The Global Food Crisis Hits Home: The Time Is Now To Invest In A Resilient Economy

The world is facing multifaceted challenges threatening the lives and livelihoods of millions of people as we experience a sharp economic slowdown due to the continued pandemic implications, deepening fragility in developing countries, and the war in Ukraine followed by skyrocketing inflation. All these overlapping crises triggered a worrying trend in the global food industry.

For example, the UK government registered the country’s worst inflation crisis in four decades, with the annual consumer price index (CPI) reaching 9.4%, according to the UK-based media house, the Guardian. Further, food and energy prices also recorded a sharp increase. Liquid fuels, including petrol and diesel, rose to 128.9% in one year until June 2022.

Even though food price hikes are felt globally, low- and middle-income economies are getting hit hardest due to the fragility and vulnerabilities in their social infrastructures. According to the World Bank July 2022 food security report, 8 of the top 10 countries experiencing the worst price increases are from Africa and Asia. Lebanon tops the list with a staggering 122% annual food inflation increase, while Sri Lankan government declared bankruptcy, closed schools, and banned the sale of petrol to control the looming fuel and food crisis. 

The World Bank further added that the Eastern African countries would be more likely to see situations “worsen” due to the persisting rainfall shortages, recurrent droughts and the growing prices of essential items.

Somalia feels the heat too!

According to the Somalia National Bureau of Statistics (SNBS) June 2022 CPI report, the annual inflation rate hits 6.98%, while food prices have increased by over 16.5%, compared with the same period in 2021.

Similarly, the fuel price has increased 300% from $0.45 to $1.80 per liter, based on primary data from random fuel stations and tuk-tuk drivers in Mogadishu. This came as a result of the war in Ukraine and the economic shocks that followed. The swift increase in fuel prices globally had a trickle-down effect on almost all essential commodities in Somalia due to the increased cost of transport of goods. According to World Bank and IMF data, Somalia is among the top 10 countries with the highest food inflation rate.

What makes Somalia uniquely vulnerable is its weak economy which is already hampered by multi-dimensional challenges – from recurrent droughts to insecurity, high unemployment, and a dearth of investment in the productive sectors, to mention a few.

In addition, the rise of protectionism and export restrictions by cereal-producing countries will further devastate the economies of import-dependent nations, including Somalia, where more than 87% of its 2021 GDP comes from imported goods. Many countries, including Hungary, Serbia, Indonesia, and Turkey, have already started hoarding and restricting exports of cooking oil and grains amid fears of escalated food crisis.

Building resilient food security is paramount

Considering Somalia’s vulnerability to global economic shocks and climate changes, urgent and serious attention should be given to building a resilient economy that can withstand the severity of the consequences of the recurrent crisis. Therefore, the following paragraphs will highlight critical recommendations for Somalia to edge towards more sustainable food security.

Removing barriers to business the private sector contributes to Somalia’s economy greatly be in employment, contribution to the national gross domestic product, or the provision of necessary services to the people. Yet, Somalia is considered to be one of the most challenging places to do business in the world, as per World Bank’s Doing Business 2020 report. More impactful results could have been achieved if the Somali government deliberately prioritized easing the business environment by putting effective and more friendly regulations in place, removing systematic barriers, and reducing high registration costs.

Empowering youth in farmingthe awareness and interest of Somali youth in the farming and agriculture sector is positively increasing, as evidenced by the rise of greenhouse farming in major cities in Somalia. There is a general sense of youth mobilization towards investing in this productive sector which is gathering pace. It is high time for the government, policymakers, and Somali investors to support such kind of impactful youth-led initiatives as they have the potential to create opportunities and support the local economy.

Promoting the fishery sectorSomalia is exceptionally known for its rich natural resources. Agriculture and livestock are the most vital sectors contributing to Somalia’s economy. However, both sectors experienced significant hiccups due to the effects of climate-related shocks and recurrent droughts. Therefore, it is imperative for Somalia to diversify its economy and tap into the potential of this long-neglected fishery industry, which has the potential to feed the whole nation if wisely invested. It is pretty counterintuitive that Somalia, which enjoys the longest coastline in Africa, consumes imported (canned) fish manufactured in Thailand.

Reducing aid dependency It is evident that dependence on humanitarian aid is not sustainable. It kills the productivity of the recipient countries if the programs are not designed in a way that empowers communities and helps address the root causes of the problems. The role of the government in the design and development of humanitarian programs is essential to intentionally use the aid to give optimal results, as alternatives to aid are being materialized.

Investing in water harvesting systems The recurrent floods, droughts, and shortage of rainfalls not only indicate Somalia’s susceptibility to environmental shocks but also the importance of water management as a crucial factor in achieving resilient food security in Somalia. Water harvesting infrastructure supports the collection and storage of rainwater for later use instead of letting it run-off.

Diversification of import/export destinationsTo achieve economic resilience, it is important to closely observe and analyze a country’s import destinations when it comes essential goods like food. Diversification and availability of supply options for both import and export items provide flexibility if one or two supply routes become difficult. Unfortunately, the case for Somalia seems different, according to the Observatory of Economic Complexity: more than 60% of its 2020 imports came from UAE ($1.28b), China ($893m) and India ($544m) – while 66% of Somalia’s 2020 exports went to UAE ($146m) and Saudi Arabia ($39.2m) alone. 

Mowliid Ahmed Hassan, Development Practitioner 

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