Month: May 2022

Feeding a continent: Food Security & Nutrition Strategy for Africa – Ghana Invest

May 25 of each year marks the celebration of the African Union Day. A historic day for the continents 55 member countries sharing political, social, economic and cultural history together.

Let’s get into a bit of history on the African political, economic and cultural journey. The African Union was officially launched in 2002 as a successor to the Organisation of African Unity (OAU, 1963-1999).

In May 1963, 32 heads of independent African states gathered in Addis Ababa, Ethiopia, to sign the Charter establishing Africa’s first post-independence continental institution, The Organization of African Unity (OAU).

At a point, African leaders realized that in order to achieve Africa’s potential, attention needed to be shifted away from the fight for decolonisation and the abolition of apartheid, which had been the focus of the OAU, and toward increased cooperation and integration of African states to drive Africa’s growth and economic development.

Hence, the formation in 2002 of what has become known ever since as the African Union (AU) capturing its broad vision as the creation of “An Integrated, Prosperous and Peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena.”

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The Year of Nutrition

In 2022, the AU declared it theme as “The Year of Nutrition: Strengthening Resilience in Nutrition and Food Security on the African Continent”

It’s no doubt that food security and more importantly nutrition, is a key priority for the African continent. As can be traced, Africa is leading in food security crisis across the globe. Despite the fact that the continent has the leading size of arable lands globally. This calls for a major concern and a conscious approach to tackle issues of food insecurity and malnutrition on the continent.

Stay with me on nutrition before we delve deeper into the issues around food security.

Data from the Continental Accountability Scorecard, which was launched in 2019 by the African Union and the Africa Leaders for Nutrition (ALN), show that on the African continent;

  • 8 million children under 5 years are stunted, and 58.7 millions of those stunted are in Africa
  • Only seven (7) member states have stunting rates below 19 percent
  • Fifteen (15) member states have child wasting prevalence below 5 percent
  • Thirty-eight (38) countries have women’s anaemia prevalence rates of more than 30 percent
  • Eighteen (18) member states have at least 50 percent of infants exclusively breastfed
  • Twenty (20) member states have more than 70 percent prevalence rates for vitamin A supplementation.

At the same time, overweight, obesity, and noncommunicable diseases linked to diet quality are on the rise, worsening morbidity and mortality rates.

But then again, the levels and trends of hunger differ significantly across sub-regions. According to the FAO Africa Regional Overview of Food and Security 2021 report, Eastern Africa has 44.4 percent of the continent’s undernourished people, Western Africa has 26.7 percent, Central Africa has 20.3 percent, Northern Africa has 6.2 percent, and Southern Africa has 2.4 percent.

Ghana Invest Graph 1
Ghana Invest Graph 2

Now, up there, is the story of the continent when it comes to nutrition. How do you think the continent is performing on the nutrition scale compared to other parts of the world? Your answer is as correct as mine.

Africa, Food Security & Malnutrition

Issues about Food Security is linked to the GOAL 2 of the 2030 Sustainable Development Goals which aim to eliminate hunger and achieve food security for all people, at all times, so that everyone has physical, social, and economic access to sufficient, safe and nutritious food that meets their food preferences and dietary needs for an active and healthy life.

Unfortunately, Africa is NOT on track to meet the GOAL 2 of the SDG. According to the most recent estimates, 281.6 million people on the continent, or more than one-fifth of the population, faced hunger in 2020, 46.3 million more than in 2019.

The COVID-19 pandemic has exacerbated food insecurity by causing economic slowdowns, rising unemployment, and income loss, as well as disrupting global supply chains.

Prior to the pandemic, the Food and Agriculture Organization of the United Nations (FAO) reported that more than 250 million Africans were food insecure, with the number increasing (FAO, 2020).

Again, the world food prices are hitting all-time high due to the disruption in Europe, the Russia-Ukraine War.

Russia and Ukraine, whose vast grain-growing regions are among the world’s main breadbaskets, account for a significant portion of global exports in several major commodities, including wheat, vegetable oil, and corn, whose prices reached their highest levels ever last month.

People experience moderate food insecurity when they are unsure of their ability to obtain food and have been forced to reduce the quality and/or quantity of food they consume at times throughout the year due to a lack of money or other resources. Individuals with severe food insecurity have most likely run out of food, experienced hunger, and, in extreme cases, gone for days without eating, putting their health and well-being at risk.

What’s the best Strategy going forward?

What’s the best Strategy going forward?
At Ghana Invest, we believe that issues of food insecurities and malnutrition goes to the heart of the continents growth and development agenda. We are currently working alongside strategic partners across Ghana’s agricultural and food value chains to ensure Ghana meets its SDG Goal 2 target by 2030.

Together with our partners at Ghana Invest, we are advocating for greater political commitment to nutrition and increased investment to address the country’s ongoing malnutrition challenges.

Our broader approach is tagged into the continent’s wide strategies by the AU. The African Union is targeting some key policy initiatives aimed at improving nutrition resilience on the African continent by strengthening African Agri-food, health, and social protection systems.

Let’s take a look at some of the policy initiatives and strategies adopted by the AU to reduce the menace of food insecurity and to stop the spread of malnutrition across the continent.

Increasing Resilience
More efforts are required to prevent, anticipate, prepare for, cope with, and recover from shocks, rather than simply bouncing back to where they were before the shocks occurred.

Food and nutrition security are important components of individual resilience, but they can also improve the resilience of entire economies by improving individual health and productivity.

Multi-stakeholder approach
Certainly, we are dealing with a complex issue caused by a variety of factors. In the context of food insecurity, access to basic social services, and other more fundamental issues such as socioeconomic factors such as poverty, education, and gender inequality, sanitation, hygiene, and water supply, sanitation hygiene, and water supply

These complex multidimensional and interdependent determinants, which act at various levels of society, necessitate coordinated and synergistic efforts across multiple sectors to resolve sustainably.

Commitments to actions
There’s no doubt that in order to make a dent on the fight against food insecurity and malnutrition, there has to be a conscious policy commitment, implementations and actions by governments.

There are already, existing ambitious plans such as the African Union’s Malabo Declaration for 2025, World Health Assembly targets and Sustainable Development Agenda for 2030, all of which demands political commitments to achieve the set target of reducing food insecurity and tackling malnutrition.

Strategic Investments
According to the AU strategies adopted, if actions are to be implemented on the continent, existing financing mechanisms must be strengthened and innovative and sustainable resource mobilization, which includes a diverse set of public and private sector actors and financial instruments, must be scaled up.

It’s obvious that governments must engage and commit to work with the private sector across the value chain to encourage their participation.

Accordingly, Nutrition must be integrated into resilient and strong health systems through universal health coverage – healthy, inclusive, sustainable, and environmentally/climate sensitive food systems; sanitation and sanitation systems that include drinking water supply and effective social protection systems.

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Source: https://au.int/en  

Ghana’s Road to Economic Recovery – FDI as a catalyst by Ghana Invest.

Let’s not pretend that we are all not weary of the current global economic happenings that have thrown all predictions into disarray.

By this, I am referring to the decline in global economic growth, the rise of public debt above sustainable levels across major economies, especially in emerging markets; the degree of decay when it comes to public health due to the COVID-19 pandemic, and now the Russia-Ukraine war and its attendant consequences.

In all these uncertainties and global risks, no single country is an exception as that’s the case for Ghana.

In this article, I will be sharing some insights, which border on Ghana’s quest for economic recovery, which could be shorter or longer, depending on the approach that the Government of the day chooses.

Foreign direct investment (FDI) is an integral part of an open and effective international economic system and a major catalyst for development.

The question is, how will Ghana catalyze FDI for its economic recovery?

Economic Outlook

According to a recent IMF Report, Ghana’s economy is projected to remain relatively strong over the medium term, supported by higher prices for key exports and strong domestic demand. Growth is projected to reach 5.5% in 2022 and average 5.3% over 2022. Growth is expected to be broad-based led by agriculture and services and a relatively stronger industry sector.

‘Light at the end of the tunnel’

Let me make it simple for you to grasp.  Ghana’s current economic situation fits the phrase, “there’s light at the end of the tunnel”.

In the wake of the recent COVID-19 outbreak, global commodities price fluctuations, and the instabilities and uncertainties in and around Europe, the Ghanaian economy has suffered a lot of economic difficulties at the macro and micro levels.

The war in Ukraine is also expected to compound the already fiscal and macro-economic challenges and will slow down growth to get back to the pre-pandemic levels.

The developments are expected to raise global prices for a number of key commodities, including food, fuels, fertilizers, and metals used in manufacturing, adding to Ghana’s already-existing inflationary pressures.

However, one could argue that the road to recovery could be shorter than anticipated if the Governments will have the political will to stay through on the fiscal disciplines it’s required in times like these.

Rising debt levels

Ghana’s public debt has risen past the sustainable levels for an emerging economy. The country’s current debt is over 80% of its GDP.

The overall fiscal deficit doubled to 15.2% in 2020 and public debt increased to 81.1% in 2020, placing Ghana at significant risk of debt distress.

These rising public expenditures in the context of persistently weak revenue performance have undermined Ghana’s fiscal and debt sustainability in recent years. As the country’s fiscal risks remained high, credible fiscal consolidation was required to reverse the unfavorable debt dynamics and reduce domestic refinancing risks.

Home-grown policies

In the wake of these financial management challenges, the Government has developed and introduced policy measures and programs aimed at restoring fiscal discipline, reversing the fiscal deterioration, and putting the public debt on a downward and sustainable path.

The government’s 2022 budget set forth an ambitious consolidation plan as it aims to raise revenue from 16% in 2021 to 20% in 2022. Fiscal measures would reduce the deficit from 12% in 2021 to 4.5% by 2024.

E-Levy

In a move to stimulate domestic revenue growth, which is ideal in this situation looking at the impossible state for the country to borrow from the international capital market, the Government has introduced an electronic transfer levy which has faced steep opposition from the Ghanaian populace.

The E-levy is estimated to generate 1.4% of the 2022 GDP.

Catalyzing on FDI for quicker recovery

Global foreign direct investment (FDI) flows fell by 35 percent in 2020, reaching $1 trillion, from $1.5 trillion in 2019. This is the lowest level since 2005 and almost 20 percent lower than the 2009 trough after the global financial crisis.

Greenfield investments in industry and new infrastructure investment projects in developing countries were hit especially hard. This is according to the World Investment Report, 2021.

Among developed countries, FDI flows to Europe fell by 80 percent. The fall was magnified by large swings in conduit flows, but most large economies in the region saw sizeable declines. Flows to North America fell by 42 percent; those to other developed economies by about 20 percent on average. In the United States, the decline was mostly caused by a fall in reinvested earnings.

FDI flows to Africa fell by 16 percent to $40 billion – a level is last seen 15 years ago. Greenfield project announcements, the key to industrialization prospects in the region, fell by 62 percent. Commodity exporting economies were the worst affected.

Flows to developing Asia were resilient. Inflows in China actually increased, by 6 percent, to $149 billion. South-East Asia saw a 25 percent decline, with its reliance on GVC-intensive FDI an important factor. FDI flows to India increased, driven in part by M&A activity.

Now that we have had a fair idea of the FDI flows globally and in specific regions, let’s zero in now on Ghana, which is our point of focus.

In a quarterly briefing report by the Ghana Investment Promotion Centre (GIPC), between “January to June 2021, Ghana recorded 122 projects with a total estimated investment of US$874.01 million.

The FDI component and the local components amounted to US$829.29 million and US$44.72 million respectively for the first half of 2021. The FDI value of US$829.29 million gives an increase of 32.15% over the FDI value of US$627.52 million recorded in the first half of 2020. The total initial capital transfers also amounted to US$47.76 million for the first half of 2021.”

Source: GIPC Quarterly Investment Report, 2021

The services sector recorded the highest number of projects at 63 followed by the manufacturing sector which recorded 24 projects as seen in the figure below.

The services sector of course, due to the volumes in the project numbers, recorded the largest value in terms of FDI of US$597.63 million followed by the manufacturing sector with an FDI value of US$98.74 million.

Whiles the international investment architecture is a key driver for FDI flows, National policies are also key for the same.

As most studies have revealed and evident across multiple economies, FDI triggers technology spillovers, assists human capital formation, contributes to international trade integration, helps create a more competitive business environment, and enhances enterprise development.

It differs from other major types of external private capital flows in that it is primarily motivated by the investors’ long-term prospects for profit in production activities over which they have direct control.

For a country like Ghana, the case is no different on how FDI could become a catalyst for economic recovery.  It has already proven to become an important source of private external finance.

Given the scale and magnitude of the opportunities that could be leveraged from FDI, it has become imperative that Ghana develop a coherent policy approach to establish a hospitable regulatory framework for FDI.

These issues border around rules regarding market entry, foreign ownership, and treatment accorded to foreign-owned firms, as well as improving the general market functions.

They also include a conscious approach to include investment promotions, investment incentives (tax, etc.), post-investment services, amenity improvements, and measures to reduce the cost of doing business.

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