This week in-equality

African heads of state met last weekend for the 36^th African Union summit. In the year since the AU’s launch of the ‘Year of Nutrition’, food insecurity on the continent has worsened with over 20 million people pushed into severe hunger. East Africans face crisis with the worst droughts in a decade claiming the lives of one person every 36 seconds.

Intra-continental trade, the topic that dominated this year’s AU summit, is seen as essential to help local farmers. But as some have pointed out, a lack of political will to prevent hunger doesn’t bode well for ambitions for the African free trade agreement.

Conspicuously absent from summit discussions were the huge gaps between rich and poor on the continent - seven of the ten most unequal countries in the world are in Africa. We just checked the latest numbers and this year alone, the wealth of Africa’s 21 billionaires has increased by $4.3 billion – that's about $3.5 million an hour! This tiny group of elites is worth more than the continent’s poorest 50% combined.

In this week’s Equals bulletin, we look at the figures behind Africa’s hunger crisis and what this means for inequality in the region.

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Africa’s food crisis in numbers

The hungriest region in the world. In 2022, 20 million people in Africa were pushed into severe hunger. A fifth of the African population is undernourished, and 55 million children under the age of five are stunted due to severe malnutrition. It comes as food and energy companies profiteer from crisis, as we covered in a previous Equals Bulletin.

Soaring food costs hit the poorest hardest. The IMF reckons the prices of staples rose by 24% during 2020-22 — the most since the 2008 global financial crisis – but based on real-life market prices, these seem like a huge underestimate. The poorest households spend far more of their income on food than the richest. Africans earning less than $2.97 PPP a day spend around 60% of their income on food and beverage while wealthier groups spend less than 10%. This is the biggest gap in the developing world.

The agriculture paradox. Despite having about a quarter of the world’s agricultural land, Africa remains a net importer of food, importing a third of the cereals it consumes. By comparison, before the war, Ukraine, which has just 14% of Africa’s arable land, was amongst the world’s largest producers of cereal crops and oils.

Inequality baked in. Around 60% of the value of African land is owned by the richest 10% and globally, the growing interest from companies is one of the main causes of land inequality.

Chronic underinvestment and missed targets. Nearly three-quarters of African governments reduced their agricultural budgets since 2019. African governments spend on average 3.8% of their budgets on agriculture while spending almost double on military. All seven commitments to food security are off course, and some have even seen a reversal. One goal is to reduce the number of undernourished people to 5% by 2025. But that number has risen by 22% since 2010.

Looming debt crisis. This is perhaps unsurprising given Africa’s debt budget – repayments are 3x more than education and 6x more than health spending. Encouraged by the IMF, 43 AU member states will cut their spending by a cumulative 5.4% of GDP in 2021–26.

A not so helping hand. The World Bank and IMF have not helped, insisting through conditions on their lending that agricultural markets be fully liberalised, promoting export crops and cash crops over food crops. African governments have been denied policy tools that are regularly used by richer nations to support their farmers, such as subsidies or public interventions to guarantee prices. In 2021, Kenya and the IMF agreed on a $2.3 billion loan program, which includes a three-year public sector pay freeze and increased taxes on cooking gas and food.

Priced out of fertilizer. Russia’s invasion of Ukraine saw gas prices soar, and with it, the price of fertilizers has tripled since 2020. Not that this has been a problem for the companies who supply fertilizers, who have increased their profits by 10x on average.

Of course, synthetic fertilizers are significant contributors to global emissions, and their use is extremely unequal between countries. African farmers use 5x less fertilizer than the global average, which is reflected in their yields. Anti-fertilizer campaigns should perhaps be targeted more at countries using excessive fertilizers that have no value to extra crop yields rather than in places where food insecurity is driving poverty and inequality.

Climate inequality. Climate change underlies the worst droughts in decades for East Africa and presents a massive challenge for agriculture. The continent has contributed little to the climate crisis – just 3% of historical emissions are from Africa.

Some hope

Fines for greenwashers. In the UK, companies that try to sell more stuff under the guise of going green now face hefty fines from the advertising regulators. Big companies face penalties of up to 10% of their turnover for making misleading claims about their eco-friendly credentials.

UN resolution on climate change and human rights. Civil society groups from 130 countries got behind a UN resolution from Vanuatu that would request an advisory opinion from the International Court of Justice on what obligations states have for protecting the environment. If successful, it would open a legal route for holding governments to account and strengthen the negotiating positions of countries most venerable to climate change.

Reads and listens

Listen to this Pitchfork Economics episode about why share buybacks should be taxed more.

Read this article [paywall] about why B-Corp certification isn’t all it’s cracked up to be.

Listen to EQUALS’ author Alex geeking out on the CafeDirect podcast about corporate governance and social enterprises.

Read Mariana Mazzucato’s new book The Big Con about the dangers of outsourcing the state to consultants (out today).