Fears for Africa as Prices Skyrocket

In a recent article, the magazine « Jeune Afrique » (i.e. «Young Africa »), warns of the serious difficulties facing Africa as a result of the escalating prices of basic essentials such as petrol, cooking oils, rice, flour, palm oil and soap.

In many African countries, the average price rises of these necessities over the last year were around 40% but in Cameroon, the price of palm oil beat all the records by going up a staggering 140 %.

The rapid development of emerging countries such as China, India and Brazil, is partly to blame as it has resulted in exponential increases in the home demand for both basic commodities (fuel, rice etc.) and more sophisticated, traditionally foreign products such as chocolate, yoghourts, alloys, sophisticated chemicals etc., thus reducing the commodities available for export and pushing up world prices.

The problem is compounded by the adverse climatic conditions of the last few years (flooding in Mozambique, Zimbabwe, Zambia and Malawi; drought in many other countries) and the ever-decreasing government subsidies for domestic production.

As a result, the FAO estimates that of the 36 countries around the world which are now facing food shortages, 21 are in Africa.

Senegal, whose domestic rice production is limited to 100,000 mtons/year for an average annual consumption of 900,000 mtons, has been hit hard by Vietnam’s decision to end exports and now only receives a trickle of imported rice from Thailand and India.
In an attempt to combat the subsequent price increases, the government first suspended Customs duties but this move not only failed keep prices down, it also resulted in a considerable loss in revenue for the Senegalese state which, like most African countries, normally earns 25% of its income from Customs duties.

Having realised that fiscal measures were not the solution, the Senegalese government is now attempting to control the profit margins of wholesalers, distributors and shopkeepers, putting further pressure on a sector which is already penalised by the effects of increased electricity and petrol prices plus a clientele with lower buying power.

When the government of Burkina Faso suspended Customs duties, it decided to compensate for the lack of income by increasing other taxes and this was one of the reasons given for the recent riots in Bobo-Dioulasso.

In Cameroon, the local “VAT” on rice, salt, fish, wheat and flour was suspended from September to December 2007 but prices continued to rise and the country was brought to a standstill by protestors towards the end of February 2008.

As witnessed by the recent troubles in Cameroon and Burkina Faso, the hugely-increased living costs are a source of real hardship for the local populations and further protests are feared throughout Africa.

In the Ivory Coast, the least well-off are now reduced to eating just one meal a day, while the middle classes have had to give up pastries, and the fortunate few who own cars are dumbfounded by the prices at the petrol pump.

Throughout Africa, the story is much the same. As governments struggle to reduce the impact of soaring prices, the people tighten their belts a notch further and the spectre of civil unrest looms ever larger.

Sarah Penwarden, Budd Marseille

18 Mar 2008 - 10:37:27