How to make a Molotov cocktail…
1 oz. rising oil and metal prices
1 oz. predicted 5.5 percent growth
2 oz. climbing food prices
1 oz. increasing number of people pushed into poverty
Dash of political instability and slowed progress
On Sunday in the Financial Times, Donald Kaberuka, head of the African Development Bank, said that “rising oil and food prices are combining to create a ‘Molotov cocktail’ for Africa as the continent attempts to push ahead with its recovery from the economic crisis.”
Of course, a real Molotov cocktail is an improvised incendiary device or explosive. While high prices may not cause the physical damage that Molotov cocktails unleash in Bond films, the riots, suffering and civil unrest that do result can be just as explosive.
Riots over the price of food and fuel broke out last month in Uganda amid political turmoil. “Bread riots” are only going to proliferate, according to “The new geopolitics of food,” an article by Lester Brown in Foreign Policy magazine, since we can no longer rely on idle cropland and multiplying yields to cushion us against grain shocks.
But shouldn’t higher commodity prices be a boon for African countries with rich mineral and oil deposits? Already, the IMF is predicting gross domestic product (GDP) growth of 5.5 percent for Africa in 2012, regaining growth levels experienced prior to the 2009 global financial crisis: “Recovery is near-complete in most of the region’s 29 low-income countries and seven oil exporters with gradual recovery in the region’s middle-income countries.”
Yet, overall growth can mask underlying inequities. ONE discussed just a few weeks ago that high food prices had not pushed their way into an African continent buffered by good harvests. But just a few weeks later, high prices are hitting hard at home in East Africa.
Ethiopia experienced poor rains hurting the second harvest of the season and planting for next year’s crop. Wheat prices are up nearly 50 percent and maize prices are more than 40 percent higher than last year. Prices in Kenya, Tanzania and Uganda have increased by 10 to 20 percent over the last month alone.
After all, the 2008 commodity boom, had mixed and mostly negative results in Africa –- six years of strong overall economic growth followed by an intense period of unrest as the underlying inequities became too prominent to ignore, followed finally by a major drop off and stagnation in economic productivity.
The trick for African nations is to make sure that resources earned from oil, minerals and metals are used to offset the costs of rising food import bills alongside making necessary investments in agricultural growth and putting safety nets in place for those families which are hit the hardest by soaring costs of food. Donors can help them along this path and encourage African national investment by meeting their L’Aquila promises to invest $22 billion in agriculture and food security by 2012.
Photo courtesy of the Wikimedia Commons