Soaring food, energy prices push 15m Africans into poverty
Some 15 million people in Africa were pushed into poverty in 2022 due to high food and energy prices, the African Development Bank (AfBD) has reported.
However, the Bank indicated that the poverty effect of energy price increases was higher than food prices.
This was because the energy impact was fully passed through household income, while the negative impact of high food prices was partially offset by increases in household income from net sellers.
“In Africa, the additional number of people falling into extreme poverty due to energy price inflation is estimated at 10.2 million, bringing the combined poverty effect of soaring food and energy prices to about 15 million people,” the bank noted.
This was contained in the Bank’s 2023 West Africa Economic Outlook report, which noted that the region’s average poverty rate increased by 10 per cent between 2019 and 2022.
It was also observed that relative to the counterfactual scenario, the international poverty rate based on the US$ 2.15-a-day poverty line increased in nine countries in West Africa.
The average household welfare decreased in 12 of 14 countries, accounting for an average real income loss of 0.82 per cent in the region, “with poorer households suffering systematically larger welfare losses.” AfDB stated.
“The fall in real household per capita income due to high global food and energy prices has impacted household welfare and exacerbated poverty and inequality in African countries,” AfDB reported.
It cautioned that protracted increases in prices of food and energy would have long-term consequences for prosperity in many African countries, exacerbating issues of poverty and inequality.
The Bank encouraged African governments to have assertive monetary, fiscal, and structural policy action to address the effects of rising inflation and subdued growth.
The AfDB called for increased support for a pro-growth structural transformation to sustain rapid, sustainable, and inclusive growth.
At the start of Russia’s invasion of Ukraine in February to March 2022, crude oil prices increased by about 20 per cent, from $93.5 barrels per day (bpd) to $112.4 bpd and averaged $102.8 bpd between March and October 2022 in Africa.
Wheat price rose by about 28 per cent, from $364.9 per metric ton (mt) in February 2022 to $446.5 per mt in March 2022 and has averaged $427.2 per mt between March and October 2022.
Similarly, fertilizer prices also surged by about 22 per cent, from $ 547.1 per mt in February 2022 to $ 668.9 per mt in March 2022 and $624.9 per mt on average between March and October 2022.
Source: Ghana Business
