How should Africa respond to the global food & fuel crisis?

What the current global oil crisis means for Africa.

The current global crisis occasioned by the war in Ukraine has led to a sharp increase in food and oil prices. This is partly because Russia and Ukraine produce a large percentage of the world’s exported wheat and corn. The ongoing situation is of great concern since it has led to increased inflation for some countries, posing a major economic crisis. There is no doubt that the war will shape global geopolitics and its impact on the global economy will be felt for a long time, even as the world emerges from the Covid-19 pandemic.

For Africa, this is a major concern as many countries do not have the adaptative capacity to cushion their populations. According to the African Development Bank (AfDB), this crisis could push a further 1.8 million Africans into extreme poverty in 2022 and exacerbate other inequalities. For example, in Nigeria, high global gas and oil prices have caused the domestic prices of cooking gas to increase by more than 100% , making it hard for local households to continue cooking using gas and therefore resorting to other “cheaper” cooking alternatives like firewood. Moreover, the use of firewood for cooking poses a threat to one’s health and contributes to increased deforestation, further perpetuating climate change.

At a time when a number of developed countries have achieved energy security and are now gradually shifting to renewable energy, Africa continuous to struggle with both amidst the oil crisis. Energy experts argue that the current global oil crisis should be a wake-up call, for African countries to  become less dependent on foreign oil supplies.

But what does this mean? For a country like South Africa, which is currently burdened by a major power shortage, leading to significant loadshedding, it’s a wakeup call to urgently accelerate the transition away from coal.

Investing in Africa’s energy transition holds the new dividend for the continent’s socio-economic development. Not only that, but it also re-echoes a popular question on climate action accountability. For example, even though Africa is the most vulnerable region to climate change, it contributes negligibly to global emissions, with just about 3% – 4%. This suggests a need for the transition to be tailored according to the socioeconomic and political contexts of specific geographic regions, with the implementation process also being cognisant of the regions’ differing contributions to climate change.

In the short to medium term, African countries will need to take very proactive steps to accelerate the energy transition. According to the African Economic Outlook report, recently published by the African Development Bank, here are some of the key measures African countries would need to take:-

  • Countries should consider blended finance to provide fiscal incentives for issuers of green finance instruments.
  • Strengthen public financial management, including of climate finance resources; reform fossil fuel subsidies; promote transparency and accountability in debt contraction; improve public service delivery; develop well-tailored domestic resource mobilization instruments; improve tax administration; and create an environment to mitigate private investment risks for sustained long-term growth and employment creation.
  • Implement an urgent countercyclical policy response such as subsidies to mitigate the impact of higher food and energy costs.
  • African countries should develop well-tailored domestic resource mobilization instruments for financing climate resilience and the energy transition, helping lighten overdependency on external climate finance resources.
  • Governments need to adopt and enforce strong policies that incentivize use of local or at the least, in-country—goods, services, and labour in climate actions. They should also pursue franchising as a source of technology transfer, helping drive market efficiencies, achieve scale at speed, and create jobs, so as to share the benefits from value addition from manufacturing, at least partly, and not remain importers of energy technologies.

Author : Damalie Tebajjukira

Communications & Marketing Associate -African Centre for a Green Economy