Africa

Bracing up for Severe Hunger Ahead

Crusoe Osagie reports that Nigeria may be on the verge of a major food crisis, which will take a devastating toll on the nation, if it is allowed to sneak on the people already pouting in poverty.

This Day Live,

14 August, 2012

About 70 percent of Nigerians live under the poverty line. That is if the figures supplied by the National Bureau of Statistics are anything to go by.

With so many people living in poverty, a basic physiological need like food certainly will be a challenge. In this case, there may be food items in the various markets, only the peoples’ depleted purchasing power would be the barrier between them and this very critical human need.

Unfortunately, a much more severe food shortage seems to lurk. A situation where there are neither food commodities in the markets nor the financial resources to purchase them will definitely spell doom for Nigerians.

If this impending food crisis were to be the result of depleted soil nutrient or any other agro-ecological factors, it might have been understandable. It is rather unfortunate that the ongoing mindless terror activities and indiscriminate killings in Northern Nigeria is the factor that has placed over 100 millions Nigerians at the risk of starvation in the coming year.

This endless insurgency unfortunately, has made the looming hunger crisis more and more inevitable. Northern Nigeria is known to hold about 60 per cent of the nation’s local food production capacity and the people responsible for producing the food items are resource-poor small holder farmers, who are mostly poor and most vulnerable to the activities of the insurgents currently threatening the sovereignty of Nigeria.

In normal years, before March, land preparation and other farming activities would have reached notable levels, with cereal crops such as maize, millet and sorghum already planted and being managed for a good harvest, but in 2012, this has not been the case. Up till May more than 50 percent of the lands that would normally be under cultivation were still bare because farmers were unable to move freely and carry out their farming activities. If this does not signify severe food shortage in 2013, one wonders what would.

A farmer and leader of All Farmers Association of Nigeria based in Kaduna state, Shadrack Madlion, said several members of his association, who are farmers of various agricultural commodities, were unable to mobilise resources to carryout farming activities.

“We have never had it so bad,” he said. “If drastic measures are not taken to ensure that more planting is done, then governments must begin to place orders around the world for massive importation of food to bridge the wide gap that would exist between food supply and demand next year,” he stressed.

Analysts have also noted that it is not sufficient for the Federal Government to simply be aware of the situation and wait till the crisis erupts before it begins to respond. Rather, government must begin to take stock of the problem now and start to put measures in place to make sure that a humanitarian crisis does not result.

Simply because decision makers in the country are sure that as long as crude oil is sold, the nation will certainly be able to muster the resources to purchase all the food that is needed to prevent an outburst of starvation is not a guarantee that the hunger crisis could easily be averted. They must also consider other factors such as the availability of the quantity of food in the global market, needed to deal with a hunger crisis involving over 100 million people. It must be noted that no nation will sell food to another, unless it has enough already to meet the needs of its own people many times over.

It is also important to take into consideration the fact that while it may take months for a consignment of food ordered from the international market to arrive in Nigeria and be distributed across the country, it only takes a few days for a child to be severely harmed of to even die, due to lack of food.

So, if the unsustainable approach of food importation is the chosen approach to deal with the impending hunger situation, the purchase orders must be placed for food items in the global market at least 6 months ahead, to ensure that the food arrives on time before any crisis unfolds.

The crisis in the North has forced some of the crop and animal farmers to abandon their lands and relocate their herds to the neighbouring countries of Niger, Chad and Cameroun.

In the first quarter of this year, investigations revealed that about 65 per cent of northern farmers had migrated to the South because of the insecurity they faced. But they are unable to ply their trade down south due to the lack of the resources needed such as land.

Analysts believe the country faces a famine situation by the end of 2012 because most of the small-scale farmers and big-time farmers in the North have been frightened away from their profession by terrorist attacks.

The United Nations has also expressed fears that the activities of terrorists would make it difficult for the World Food Programme to source its supply from Nigeria to affected areas in the Sahel region.

To boost the nation’s food security system and prevent the imminent food crisis, Oxfam International, a civil society group involved in the fight against global poverty and hunger, has called on federal government to invest more in small scale farming.

Oxfam Country Director, Mr. Tunde Ojei, stressed the need to map out plans to prevent an imminent food crisis in Nigeria as has been the case in neighbouring countries such as Niger, Chad and Mali that were already hit by shortage of food.

He said the implication of this was that there would be pressure on the Nigerian agricultural sector as food demand from those countries would be high, a situation Nigeria was not in any way prepared for.

“Apart from the ongoing crisis in Nigeria, the country is surrounded by nations that are already hit by the food crisis and in those places; the food crisis has more than doubled. These countries at some point will approach Nigeria to the buy food and then there will be pressure on the food we ourselves as a country are depending on. Therefore we as individuals must create awareness for this imminent crisis which would prompt actions towards ensuring that we have a functional food security system in the country,” he said.

Ojei said a lot had to be done to boost small scale farming in the country as small scale farmers produced 80 percent of food consumed by the Nigerian population.

He called on government to make small scale farming more attractive and profitable in order to get more people to go into it so that more food would be produced in Nigeria.

Also noted was the inaccessibility of small scale farmers to modern farming equipment. Farmers should have access to production enhancers such as fertilisers, good storage system, credit system with low interest rate and good insurance policies in the case of natural disasters leading to crop failure.

To effectively fend off the impending crisis, there is also the need for adequate awareness among members of the public on the impact of food crisis and its prevention and if the oncoming crisis is to be averted, the time to act is now, and the response should be a combination of local food production efforts and plans to buy the deficit food supply from other countries.

Although relying on foreign nations to feed its people is disgraceful for a country like Nigeria with so much arable land and clement weather, it is a much safer option than doing nothing and leaving millions of Nigerians vulnerable to starvation.

Africans Chase Away Almighty Dollar

African countries are trying to shoo the U.S. dollar away, even if it means threatening to throw people who use greenbacks in jail.

WSJ,

12 August, 2012

Starting next year, Angola will require oil and gas companies to pay tax revenue and local contracts in kwanza, its currency, rather than dollars. Mozambique wants companies to exchange half of their export earnings for meticais, hoping to pull more of the wealth in vast coal and natural-gas deposits into the domestic economy. And Ghana is seeking similar ways to reinforce "the primacy of the domestic currency," after the cedi plummeted more than 17% against the dollar in the first six months of this year.

The sternest steps come from Zambia, a copper-rich country in southern Africa where the central bank has banned dollar-denominated transactions. Offenders who are "quoting, paying or demanding to be paid or receiving foreign currency" can face a maximum 10 years in prison, the central bank said in a two-page directive in May.

That puts an uncomfortable squeeze on foreign mining companies and tour operators that shepherd thousands of travelers a year to Zambia's side of Victoria Falls. "No one has been prosecuted or jailed for contravening the law yet, but the monitoring process is in progress," Kanguya Mayondi, the Bank of Zambia's spokesman, said. The penalty for not using the kwacha is well within the bank's mandate, he added.

The moves aim to strengthen thinly traded currencies and steer more capital into isolated financial markets. But the new rules are an abrupt change for foreign and local companies used to doing business in U.S. dollars.

"There will be an adjustment period," said Mike Keenan, an African currencies analyst at Absa Capital, a South African subsidiary of Barclays PLC. "But the story with Africa and commodities has been one where the proceeds kind of circumvent the country. These authorities are trying to clamp down on that."

Zambia's central bank sees upside to a strong and liquid kwacha.

The move to promote the currency's use gives authorities leverage over monetary policy they lacked without control of the dominant market currency. The crackdown also could bring local banks new business in hedging instruments and foreign-exchange transactions.

Some of Zambia's high-end hotels and luxury travel companies still advertise rates in dollars, irking local residents. Their complaint: The kwacha can't be used in the U.S., so why are dollars used in Zambia?

"The kwacha is legal tender," said Caeser Siwale, chief executive in Zambia for Renaissance Capital, an investment bank. "There tends to be a different yardstick for us," with big companies expecting small economies like Zambia to live with a reliance on foreign currency that would never happen in Europe or China, he added.

In Zambia, the measures appear to be working. Heightened demand for kwacha pushed the currency to its highest level in more than a year in July, when it reached 4,640 to the dollar. It has slipped a bit since then.

Fueling the demand were foreign-owned manufacturing and mining companies racing to acquire kwacha even as they asked the government to reconsider the policy. The companies complain it make operations more expensive and cumbersome.

"It might be hard to find kwacha when you need it," said Frederick Bantubonse, general manager of Zambia's Chamber of Mines. Mining companies also are worried about the cost of hedging their copper production against kwacha volatility. The group has appealed to government to limit the types of transactions affected by the move.

In the long run, strengthening the kwacha by decree will take less time than demonstrating political stability and a commitment to controlling inflation, said John K. Wakeman-Linn, mission chief for Zambia at the International Monetary Fund.

"I don't think it's necessarily an adverse policy, but I don't see it providing a lot of additional long-term confidence in the kwacha, either," he said. "Regulation like this cannot substitute for policies that generate confidence in the market."

Policy makers elsewhere in Africa are watching Zambia. Ghana, another fast-growing African economy with rich mineral deposits and a nascent consumer class, also is seeking to boost its currency's value.

Since May, Ghana's banks have had to keep all of their deposits at the central bank in cedi, rather than a mix of cedi and U.S. dollars. The switch encourages banks to seek deposits in cedi rather than foreign currency, according to Millison Narh, a deputy governor of the Bank of Ghana.

The central bank's pro-cedi policies aim to make life easier for people like Sterre Mkatini, who recently lugged a backpack filled with $8,000 worth of local currency to a nearby bank to pay one year's rent upfront. Many landlords demand such payments to sidestep high inflation.

At the bank, the television producer converted the money into dollars, deposited them into a dollar-denominated bank account and then had the funds transferred to her landlord's bank in London.

The landlord is Ghanaian but keeps his rental income in British pounds to protect it from Ghana's nearly double-digit inflation.

"So I guess I paid in pounds," Ms. Mkatini said.

Those who demand payments in dollars are a boon to money changers like Assistant Manager Robert Asiedu at Qwick Bureau D'Change Ltd, located on a clamorous street in downtown Accra, Ghana's capital.

A central bank ceiling on over-the-counter dollar transactions at banks has sent Ghana's class of China-bound traders into street-side foreign-exchange bureaus that normally cater to fanny-pack-clad tourists. Chinese importers often show up just before flights back to China desperate to buy $100,000.

Kwaku Asente Addo, a cashier at Penta Forex Bureau, isn't sure Ghana's government can or will do much to purge the greenback. "They can't do that; they're bluffing," he said.

Mr. Narh, Ghana's central banker, said the government is considering rules like those in Mozambique that require companies to convert some of their export earnings into cedi. Without such moves, the government won't be able to counteract a weak exchange rate and large trade deficit.

Those are side effects of growing consumer demand in Ghana's population of 25 million. "Unless something is done about it. it's likely to affect us for a long, long time," he says.