OPEC Fund Quarterly - 2023 Q4

SPECIAL FEATURE

Here are four key policy recommendations: 1. Invest in sustainable economic development – by promoting education, entrepreneurship and job creation – particularly in the most impoverished areas of central Africa. Setting up social safety nets and conditional cash transfer programs will also protect vulnerable populations in the wake of so-called natural disasters. 2. Ensure governance and policies are inclusive, transparent and accountable at all levels. Channel aid and trade through established institutions to ensure benefits reach the intended populations. This is particularly important when tackling political instability in parts of North Africa and the Sahel. 3. Encourage regional cooperation in climate action plans , particularly in the Sahel and Nile Basin. Cooperation is key to managing shared resources and addressing cross-border environmental challenges. Strengthening partnerships with international bodies for technical and financial support in climate adaptation and mitigation strategies is also crucial. 4.Develop agricultural policies that support climate-resilient and sustainable farming practices, especially in East and Southern Africa, which are facing the most severe climate shocks. Investment in research and development of drought- resistant crops and efficient water management systems will also reap dividends. While Africa is facing massive challenges, recent changes in the global landscape and geopolitics may work in the continent’s favor. It has considerable resources and as Europe seeks to diversify its energy supply, investment plans will be adjusted accordingly. To seize this moment, governments will however need to learn from past mistakes, when investors were frightened and revenues were squandered. Adonis Pouroulis, CEO of the energy group Chariot, which is active across the continent, recently told the Financial Times : “This century is Africa’s century.”

and work towards the Millennium Development Goals and the Sustainable Development Goals. The decline in global extreme poverty from 1990 to 2022 was not, however, universal. Sub-Saharan Africa is now the primary region for extreme poverty. In 1990, only 13 percent of the extremely poor lived there. By 2022, this rose to 62 percent, or 426 million people. Currently, 23 out of the 28 poorest countries globally are in Africa. The disparities between regions in Africa are significant, with Central Africa having the highest extreme poverty rate at 54.8 percent, followed by Southern Africa at 45.1 percent, Western Africa at 36.8 percent and Eastern Africa at 33.8 percent. The causes of extreme poverty in Africa are complex and multifaceted, including economic factors such as high unemployment rates, low productivity and limited access to credit. Weak institutions and governance, wars and conflicts, climate change and environmental degradation, poor infrastructure, lack of access to services and inadequate health and education services are also significant contributors. Extreme poverty in Africa is closely linked with food insecurity and climate change. Countries such as Niger and Chad in the Sahel region face extreme poverty due to a combination of climate change and food scarcity. Malnutrition and a lack of clean water lead to widespread diseases, perpetuating poverty. To address these challenges, comprehensive and integrated policy strategies are necessary. These strategies should address extreme poverty, climate change and food insecurity concurrently to foster sustainable development across the continent. A four-pronged agenda for action Food, climate and poverty insecurities in Africa are interconnected and pose significant challenges to individuals, countries and the international community. To paraphrase Martin Luther King Jr.: “Insecurity anywhere is a threat to security everywhere.” However, there is no one-size-fits-all solution to these challenges, which require a nuanced approach that considers the diverse regional and national differences of Africa.

Gambia RURAL INFRASTRUCTURE DEVELOPMENT PROJECT AND THE OPEC FUND Approved: October 2011 Completed: May 2020 Total project cost: US$10 million OPEC Fund financing: US$10 million

T he project helped alleviate poverty by increasing the productive capacity of economic activities in rural and peripheral areas through the provision of economic and social infrastructure to rural communities. With poverty and food insecurity widespread, nearly half of Gambia’s 2 million population live in poverty, 40 percent of which in rural areas. Gambia requires investment in physical infrastructure, services and productive activities. Despite the emergence of the COVID-19 pandemic, the project was successfully implemented and added basic infrastructure in five impoverished rural regions. This included construction of school buildings and provisions of safe water supply. Because of the success, in June 2023 the government requested a second phase of the program.

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