of consumption across the region, a far larger share than anywhere else.

It said central bankers were caught between trying to control inflation and promote economic growth, while commodity importers in particular had limited fiscal bandwidth while struggling with increasing debt burdens.

Selassie said he was particularly worried about social unrest in countries in the Sahel and others that were already food-insecure and facing significant security challenges.

"This is layering on top of all of that," he said. "What happens in the Sahel is not going to stay in the Sahel. It's going to drift to the more littoral states and other countries."

The IMF was in intense discussions with the World Bank, the World Trade Organization, and the UN Food and Agriculture Organization about which countries would be hardest hit, he said.

Countries were already requesting emergency financing or added funding under existing IMF programs, as well as more leeway in parameters for reaching economic targets, Selassie said, declined to identify the countries in question.

"I cannot think of a higher priority right now than making sure that this food security challenge is addressed head-on for the most vulnerable households," he said.

Advanced economies were aware of the problem, but needed to translate their concerns into incremental financing for countries at risk, he added.