Falls in commodity prices and higher import costs are a double blow, writes RUADHÁN MAC CORMAICin Dakar
WHEN DAKAR’S bakers closed their shops and set up picket lines across the city in late October, they might as well have directed their ire at the Russian government as their own.
As long queues formed outside the few shops still selling bread in the Senegalese capital, the National Federation of Bakers declared that their members would not return to work until the government allowed a rise in the price of a baguette from 150 CFA francs (€0.23) to 175 (€0.27).
Bakers had come under intolerable pressure, said Amadou Gaye, the federation’s president. The price of a sack of imported flour had almost doubled in the previous month, causing 80 bakeries to go out of business and piling pressure on everyone else. “We’re wondering if this is not an operation to shut down the bakers,” he said.
The Senegalese trade ministry eventually relented and authorised the extra 25 cent on the baguette, but in truth the panic had surprised the government as much as anyone else. Its roots lay 6,500km away, in Moscow, where the Kremlin had taken the decision, two months earlier, to temporarily ban wheat exports as Russia struggled with its worst drought on record.
Since Russia is the world’s third-largest wheat exporter, that immediately caused prices on the global market to soar, and within weeks riots over rising bread prices had broken out in Mozambique and the Senegalese bakers were on strike.
The sequence encapsulated the problems faced by open, trade-dependent African economies such as Senegal’s, for whom a ripple on the other side of the world can turn into a major shock by the time it hits the Atlantic coast. Since Senegal produces only half the food it needs to sustain its 14 million people, leaving it reliant on imports for the rest, it has found itself badly exposed to the downturn.
The country is stalked by memories of the 2008 food crisis, when the double shock of poor harvests and rising global prices meant it could only produce enough food to meet 24 per cent of its needs while simultaneously coping with a doubling in the price of imported rice, the staple of the local diet.
When the World Food Programme’s Senegal office carried out a survey at the height of the 2008 crisis, it found that 40 per cent of rural households were “food insecure”, which means they were eating too little and had a limited diet lacking protein, vegetables or fruit. “In 2008, 20 per cent of households ate just one meal a day, and in certain parts of the country worst hit by the crisis, some households passed the day without a proper meal,” says Atsuvi Gamli. This year, thanks to improvements in agriculture and better harvests, that figure is down to 15 per cent.
In some respects, Senegal has been spared the worst suffering. In recent months, aid agencies have warned that more than 10 million people across West Africa face severe hunger and malnutrition because of drought, poor harvests and rising food prices.
The gravity of the problems, and their causes, vary across the region. Niger has been the worst hit, with seven million people – almost half its population – facing food insecurity there, according to Oxfam. The problems extend across Chad, Mali, Mauritania as well as parts of Burkina Faso and northern Nigeria. Agencies report that in some places, people have been forced to eat leaves, berries and maize meant for feeding poultry.
But in each of these countries, the problems are due to internal shocks such as drought and poor harvests. Landlocked Mali, for example, produces most of its own food and has relatively few links to global markets. But in countries such as Senegal and Mauritania (which imports two-thirds of its food), the problems have been intimately tied to global trends.
Openness to the world is nothing new in West Africa. Senegal has been exporting groundnuts to France and buying Asian rice since colonial times, while Liberia has exported rubber to the United States since the 1920s. But such exchanges have intensified in the latest era of globalisation. “When prices increase on the international market for rice or meat, the effect is felt quickly,” says Jean-Martin Bauer, markets specialist at the World Food Programme’s regional office in Dakar. “Here in Senegal, the government did everything it could – it tried subsidising rice, it tried controlling prices, but it just didn’t work. Prices had to rise, just because of the extent of dependency on international markets . . . When things happen overseas, they will affect these countries quite quickly.”
The same applies to exports. Global prices for Senegal’s food commodities collapsed after the fall of Lehman Brothers in 2008, with groundnuts – a source of income for two-thirds of the rural population – still not yet fully recovered. More recently, one of the effects of Ireland’s turmoil was to set off a fall in international prices for commodities that Senegal and its neighbours rely on as exports. On November 18th, the day EU and IMF teams arrived in Dublin, maize futures – traded contracts used to hedge or to speculate on price movement – fell to $5.38 a bushel on the Chicago exchange. This compared to $5.77 a week previously.
Ominously, the volatility of food prices shows no sign of abating. Last month, the UN’s Food and Agriculture Organisation said the bill for global food imports would top $1 trillion this year for just the second time, putting the world “dangerously close” to a new food crisis. And those most exposed are more vulnerable than ever, says Gamli, since many rural families sold animals and tools to sustain themselves at the height of the 2008 crisis, thus falling deeper into long-term poverty. “The conditions that create food shocks in Senegal are still in place. If there is a shock on the international markets, that will incontestably hit the poorest households in the country first.”
Trailing behind: West Africa hit again
OF THE 10 lowest-placed countries on the UN’s human development index, nine are in west Africa.
In general, the continent appears to have come through the global downturn better than in the past, despite declining trade, less money sent home by emigrants and sharp reductions in economic growth.
The picture though varies between regions, and the worst hit region has been the one that was weakest at the outset.
“West Africa hasn’t been able to move into and sustain the higher rates of economic growth needed to make serious inroads in job creation and poverty reduction,” according to Mark Plant, deputy director of the IMF’s African department. Political instability, poor infrastructure and low private investment rates – all overlaid by deep poverty – explain the sluggishness.
“Poverty is a big issue in west Africa,” says Jean-Martin Bauer of the World Food Programme.
“It makes all these shocks more difficult to deal with, because people have hardly a dime to their name, [and] very few assets. You have a drought or an economic crisis and that’s going to cause pain.”
- TOMORROW:The "North African miracle", and how Morocco has become a pioneer in green energy.
This series, which explores the impact of global recession on trends in the developing world through case studies in francophone west and north Africa, was supported by a grant from the Simon Cumbers Media Fund