Speech

Emergency Meeting of African Ministers of Finance and Ministers of Agriculture on the Looming Food Security Crisis in Africa

May 19, 2022

As prepared for delivery

Thank you, President Sall, President Adesina, and Chairperson Faki, for bringing us together today.

Let me start by reiterating what we all see, and what you in the region are experiencing: that the war in Ukraine is gravely impacting Africa—and vulnerable people will suffer the most. The main transmission channels are well-known:

• Sharply higher food and fertilizer prices are putting significant pressure on households—especially the poorest, for whom food accounts for 40 percent of consumption. And this is exacerbating the significant food security challenges that many countries in the region already face.
• Higher fuel prices will boost the import bill for oil importers. And this will make an already delicate fiscal balancing act even more difficult.
• Together, these shocks will worsen external and fiscal balances—already strained by the pandemic—across many African countries.

Our projections show that the impact of the war in Ukraine on food and fuel prices threatens progress made by African economies in recovering from the pandemic. We expect growth in sub-Saharan Africa’s to slow to 3.8 percent in 2022 from 4.5 percent last year.

Inflation is expected to remain elevated, with a regional average of 12.2 percent this year and 9.6 percent next—the highest level since the last food crisis in 2007/08.

North Africa is also set to lose momentum, with GDP set to expand only marginally from 3.7 percent in 2021 to 4 percent in 2022. Inflation would remain elevated at 17.8 percent in 2022 [8.8 percent excluding Sudan], mainly due to higher food and energy prices. Many countries will face disruptions in wheat supply.  

This situation exacerbates risks to stability and growth, and can unleash social unrest. Dwindling policy space coupled with rising inflation makes it challenging to withstand tightly coupled risks related to fragility, conflict, and climate change. These risks reinforce one another, requiring urgent responses and additional support, and also long-term reforms.

My second point is that you can count on the IMF to do its part. We learned from previous crises that fast and well‑coordinated actions are needed to maintain open trade, support vulnerable households, ensure sufficient agricultural supply, and address financing pressures. Too often, things can move in the wrong direction, without coordinated action. For instance, since February at least 23countries have imposed 35 restrictions on food and fertilizer exports.

Last month, I joined the heads of the World Bank, WFP, and WTO to call for an urgent, coordinated response to support countries most impacted. As announced yesterday, we are also contributing to the joint Action Plan of the International Financial Institutions to address food insecurity. So, what does this mean in practice?

First, the IMF will continue to monitor the impact of higher food prices on external balances to identify countries with the most pressing financing pressures. We will also work with regional policymakers on macroeconomic frameworks and policy priorities—importantly, helping to design social safety nets to protect vulnerable households.

Second, this crisis adds to the already significant financing pressures the region faces. We are acting accordingly to help countries close financing gaps, exacerbated by the spike in food and energy prices. In Mozambique, our Board approved earlier this month a new [US$456 million] program. In Senegal, we are discussing with the authorities the possibility to augment the existing program. And we are actively engaging other countries.

Third, together with the World Bank and others, we support efforts to help address unsustainable debt situations. Since 2015 the share of low‑income countries at or near debt distress has doubled to 60 percent. For many, debt restructuring is a pressing priority. We urgently need to improve the G20 Common Framework to deliver for the countries that turn to it for help—and we urgently need large creditors, and the private sector, to step up their participation.

Let me end by saying: we know hunger is the world’s greatest solvable problem. Africa has tremendous potential to be a part of the solution. This requires progress on reforms that could rapidly and sustainably boost food production, including wheat, rice, and other cereal crops. These reforms would significantly help African economies become more resilient to shocks, more peaceful, and more prosperous—our common goals.

Thank you.