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What if oil hit $200 a barrel?

Kandeh Yumkella warns of the severe consequences of a combined oil and food crisis in Africa. The interview is part of the Risk Response Network’s “What if?” series.

Boris Sullivan

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Kandeh Yumkella warns of the severe consequences of a combined oil and food crisis in Africa. The interview is part of the Risk Response Network’s “What if?” series.

What is your main field of expertise?

I have a PhD in agricultural economics, but I have been in an industry agency for 16 years and I am the Director-General of the agency. My area of focus is management and public policy.

What area of research are you focusing on at the moment?

There are three areas. First, I am curious about the interface between energy security, water security and food security in the whole context of sustainable development. Second, I’m interested in agribusiness as a way of reducing poverty in Africa and creating wealth. The third area, in a category of its own, is looking at the global energy architecture.

For me, these three interests are deeply linked. As an example, agribusiness development in Africa requires some degree of energy security. Agribusiness can contribute to food security. And to get agriculture moving in Africa, you also need good water management.

Given your work, what would you say is the most underappreciated risk?

I see three risks. One is an oil crisis with prices reaching US$ 200 per barrel. Simultaneously you could have countries in sub-Saharan Africa experiencing problems with drought or other climate-induced agricultural risks – that’s the second risk. As the International Monetary Fund and other experts have noted, the days of cheap oil and cheap food are gone. Third, and in addition to the other issues, you have high population growth rates in Africa and massive urbanization. The demographic projection for Africa is 1.4 billion by 2025 or 2030, and it already has a huge urbanization rate. But we in the development community are not appropriately considering the confluence of these factors and these demographic pressures; a more holistic view would lead us to more dramatically accelerate the pace of our intervention to these interlinked challenges.

How would you frame this risk as a hypothetical scenario: “what if” this were actually to happen?

Take a poor country, such as Kenya or Ethiopia, and then imagine they have a famine or drought, and the demographic trend they have now has continued for another five years… What if this were to happen? It is not unlikely. How would these countries cope?

In 2008, with a financial crisis, food crisis and oil crisis all occurring at the same time, according to World Bank figures we immediately saw almost 40 million people pushed under the poverty line. There was a huge balance of payments problem and riots kicked off. So, I think that this scenario could realistically be repeated in the future.

via What if oil hit $200 a barrel? | Forum:Blog | The World Economic Forum.

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