Business Daily (Nairobi)
James Makau
3 June 2008
When world business leaders gathered in Cape Town, South Africa yesterday for the 18th Annual World Economic Forum on Africa, four hot issues that bedevil the continent were seen likely to steal the show.
Analysts say that food and fresh water security, climate change, economic shocks and geopolitical stability will be at the core of the discussions in this year's meet as being key stumbling blocks to an economically empowered Africa.
"Africa is at an inflection point. The prospect of the region sustaining five per cent growth is achievable, but a number of risks loom large, threatening future development and security," say the authors of the AFRICA@RISK 2008 report, released by the World Economic Forum's Global Risk Network.
In preparing the report, more than 20 experts from business, academia, non-governmental organisations and civil society were asked to consider the drivers of the recent period of unprecedented growth in Africa and the opportunities that exist, as well as the threats to Africa's continuing progress.
The report stresses that as with all global risks, these four threats to Africa's future are not isolated risks; their drivers, triggers and potential consequences are highly interconnected.
The economic consequences of the escalation of food prices depend on how long food prices remain high. Analysts say that what is clear is that water scarcity and food insecurity are realities today; amplifying poverty and inhibiting business, and they are likely to worsen in the future.
It has been argued that there is no food security without agriculture and no agriculture without water. Policy-makers may have to return to thinking about food and water resources as strategic assets, and businesses should brace themselves for more expensive and more highly regulated water.
The report indicates that with food and water security at the nexus of a range of interconnected risks, the potential for risk conflation is high. In particular, social and political tensions over access to food and water resources can lead to political instability, putting humanitarian efforts at risk and damaging the business and investment climate.
"Food and water security will be affected by how climate change impacts the region as well as by global and regional economic conditions," said Irene Casanova, co-author of the report and a member of the Forum's Global Risk Programme.
"As food is a major proportion of poor people's consumption basket, higher food prices may threaten political stability in Africa, leading to a regressive economic crisis, and placing Africa's growth at risk.
Likewise, acute water shortages might exacerbate intercommunity and interstate tensions and blight prospects for development," said Gareth Shepherd, co-author of the report and member of the Forum's Global Risk Programme.
Ms Casanova says urgent collective action is required, including raising agricultural productivity, strengthening local adaptation to climate change, improving governance and enhancing economic resilience through diversification.
"Decision-makers cannot assume that tomorrow's growth story will read like today's," says Mr Shepherd.
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