Fiscal And Financial Policies Against Droughts
Protecting food production and distribution from weather events begins with climate-resilient infrastructure. This type of public investment also creates jobs and can catalyze private investment.
Consider, for example, solar power that facilitates irrigation, water access, and temperature control for food storage. Equally impactful is a flood barrier that protects ports and roads critical to food distribution.
Digitalization is also crucial. It gives farmers access to early warning systems and mobile banking as well as platforms to purchase fertilizers, seeds, or sell produce, helping to connect small producers to large vendors.
Social cash transfers that are targeted and far-reaching help people buy food and rebuild after weather shocks. They further allow families and small businesses to invest in resilience-building equipment and technology. By offering people control of the support they receive these cash transfers are more effective at containing inequality than agricultural subsidies.
Access to finance from private markets can play a similar role to social assistance. Raising it requires developing financial markets, which can take time. In the interim, micro-finance or public-private partnerships can help provide credit to people who currently don’t have access through banks.
To this end, establishing collateral through advances in property rights is crucial. With World Bank support, Mozambique and Tanzania are expanding title and survey registers and developing digital land administrative services. A pilot project in Ghana uses blockchain technology to improve incomplete or missing land records.
Direct Drought Impact On Populace
Droughts are cyclical events around the world. The current drought has had a severe impact on water levels in dam reservoirs, causing some to run dry. The Hazelmere Dam in KwaZulu-Natal as at October 2015 was at 29% capacity—an all-time low—while the Kamuzu dams in Lilongwe, Malawi, were at less than 40% capacity in May 2016 at the peak of the drought (see Figure 3). The resulting low dam levels led to water restrictions being imposed on users across several countries in Southern Africa.
Additional impacts of the drought are death of livestock and poor crop yields due to poor or no rainfall making water unavailable for irrigation. Primarily attributed to El Niño*2, the drought has led to increased food prices and the United Nations estimates that 11 million children are at risk of starvation and inadequate water supplies in East and Southern Africa.
Areas in the Free State and North West provinces of South Africa that are known for corn farming are currently unable to grow enough corn due to the drought. In response, the government has declared about five provinces in the country to be disaster areas.
In Botswana, it was reported by the magazine African Business that the water level in the Okavango Delta was at its lowest in years at the peak of the drought. The Okavango Delta is the end point of rainwater that flows into the area each year from the highlands of the Republic of Angola. However, the scarce rainfall because of drought has made it practically impossible for houseboats and tour boats to navigate the waterways on tourist routes; it was only possible using makorro (dugout canoes).
The impact of the drought in South Africa has been most strongly felt in increased food prices. For example, the prices of meat and poultry, which are popular protein sources, are quite high, making it difficult for low-income households to purchase them. The government has resorted to importing food and poultry to augment local food production.
Climate Change And Chronic Food Drought
Food supplies and prices are especially vulnerable to climate change in sub-Saharan Africa because of a lack of resilience to climatic events, food import dependence, and excessive government intervention.
Most people live in rural agricultural and fishing communities that can’t afford infrastructure to protect them from adverse weather. For example, they depend on rain to water their crops, and less than 1 percent of arable land is equipped with irrigation.
Weather-sensitive domestic food production results in heavy reliance on imports, with some 85 percent coming from outside the region. While food imports can provide a buffer to domestic shocks, inflation spurred by weather shocks in regions where imports are produced can be passed on to consumers. Similarly, weather events that raise the cost of transportation are also passed on. The resulting high food-import costs can erode foreign reserves and weigh on exchange rates, contributing to more rapid price gains.
How Can The Government Help With Drought In South Africa
Trade liberalization and import diversification could help stabilize regional food supply and prices. Zambia’s big maize harvests, for example, could have helped offset shortfalls elsewhere in Southern Africa if not for a ban on exporting the crop.
Access to larger markets can incentivize investment in agricultural production networks and value chains. It can also help spread knowledge—such as how to plant drought-resistant crops—and spur competition. One positive step in this direction is the Africa Continental Free Trade Agreement among 54 countries, which covers most goods and services.
Empowered producer organizations can reach remote climate-vulnerable agricultural communities. This would help spread new technologies such as digital pest-control devices and high-yield seeds that tolerate heat and drought and improve climate adaptation training and market information. Aggregating production and selling directly to consumers can help to increase negotiating power, which in turn reduces storage costs, lengthens contracts, expands profit margins and opens access to new markets.
By streamlining and better targeting regulations, governments can help farmers build resilience. For example, appropriate water-use regulations reduce the cost for farmers to establish and expand irrigation systems. Along the same lines, efficient seed registration, like in Kenya, multiplies seed supply and access to resilient seeds. Finally, fertilizer testing, labeling, and registration requirements help farmers access contaminant-free fertilizers appropriate for specific weather shocks, soil, and crops.
Financing, capacity development, and transfer of technology and know-how will be key to supporting the policies outlined above. With mounting debt and limits to raising taxes, countries in sub-Saharan Africa will need grants and concessional finance. Development partners can also support resilience-building research and can propagate climate and financial literacy.
The IMF is supporting countries in these efforts including through climate-oriented public financial management advice and lending facilities such as our Resilience and Sustainability Trust. Soon to be operational, this new lending facility will provide longer-term affordable financing to address climate change and other challenges.
