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Food tax cuts, export bans not sustainable for Africa

20th May 2008

By: Reuters

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Tax cuts and export bans are not a sustainable strategy against rising food prices in Africa and could instead hinder the fight against poverty, delegates at a West African regional summit said on Monday.

Rocketing prices for staples such as rice and millet, driven by a global surge in the cost of major cereals and oil, have triggered riots and protests across West Africa, the poorest part of the world's least developed continent.

Governments have scrambled to curb food exports, ease taxes on imports and increase subsidies for basic staples to try to make food more affordable for their struggling populations.

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But experts at a meeting of trade, agriculture and finance ministers from the 15-member Economic Community of West African States (ECOWAS) warned that such measures could prove counter-productive in the long term.

"African countries have been struggling to mitigate the impact of the crisis through fiscal and other measures that are clearly unsustainable," Said Djinnit, U.N. Special Representative for West Africa, told the meeting in Abuja.

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"This is a matter of serious concern that is posing a new threat to the peace, security and stability of the continent in addition to further compromising the efforts towards achieving the Millennium Development Goals," he said.

The U.N. Millennium Development Goals aim to halve global poverty by 2015.

A panel of experts which reported to the ECOWAS meeting warned that export restrictions -- meant to ensure food supplies reach needy local communities -- could cause production to drop and hinder the wider goal of regional integration.

It also said that easing taxes on basic foodstuffs was not affordable for some countries in the long term, and could lead to a drop in public spending in other areas.

"It may also, in the medium term, heighten dependence on the outside world and above all, deepen tastes for foreign foods," the experts said.

 

FARMING NEGLECTED

Some development officials say too much aid for Africa has been focused on good governance initiatives in recent years instead of on developing rural economies. Some nations which were once net food exporters now rely on expensive imports.

The head of the U.N. Conference on Trade and Development (UNCTAD) said last month that between 2003 and 2005, $1.3 billion was spent on governance initiatives in the world's poorest countries against just $12 million on agricultural aid.

Rapid urbanisation in countries such as Senegal, where the younger generation has largely abandoned agriculture in favour of finding work in the cities, has also taken a toll.

"There are clearly external factors to the crisis. But there are also internal factors to African countries that have contributed to the marginalisation of the agricultural sector," Djinnit told the meeting in Abuja.

"These combined factors contribute to create a paradoxical situation where in many African countries, people consume what they do not produce and produce what they do not consume."

The experts' report called for ECOWAS member states to take a raft of immediate measures including the lifting of export bans, easier access to financing for farmers, and programmes to promote the cultivation of food meant for local consumption.

It also called on development partners to set up a support fund to help reduce hunger and urged donors and governments to allocate more of their budgets to agriculture.

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