World Bank has advised policymakers to focus on targeted safety-net programmes rather than food or fuel subsidies.
The Washington based institution disclosed this in its latest Commodity Markets Outlook report from the Global Report on Food Crisis.
The report said countries would face the risk of high food shortage, inflation due to the COVID-19 pandemic and the ongoing Russia-Ukraine war.
According to the report, the impact of the pandemic and the ongoing war has significantly increased food prices and distorted production as well as the trade of commodities.
The increase in the price of crude oil, energy, iron ore, and costs of inputs to agriculture production has led to food insecurity and inflation.
Quoting a United Nations report, World Bank added that food shortages and inflation are negatively impacting the poor and may worsen inequality, especially for 23 million Nigerians.
“Rising food prices have increased food insecurity in most EMDEs. It could increase even more, given the reliance of a number of EMDEs on food imports from Ukraine and Russia. Even before the Ukraine war, the pandemic had already taken a toll on food insecurity,” the report reads.
“According to the Global Report on Food Crises, an estimated 161 million people were facing a food crisis or worse in 2021, up from 147 million in 2020. Populations facing a crisis, which are typically in countries with conflict, include the Democratic Republic of Congo (26 million), Afghanistan (23 million), Nigeria (23 million), Ethiopia (16 million), and Yemen (16 million).”
It added that the high global food prices and fears of shortages are leading to restrictions on food exports in some countries.
“The war in Ukraine has been a major shock to global commodity markets. The supply of several commodities has been disrupted, leading to sharply higher prices, particularly for energy, fertilisers, and some grains,” it added.
The report urged policymakers to act promptly to minimise harm to their citizens and to the global economy.
It called for targeted safety-net programmes such as cash transfers, school feeding programmes, and public work programmes — rather than food and fuel subsidies.
“A key priority should be to invest in energy efficiency, including weatherisation of buildings. It also calls on countries to accelerate the development of zero-carbon sources of energy, such as renewables,” it said.
