How Africa Can Escape Chronic Food Insecurity Amid Climate Change

IMF Blog, September 14, 2022

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Climate change is intensifying food insecurity across sub-Saharan Africa, compounded by Russia’s war in Ukraine and the pandemic.
Climate events destroy crops and disrupt food transport, aggravating shortages, high prices, and slower economic growth.
A new IMF policy paper examines fiscal and financial policies and reforms, including technology transfer, to reduce damage and help countries adapt.

One-third of the world’s droughts occur in sub-Saharan Africa.
Ethiopia and Kenya are enduring one of the worst in at least four decades.
Countries such as Chad are being severely impacted by torrential rains and floods.
Most people live in rural agricultural and fishing communities that can’t afford infrastructure to protect them from adverse weather.
Less than 1 percent of arable land is equipped with irrigation.
Weather-sensitive domestic food production leads to heavy reliance on imports, with some 85 percent coming from outside the region.
Weather shocks in supplier regions and weather events that raise transportation costs are passed on to consumers and can erode foreign reserves and weigh on exchange rates.

Untargeted interventions can be inefficient and:
- Weigh on national budgets.
- Inflate food prices.
- Impede competition.
- Reduce crop yields.
Examples of problematic interventions:
- Price controls and numerous and lengthy regulatory processes disincentivize food production, storage, and trade.
- Subsidies for fertilizer and seeds drive overuse and suppress crop diversification.
Targeted government involvement can be beneficial, e.g., supporting research and development in building resilience and agricultural productivity.
Prioritizing policies that best protect the poor is key amid financing and capacity constraints.

Climate-resilient public investment protects food production and distribution and can create jobs and catalyze private investment.
Examples of infrastructure and technology:
- Solar power that facilitates irrigation, water access, and temperature control for food storage.
- Flood barriers that protect ports and roads critical to food distribution.
- Digitalization providing farmers access to early warning systems, mobile banking, platforms to purchase fertilizers and seeds, and marketplaces to sell produce.
Social cash transfers:
- Targeted and far-reaching social cash transfers help people buy food and rebuild after weather shocks.
- Cash transfers allow families and small businesses to invest in resilience-building equipment and technology.
- By offering people control of the support they receive, these cash transfers are more effective at containing inequality than agricultural subsidies.
Access to finance:
- Developing financial markets takes time; in the interim, micro-finance or public-private partnerships can provide credit.
- Establishing collateral through advances in property rights is crucial.
- With World Bank support, Mozambique and Tanzania are expanding title and survey registers and developing digital land administrative services.
- A pilot project in Ghana uses blockchain technology to improve incomplete or missing land records.

Trade liberalization and import diversification can help stabilize regional food supply and prices.
- Example: Zambia’s big maize harvest could have helped offset shortfalls elsewhere in Southern Africa if not for a ban on exporting the crop.
Access to larger markets can:
- Incentivize investment in agricultural production networks and value chains.
- Spread knowledge, such as how to plant drought-resistant crops.
- Spur competition.
The Africa Continental Free Trade Agreement among 54 countries covers most goods and services.
Empowered producer organizations can:
- Reach remote climate-vulnerable agricultural communities.
- Spread new technologies such as digital pest-control devices and high-yield seeds that tolerate heat and drought.
- Improve climate adaptation training and market information.
- Aggregate production and sell directly to consumers to increase negotiating power, reduce storage costs, lengthen contracts, expand profit margins, and open access to new markets.
Regulatory streamlining and better targeting can help build resilience:
- Appropriate water-use regulations reduce the cost for farmers to establish and expand irrigation systems.
- Efficient seed registration, like in Kenya, multiplies seed supply and access to resilient seeds.
- Fertilizer testing, labeling, and registration requirements help farmers access contaminant-free fertilizers appropriate for specific weather shocks, soil, and crops.

Financing constraints:
- With mounting debt and limits to raising taxes, countries in sub-Saharan Africa will need grants and concessional finance.
Capacity development and technology transfer priorities:
- Development partners can support resilience-building research and propagate climate and financial literacy.
- Financing, capacity development, and transfer of technology and know-how are key to supporting public investment, digitalization, financial inclusion, and structural reforms.

The IMF is supporting countries through climate-oriented public financial management advice and lending facilities.
The Resilience and Sustainability Trust is soon to be operational and will provide longer-term affordable financing to address climate change and other challenges.

Source: IMF blog post "How Africa Can Escape Chronic Food Insecurity Amid Climate Change" (September 14, 2022).