Business Reporter
THE World Bank has warned the impact of volatile exchange rates coupled with the impact of El Nino induced drought failure is likely to worsen the state of hunger in the country.
In its latest update on the country’s economy, the World Bank said macro-economic shocks has exerted pressure on the state of hunger
“Macroeconomic vulnerabilities and a difficult business environment raise the cost of doing business, which in turn limits structural transformation and investment and increases the informal sector. The investment climate is further hampered by inadequate electricity supply,” the World Bank said.
The global financier said poor households, which spend about 48% of their total income on food, are hit hardest by reduced crop yields and increased prices.
Consequently, many vulnerable households may fall below the poverty line. Additionally, the existing social assistance programs have limited coverage and effectiveness, which hinders their ability to alleviate the impact of such shocks.”
The El Niño-induced drought will have such a huge impact because the agriculture and food sector contributes, on average, 17% to the gross domestic product, according to the World Bank.
Further, the sector contributes 40% of total export earnings and provides employment to nearly 70% of the population through its multiplier effect.
“Large inter-annual and seasonal climatic variability severely impacts the primarily rainfed production base. This is exacerbated by low levels of farming technology, declining soil fertility and limited financing. The total agricultural output is set to contract by 17% in 2024 from 11,1% in 2023 due to the worst drought in 40 years,” the global lender said.
“Additionally, the sector suffers from low investment, weak support services, and poor physical and institutional infrastructure. The livestock sub-sector, crucial for food, capital assets and as a safety net for smallholder farmers, is hindered by animal health issues, diseases, zoonoses and antimicrobial resistance.”
