Okonjo-Iweala: ready to respond
| Okonjo-Iweala: ready to respond|
The World Bank is preparing to revive its emergency facility to help countries affected by food price rises, in the wake of street riots last month over the surge in cost of essential goods such as wheat and bread.
Ngozi Okonjo-Iweala, a managing director at the Bank and former finance minister of Nigeria, said the volatility in food prices are a key risk for countries affected by the food crisis two years ago.
The 2008 crisis pushed millions of people into poverty, she added. It led the Bank to establish a $2 billion Global Food Crisis Response Programme, of which some $900 million has been distributed.
We have sent to our board a request to reactivate the facility, because we have got the mechanism ready to go, she told Emerging Markets. With that we will be able to respond again.
We have readied ourselves to be able to kick in should we have difficulty with food prices again.
Since mid-June, global grain prices risen strongly with a 56% rise in global wheat prices and knock-on impacts on other commodities such as rice, maize, and sorghum.
Okonjo-Iweala said she did not believe the world was in the middle of a food crisis, as a strong harvest in the USA had offset crop failures in Russia. Nevertheless volatility remains a key risk, she said. The crisis threw 64 million more people into poverty. Isnt that a big issue to look at?
Fears over food security have marred what Okonjo-Iweala sees as a potential opportunity for Africa and other low-income countries to close the wealth gap between rich and poor.
The Bank forecasts that sub-Saharan Africa will enjoy economic growth of 5.1% next year, double the rate of the high income nations, which will grow by 2.4%.
Developing countries are providing 50% of world growth, and this is not just a phenomenon of China and India, she said. If you think of Africa approaching a population of a billion people, that provides a strong market. People should change their perception and the way they view Africa.
Africa is increasingly seen as a good investment opportunity. It is the wise investor that gets in now because the returns are substantial, Okonjo-Iweala said.
She urged countries to focus on building institutional capacity, regulatory frameworks, revenue collection systems and judicial to create the right environment for investment.
We need not to stand back now, she said. We need to invest in public-private partnerships.
Okonjo-Iweala pointed out that the International Development Association (IDA), the banks funding arm for low-income countries, had invested $7.6 billion last year of which $3 billion went on infrastructure.
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