Food Security in Africa: “This Crisis Has Shown the Limits to Africa’s Resilience”

“We risk a global decoupling in which East and West face off in a cold war, and Africans are caught in the middle,” says Professor Carlos Lopes in an interview with Folashadé Soulé and Camilla Toulmin

Professor Carlos Lopes is Honorary Professor at Nelson Mandela School of Public Governance, University of Cape Town, Associate Professor at Sciences Po, Paris, Associate Fellow at Chatham House, London, and 2022 Fellow at Oxford Martin School, University of Oxford. His new book on Africa-Europe relations will be coming out in mid-2023.

Thank you for talking to us. It’s been nearly two years since our last discussion. Welcome back from COP27. You were there particularly for the African Climate Foundation?

Thank you. Sharm el Sheikh was a real jamboree! I was there for several reasons. I led the delegation for the Africa Climate Foundation as Board Chair. I am also a member of the UN Secretary General’s High-Level Expert Group on Net Zero Certification. We presented our report on how non-state entities should adhere to standards that need to become universal to avoid “greenwashing”. Then with the World Resources Institute, where I am a board member, we presented a report on sustainable cities, my interest being the African angle of the discussion. I was also involved with the dissemination of the recent report of the Nature Markets Taskforce, looking into how we can use market-driven policy measures to protect nature. We ask whether it’s feasible to use market-based solutions for sustainability, rather than being just another opportunity for business. I was quite involved with side events on global economic governance, to discuss reforms to the Bretton Woods institutions, to make them fit for purpose in a climate emergency. So COP27 was busy for me, with many calls to be involved in a number of events, like the launch of the African Renewable Energy Forum, AU joint positions on how to address land and agriculture in a sustainable manner, and so on.

Let’s talk now about the consequences of the Ukraine invasion, most particularly on Africa, given big price increases for food, fuel, and fertilizers. How have governments responded to this new crisis? Two years ago, when we spoke, we discussed how the COVID crisis had been a big shock to the system. Sometimes this kind of disruption can have positive consequences, by forcing people to do things differently. How far has this latest food crisis and inflation been an opportunity to rethink policy options and agricultural development models across Africa?

We are really in a watershed moment. The crisis of 2008-09 showed up the difficulties of global economic governance in dealing with capital investment innovations, due to the weakness of the regulatory bodies. The response from the Bank of International Settlements, through the so-called Basel III regulations, was aimed at central banks to identify unacceptable financial innovations and address the risks faced by the international banking system. Basel III had large unintended negative impacts for Africa since it established safeguards that were very difficult for international banks to fulfill in relation to their African operations. The burdens associated with the new due diligence requirements were so demanding, that many international banks were unable to sustain such complex structures for the levels of business they had on the continent. Many started to withdraw, given the costly stress tests they needed to complete in the case of African operations. Thus, levels of access to capital fell further and costs of capital rose, creating immense difficulties.

African countries are always presented as having access to special concessional lending but, when you look into the detail of such claims, the scale of disbursements from international financial institutions do not correspond to the growth in Africa’s GDP and current needs. With the 2008-09 financial crisis, Africa ended up being the last to be affected by the crisis and the first to recover, which showed the continent’s resilience at that point. However, by 2010-11, the subsequent repercussions of the 2008-09 crisis led to falling demand for Africa’s commodity exports and began to expose real weaknesses in Africa’s economic outlook. Many African countries were forced to borrow capital on tougher conditions, with sovereign borrowing at high rates of interest, at 7% or more, which risked erasing the precarious macroeconomic gains of the previous decade.

When the pandemic arrived, their margin for maneuver and fiscal space was stretched to the limit. There is a common narrative that proclaims that African countries received a lot of help during the COVID crisis, in a spirit of solidarity. But in reality, Africans have got less than anybody else. When the IMF approved COVID support of about $1tr, only about $23bn was programmed for Africa, and even this was not actually disbursed. During the pandemic, African countries did well in terms of introducing new forms of social protection, but they had to cut other items out of the budget. Investment suffered significantly, and there was a slowdown in the economy. Africa did not suffer as much as other regions from a medical point of view and, while economic growth went into reverse, most escaped a recession which is remarkable. With this second major crisis, they showed proof of resilience, without help from outside.

But then came the Russian invasion of Ukraine. It was one crisis too many! You can’t be resilient all the time. The war has been particularly difficult - not so much the inflationary dimensions but difficulties in accessing food. During the pandemic there had been large-scale supply chain disruptions, which have been further accentuated by this conflict. Africa being at the tail-end of logistical supply chains means the cost of commodities for Africans are as much to do with supply chain logistics as the cost of the goods themselves. The cost of shipping containers has boomed, multiplying by 8, 10, and sometimes 15 times. For food, when everybody wants it, we see the same problem as during the pandemic. Then, Africa was at the end of the queue for vaccinations, and now Africa must pay much more to access food. So this particular crisis has affected Africa more than the previous two.

This crisis has also shown the limits to Africa’s resilience. Before, we could navigate more or less, but now we can see the vulnerability of Africa within the global trade system. There are also big tensions between energy security and energy access in Africa, since we do not have enough and need more energy. However, other parts of the world have energy security as their main concern. If you give priority to energy security, you look around your neighborhood for extra supplies. Europe has been the most affected by the Ukraine conflict, so they have been seeking gas from Africa. This demand then displaces the energy priorities in Africa from access to security, from focusing on domestic needs to privileging exports. Yet again, we are pursuing another wave of commodity dependence, with Africa exporting gas, green hydrogen, and strategic minerals to allow others to prosper, instead of using these resources to transform the continent’s economy. We risk digging ourselves even deeper into the colonial trap of commodity dependence as a result of this last crisis.

Several African governments have taken measures to respond to the food crisis. What is your opinion of the effectiveness of such measures, and how do you assess their responses?

In Africa, we have the least productive agricultural sector in the world, in terms of yields per hectare. It is true that high yields based on the intensive use of inputs can also bring major environmental consequences, but here in Africa our problem is low productivity. We have been treating farming as a social sector and using development assistance to support livelihoods for smallholders, rather than thinking about agriculture as a business, needing value chain development and agro-processing to make it profitable. We have been keeping the sector afloat with microcredit and drought resilience, without any of the needed transformations. It is now clear that six decades of development policy for the agricultural sector has not worked.

The crisis in Ukraine has shown this very starkly, by exposing the high dependence of Africa on food imports. This is especially true for food products that do not form part of traditional diets, such as wheat, which has been introduced thanks to food aid and has now become part of the daily diet. Food aid, the great majority of which comes from surplus production in countries that provide heavy agricultural subsidies, is also not good for nature.

How have African governments reacted to the Ukraine conflict? Some have reoriented domestic consumption towards crops they can produce. This process is now underway, with countries reorienting food habits in favor of indigenous products, but it will take time before it has a significant impact. Second, governments have tried to guarantee the flow of global food stocks, which requires a lot of international negotiations. From a geostrategic point of view, this is why African countries did not want to take sides in the conflict. The position of AU President, Macky Sall of Senegal, has been to guarantee the Black Sea grain export corridor from Ukraine and Russia, so African countries can benefit from the large grain stocks which had been blocked. Even after an agreement was achieved, with the mediation of Turkey, Africa has not in fact been the main beneficiary. A lot of the food coming out through this corridor has gone elsewhere, and only a minimal part has gone to Africa. So we are still going to suffer from inflation and a lack of proper stocks. The third measure has been to negotiate replacement supplies from other geographies and suppliers, namely Latin America.

These different measures have had mixed results. The situation remains dire, with famine increasing in many parts of the continent. Now we also see much more contestation of power, because people are hungry, leading to the resurgence of jihadism, coups d’état, and revisions to the constitution. These are all forms of political contestation, and we will see much more of them as hunger creates fertile ground. I expect many more African countries are going to enter a period of increased political instability because of what has happened to food prices.

Can we talk about capital markets, and where the investment will come from for the energy transition and industrialization? What combination of both domestic and international capital might unlock investment in energy and industrialization, and also radically improve levels of yield and productivity in agriculture?

Let’s start with issues of terminology because they influence how we see these problems. I already mentioned concessional lending, meaning loans at very low rates, such as 1%. If we look at which countries benefit most from this, it is not the poorest and most vulnerable in Africa, but rather Germany, the UK, and other developed countries with very low-interest rates. They are subsidized because their Central Banks have room for maneuver to stimulate the economy by using monetary policy. But in Africa, we don’t have that luxury. If we ask who is getting concessional lending, actually it’s the richer countries.

Let’s talk now about risk. If we want to increase investments needed by the planet to deal with climate change, we are told we must de-risk what is good for the planet. But what about the large amounts of investment going into fossil fuels, which we know are bad for the planet? Another issue of terminology concerns “stranded assets”, with African countries being told they should not invest in oil and gas because this will result in stranded assets. But, at the same time, we are pushed to invest in these in the short term, because there is an energy security need in richer countries that justifies short-term pragmatism. But the real stranded assets are not the physical infrastructure. Some of these assets can be repurposed, with gas pipelines able to carry green hydrogen, for example. It’s the financial stranded assets I worry about. We’ll be continuing to repay the debt long after the urgent demand for these resources has passed.

Over the last two centuries, the growth model has produced two problems - the accumulation of wealth, and problems for the planet in the form of greenhouse gas emissions. We can’t address these two major global problems – inequality and climate – without changing the pattern of growth. We also need a parallel change in global economic governance. The Bretton Woods institutions – the World Bank and IMF – were established nearly 80 years ago and are not responding to today’s needs. The Bridgetown Initiative, led by the PM of Barbados, talks about how to liberate more money from existing institutions, rather than challenging the foundations of such structures. How we use the issue of Special Drawing Rights (SDRs) is a good case in point, which could leverage private capital 15 or 16 times over. I believe these are all short-term solutions rather than addressing the model of growth which has generated the problems in the first place.

We need a completely different approach. For example, we should discipline the use of intellectual property to reduce wealth accumulation, and put part to use for global public goods, since protecting the planet is public good number one. But there seems no appetite from rich countries to change course. For example, a relatively small request from African countries to have patent waivers for the COVID vaccine ended with a two-year waiver being granted. This is the time needed for African countries to get their vaccination plants up and running, so by the time they are ready to go, the waivers will have expired. It feels like a gimmick. The only one that can benefit right now is South Africa, which already has plants ready to produce. But even here, they are struggling to find buyers for the vaccines they produce. World trade rules say they cannot export without respecting patent owners’ rights, even to other African countries. The donor-supported COVAX mechanism has been used to flood the markets that could have imported from South Africa, restricting their chances of expanding vaccine production. In normal trade jargon, we might call it “dumping”, a technique to prevent new entrants from coming into a market.

So, African countries remain seriously disadvantaged. They are dealing with short-term supply shocks in the food system and political contestation. They are too distracted by short-term problems to enter into the debate around global governance, which is led by middle-income countries. Most African countries will not benefit because they are not in a position to enter this debate. I am trying to provoke them into engaging in this debate, by offering a different set of perspectives so they understand what’s at stake.

What highlights do you take away from COP27? Are there some positive outcomes emerging, despite the rather downbeat assessment you read in the press?

The biggest gain from COP27 is the recognition of Loss and Damage (L&D). This means that Mitigation, Adaptation, and Loss and Damage have become the three big-ticket items. Discussions about funding will be tough, but Loss and Damage has really important historical dimensions. Taking past patterns of growth, you have some countries and regions whose production and consumption levels have benefitted greatly from fossil fuels. Over time, their emissions have accumulated into a substantial carbon debt. Countries that have not benefitted from this kind of growth have not emitted much, and they have a carbon credit. African countries together have a very large, accumulated carbon credit.

Why is there so much focus on sovereign debt in Africa? There are 79 countries around the world with debt-to-GDP ratios of more than 60%. But only 23 of these are considered by the IMF as having a debt sustainability problem, and all of these are African. Obviously, debt sustainability is judged by financial criteria relating to limited fiscal space, not being able to service the debt, etc., but surely we should introduce carbon credits into this discussion! Where is climate in this checklist of criteria? It’s completely absent. For me, accepting loss and damage means you compensate for the historic dimensions of the climate crisis by ensuring that those countries with a carbon credit get something in return. This discussion is just beginning, so I am not sure we’ll get anything substantial out of COP27 but sometimes you need to be patient. I still remember the Addis Ababa Action Plan for the post-2015 UN agenda, which started us talking about overhauling taxation, and introducing a digital tax. While nothing came out of the Addis Ababa meeting, apart from a couple of statements, look at the position today and the presence of significant digital revenues. You have to begin somewhere, so I think L&D will be tagged to the Sharm el-Sheikh COP.

At the same time, I see more and more African countries becoming extremely cynical about the promises made at events like COP. There has been a long-term pattern, especially since the Paris COP, of over-promising and under-delivering, which demonstrates the hypocritical nature of current governments in Europe and elsewhere.

My final question is about multilateralism in the current crisis. You mention that global economic governance is not adapted to address the overlapping crises we face, especially for African countries. There has been a resurgence of non-alignment amongst African countries, and a lack of trust in global institutions as a whole. In spite of this, how do you see the future of multilateralism? Is there any hope for reform?

I mentioned the vaccine issue, which ended with nothing more than a gimmick. Let me give you two more recent examples. This week, Chad was the first country in Africa to qualify to be eligible for debt restructuring, as announced three years ago by the IMF and Paris Club within what’s known as the “Common Framework”. Would you believe it? It has taken three years of negotiation in the middle of a pandemic and war to get one single country eligible for debt restructuring! And what has actually been achieved? Instead of reducing Chad’s debt, it just involves kicking the can down the road. Chad needs quite a bit more fiscal space right now, to address social and political upheavals. There have been big demonstrations in the capital, N’Djamena with more than 100 people killed. What is the reason given for the lack of speed and ambition? That the oil price has increased, so Chad as an oil exporter has less need for debt restructuring. The so-called Common Framework is just not working if it takes three years to negotiate for one country.

The second example concerns Special Drawing Rights (SDRs). In June last year, President Macron and the IMF proposed to mobilize an extra 100bn SDRs for Africa, but where are we today? Only three countries have announced they would contribute – France, Portugal, and China. But the mechanisms are complex and challenging because they introduce multiple conditionalities for recipient countries to access these funds. Called the Resilience and Stabilisation mechanism, the process mimics previous instruments drawn up by the IMF and World Bank and has been made so complex, not a penny has been disbursed so far. Zero! It’s going to take many years for just one or two countries to benefit from this mechanism, and the resources are small in relation to need.

The impacts of climate change have been estimated to cost Africa $277bn per year, but we’re getting just $20bn in adaptation finance. Given that we are facing large planetary crises, we need a different scale of response. Only if we take the Congo Basin, Africa has a carbon sink capable of trapping more emissions than we send into the atmosphere - so we are a net provider of solutions. Look at the International Energy Agency projections for renewable energy around the world. Again, Africa has by far the largest potential for renewable energy in the future. It will be much cheaper to invest in producing green hydrogen in Africa than in Europe. But where is the investment actually going? Not to Africa, despite this being where you get much better returns for the environment.

We do not yet have solutions for dealing with the global systems which we all depend on. The multilateral system, constructed more than 70 years ago, is creaking and will become evermore marginalized unless it demonstrates clearly it can tackle the most important problems we face. We risk a global decoupling in which East and West face off in a cold war, and Africans are caught in the middle. Many value chains are being restructured and re-shored to friendly countries, which introduces many new forms of protection, with colossal impacts on the environment. So there is a huge debate underway to reshape our global institutions and address the big challenges we face. Africa needs to be a central part of it.

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