Food prices could spark protectionism in Africa: IMF

By Daniel Flynn

DAKAR (Reuters) - High food prices are prompting African nations to impose protectionist measures which could reduce the already low levels of trade on the continent and harm its economic growth, an IMF official said on Thursday.

Alex Segura, the International Monetary Fund's resident representative for Senegal and Gambia, said the Washington-based lender was concerned by the destabilising effects of the spike in living costs in Africa this year, after violent protests rocked countries from Mauritania to Cameroon.

Guinea, where more than 130 people were killed in protests last year sparked by high food prices, on Tuesday banned the export of all types of foodstuffs, oil and timber in an effort to stabilize the cost of staple goods. The cost of rice in the capital Conakry has doubled since January.

Segura said the IMF was eager to help governments which cut back unnecessary administrative spending and focused on essential health and education budgets, and urged African nations not to fall back on banning exports of basic goods.

Asked if there was a risk of a wave of protectionism in Africa, Segura replied: "Yes, there are some countries which export products like rice and wheat which have introduced export restrictions in the form of exorbitant taxes on exports."

"This has a double impact: it reduces trade flows, which are an important source of economic growth, and it distorts the normal functioning of the economy."

Despite 14 overlapping trade blocs in Africa, the continent has the lowest internal trade rate of any region in the world: less than a 10th of their total. Companies complain that high customs and poor roads make trade on the continent difficult.

Countries from Senegal to Ivory Coast have slashed import taxes on staples such as rice and cereals, after prices soared due to poor harvests, record fuel prices, and tight international food supplies.