Crowdsourcing the solutions to financing Africa’s agriculture and food security risks

The story repeats itself over and over. After Cyclone Idai hit Mozambique in March 2019, the government and development partners were struggling to find enough funding to finance the response. A month into the disaster response phase, less than a quarter of the funds required for the basic and immediate humanitarian assistance had materialized.  On the other side of Southern Africa, in Angola, 2 million people were food insecure due to a severe drought that hit in April 2019. There again, adequate funding was sorely lacking. For food insecure households and farmers, the story is well known. Financing and assistance for disasters arrives late, if at all.

Although advances have been made in forecasting and early warning systems, the agriculture and food security sector are still largely behind in using the latest technology for managing risks and shocks.  Slow onset disasters like drought, and agriculture risks like pests and diseases are now starting to be better understood and analyzed. National agrometeorological systems, and international institutions such as the World Bank’s Ag Observatory, FEWSNET, and FAO (among others) have been trying to proactively sound the sirens of impending disasters affecting food security and farmers. However, the actions and financing for Governments remain constrained, and waiting for the disaster to hit to raise money continues to be the preferred modus operandi.

To make things worse, climate change is increasing the frequency and severity of such extreme weather events. According to a recent study by FAO around 90 percent of economy-wide production losses in SSA arising from natural disasters are in the agriculture sector.  At the same time, the sector contributes to a quarter of GDP, rising to a half when agribusiness is included. At a conservative estimate, total crop and livestock production losses after major droughts were equivalent to more than $30 billion between 1991 and 2013 in the region. A case in point is Mozambique, where annual agricultural losses from adverse productions shocks amounted to over $23 million  between 1980-2016, according to a recent World Bank study. This represents more than the annual disbursements of World Bank projects in the country. Worryingly, this means that the progress done through development projects in improving the resilience of the agriculture sector can easily be undone by the lack of management of short-term shocks, like the recent cyclone, or the fall army warm infestations from recent years.

But this story is not only about economic losses. Food insecurity is a big concern for Sub Saharan Africa.  Angola just documented 2 million people who have become food insecure due to the recent drought from April 2019. Food insecurity in the region is increasing, with a total number of 124 million food insecure at crisis level. This recent increase has led to the World Bank and other partners to launch the Famine Action Mechanism, and the same risks affecting agriculture impact food security. 

So what can countries and development partners do to be better prepared to attend to these systemic risks affecting agriculture and food security outcomes?  

The first step should be understanding better the risks that undermine agriculture development and food security. The risks affecting farmers and vulnerable households are too many, but the most important ones according to recent World Bank studies in terms of adverse impacts are weather-related shocks, animal and plant pests and diseases, and food price volatility. If we can get a better handle on understanding those risks, their probability and their expected impact on the public budget and on farmers and households, we would then be in a better position to manage them. But how can we do that? There have been numerous initiatives trying to model risks. Some have been successful - leading to agriculture insurance and early warning systems, but many have failed. So why not take advantage of new technologies like remote sensing, satellite imagery, social media, machine learning approaches, and crowdsource ideas for new tools that Governments in Africa can use to better understand their risks?  A new global challenge fund focused on agriculture risks attempts to do just this. (Read details of the fund launched here).

The second step is to improve public policies surrounding agriculture and food security emergency response. Leaving all activities to after disaster has struck is bad policy.  Countries already know what are their main risks, and although they may have data constraints in trying to quantify them accurately, there are existing new financial instruments that the World Bank and other partners can provide that can make the public finance strategy more effective and efficient, in particular right in the aftermath of the event, when fast and sufficient resources are mostly needed to avoid decapitalization of assets and even famine. This is why the World Bank is partnering with the Global Facility for Disaster Reduction and Recovery (GFDRR), the UK Department for International Development (DFID), Platform for Agriculture Risk Management (PARM), and the Centre for Disaster Protection to support sub-Saharan Africa in improving its risk financing policy framework at the national and regional level.

In the future, Angola and Mozambique would ideally be equipped with clear public risk financing strategies that support an integrated management of agriculture and food security risks, allowing them to spend most of the planned emergency response just days after a disaster occurs. World-wide there are many positive experiences with such an integrated financial risk management strategy, and with the advent of digital technologies, sub-Saharan Africa can leap frog these benchmark countries to put in place state-of-the-art policies and programs to ensure agriculture development and food security for its farmers and population.