global economy and social stability but policymakers must not
over-regulate commodity markets, a senior World Bank official said on
Thursday.
Ngozi Okonjo-Iweala, managing director at the Washington-based bank,
said rising food prices are squeezing the poor and contributing to
social instability. "Higher food prices and volatility are one of the
biggest threats to the global economic recovery and social stability.
You saw what happened in Algeria and other countries recently — there’s
no doubt higher food prices and a stress in living standards are taking
a toll," Okonjo-Iweala, former Nigerian finance minister, said.
"This will hit the poor the hardest. We’re not going to see cheap food
prices again because this is a long term phenomenon… We need more
investment in Africa because more than 50 percent of arable land in the
world today is in Africa."
Algeria was forced to slash taxes and import duties on some staple foods
after a sharp rise in food inflation triggered a wave of riots. But
analysts have said much of Africa may be in a better position than
previously to deal with a global surge in food price pressures.
French President Nicolas Sarkozy, who will address delegates at the
World Economic Forum later on Thursday, has called for new rules to curb
commodity price volatility, warning that the world risks food riots and
weaker growth if leaders fail to act.
Okongo-Iweala said a certain amount of regulation oversight is needed, especially in the key commodity markets.
"But we have to be careful about overregulation. We need some regulation
but not a heavy hand. We need to develop commodity markets in key areas
such as in Africa, that will enable farmers to plan for the future,"
she told Reuters.
She added that Africa had around half of the world’s arable land and
more investment is needed. The World Bank has identified a $31 billion
shortfall in the continent’s infrastructure funding requirements.