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March 12, 2008

World Bank to double agricultural loans to Africa

Responding to spiking food prices, the World Bank has said that it will nearly double the amount in loans made to help boost agricultural production in Africa to $700 million from $420 million.

Record high prices for energy and agricultural commodities are hitting developing nations hard, in this case sub-Saharan Africa, given how their price indexes are weighted heavily toward food.

"Because you don't want everything to be a short-term response, we are really trying to upgrade our efforts in terms of increasing agricultural production," World Bank President Robert Zoellick said.

The $700 million will be spent in fiscal 2009, which begins in June of 2008.

World Bank lending for agriculture has averaged some $500 million a year, but there are plans to push it up to as much as $850 million in coming years, a bank official said. He did say the focus for agriculture production should address a whole "value" chain that includes everything from property rights, seeds, fertilizers, irrigation and more.

Record high commodity prices are not all bad, because some nations are net exporters of energy, minerals and grains and could offer them a way to boost agricultural infrastructure. Crude oil prices recently topped $106 a barrel, gold is making repeated runs toward $1,000 an ounce, and wheat, corn and soybeans all trade at or close to records highs.

Zoellick said he did not expect food or energy prices to come down any time soon.

However, the price spikes come halfway into the U.N. Millennium Development Goals (MDG) the world body has pledged to meet by 2015. The first of these goals is to cut in half the number of people living in poverty on less than $1 a day and also by half the proportion of people who suffer from hunger.

"The dramatic rise in food prices underscores the pressing need to invest in raising agricultural productivity across Africa," U.N. Secretary General Ban Ki-moon said after chairing a meeting of the MDG Africa Steering Group.

The group was formed after a June 2007 U.N. report saying that despite increased economic growth rates and strengthening institutions, Africa was behind on all of the eight MDGs.

Ban said: "We have made good progress on balance but unfortunately we have not seen any single country in sub-Saharan regions who are on track, including all the major goals of the MDG."

Ban added that the African steering group he initiated has proposed African governments work with the international community toward launching an African "green revolution" to boost economic growth and combat hunger.

China has become one of the biggest investors in Africa as the world's most populous nation hunts the globe for resources to fuel its economic growth. But questions remain over whether China will adapt its various commercial interests to developing the African continent and push it toward more sustainable economic growth.

Alpha Oumar Konare, chairman of the African Union Commission, welcomed China's large infrastructure investments rather than "bargain basement low budget development." He said he did not want China or any other country come to Africa, take its resources and leave without local benefits.

"In other words taking raw materials at low prices or simply to ruin our industries by transforming Africa into a mere market. That is the true question that we need to look at. We say now, we do not agree," Konare told reporters at the United Nations.

Reuters

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