The global food and financial crises and the poor in Africa

Abstract

Sub-Saharan Africa was significantly affected by the global food and economic crises of the late 2000s, with the continent suffering pronounced negative impacts on many of its countries and people. Given its widespread poverty, dependence on commodity exports, and status as a net food importer, the continent experienced a series of shocks as it was hit first with sharply rising food prices in 2007-2008, then by falling global prices for its exports, and finally by the depletion of foreign reserves to pay for imports and necessary goods. These impacts reversed past gains in poverty reduction and led to increased undernourishment, poor health, infant mortality and social unrest. The global financial crisis and economic recession which followed immediately thereafter further worsened the state of many African economies and people, most notably the poor. The financial and economic crises were transmitted to African economies both through direct channels-stock and bond markets, the banking sector, declines in foeign direct investment, and depreciated exchange rates-and even more strongly through indirect channels-significant declines in export prices, export revenues, official development assistance, and remittances. Economic growth in sub-Saharan Africa-in oil-producing and non-oil producing countries alike-slowed significantly in 2009 following impressive performance earlier in the decade. This chapter highlights developments in three countries-Ghana, Zambia and Nigeria-to illustrate the diverse impacts of the crises. Overall, the poor in sub-Saharan Africa experienced a 'double agony' as a result of the simultaneous crises, with negative consequences for poverty, undernourishment and infant mortality. Although the economic recovery followed more rapidly than expected and is now well underway, sub-Saharan Africa continues to be at risk once again with rising food prices in 2010-2011. While African governments made significant strides in mitigating the impact of the crises on their economies, much less progress has been made in softening the blows of the food and financial crises on the poor. Just as governments have adopted counter-cyclical macroeconomic policies, governments must, in the future, do a better job of implementing counter-cyclical social protection programs to assist poor and vulnerable populations and help ensure that external economic shocks do not derail long-term poverty reduction goals. © CAB International 2011.