Jendayi Frazer, Juergen Voegele, and Gary Weir flesh out the drivers of scarcity and security challenges related to natural resources in Africa, focusing on natural resource management. This meeting is part of the Global Resources, the U.S. Economy, and National Security symposium, sponsored by the Council on Foreign Relations and Conservation International.
This event is made possible by the generous support of longtime CFR member Rita E. Hauser.
HARRY BROADMAN: Good morning, everyone. Welcome to the third session of this symposium. And before lunch, which I know is a heavy burden to bear before you and before all of us up on stage, we're going to talk today about the relationship between scarcity, security and conflict using Africa as a case study. I know that obviously, other regions have been discussed, and Africa also came up in the earlier part of discussion, so we'll really focus on Africa, but when necessary, as you see through the dialogue, we'll pick up where is that more generic problem that we're focusing on.
The folks joining me -- I'm Harry Broadman. I'm with PWC leading the emerging markets practice and the chief economist of the firm. To my immediate right is Gary Weir. All the bios are on the table. Juergen Voegele is to his right, and Jendayi Frazer is last but not least to the right. All of us have a variety of expertise in Africa and other emerging markets. And what makes this panel for me quite interesting is the interdisciplinary nature of the folks that we have up here on the table, both by training and by experience.
And what I thought we would do is carry on a conversation for 30 minutes or so and then open it up to the floor so we get a fair amount of interaction with the audience. And the way I -- we have agreed, I should say, to carry out this conversation is through different sets of lenses: first, you know, discuss sort of what's the facts on the ground in terms of the degree of scarcity and the potential relationship or relationships with security; how do we measure, how do you quantify those relationships, how robust are those linkages; and then thirdly, who are the operative actors in both recognizing these problems and dealing with the problems; and then finally, fourthly, which is what we see as the dessert, is what's the solutions. And we want to try to spend as much time as possible on the solution side of the discussion as on stating the problems.
So maybe Juergen, we can just start with you, And since we're former colleagues at the World Bank for me many years ago, you probably have a great command of the facts, so maybe just set the table for us about the issues in this theme.
JUERGEN VOEGELE: Thank you, Harry. Also thank you to CI and the council for having the World Bank here in the room. I was here all morning, and I was -- truly fascinating conversation. So I will try to build a little bit on what has been discussed earlier and maybe add a few facts.
One of the most stunning figures that you heard is how many people are going to be water scarce. And Africa is -- that's particularly relevant. In the next -- we estimate by 2025, 2030, it'll be 2.5 billion people on this planet. Two-thirds of all countries in this world will face water scarcity. That in and in itself is a huge, huge challenge.
Food security is the second one. I don't know how many of you know what our current global food reserves are.
Assume tomorrow agriculture will stop. How many weeks of food supply do we have on the planet?
It's about two months. About eight weeks. It's the first time in a very long time in our history that we are that low, which is one of many reasons why food prices are so high at the moment because people are very, very concerned.
We have in the last four years globally consumed more food every year than we produced. Despite the fact that prices have been high since 2008, that there is a clear market signal and that the markets usually react, they haven't reacted in the way they normally do. Why is that? Because we have this massive volatility. There is uncertainty in the markets. Farmers do not know what -- should they, should they not, when, what, how much, at what price, et cetera. This is a volatility situation, and that has to do with security and -- insecurity globally that is not going to go away; we're going to have this situation for the next five to 10 years going forward for a number of reasons.
Several have been mentioned: We have high oil prices. We have great consumption increases. These are also the facts that lead to the situation that we have. A lot more meat is eaten in China, a lot more consumption. Globally it's going up almost exponentially.
Supply is not following, as I've said, for a variety of reasons. Weather is one. Call it climate change or not -- we don't really know -- but what we do know is that we had a huge drought in the U.S. last year, we had a huge flood in Australia, we have droughts and floods, major events going forward every year now; what used to be one in a hundred is now one in one or one in 10 years.
This is not normal. It's changing. And our analysis shows two things when it comes to agriculture production and climate. Two to 3 percent of what we normally harvest on this planet every year is lost because we are already in a warming world. The science tells us that we are still .8 percent higher than we were historically. And then we have these major events, which take another 3 to 4 percent of global harvest away from us.
So here are some of the facts. This affects Africa very strongly, combination of water and food security. In Asia, 40 percent of the agricultural land is irrigated, which is a great part of the stability and security of food supply in Asia. You know what the percentage is in Africa that's irrigated? It's 4 percent. And in order to get it to a more stable, more secure number, (they will ?) require a huge amount of investment going forward.
One third factor which is very concerning to all of us, we are not managing our global landscapes very well. We have mentioned about forests and deforestation. We mentioned about dry land. We mentioned about degraded lands a little bit. Twenty-five percent, one quarter of the entire surface -- land surface is essentially degraded on this planet. That's a luxury we could afford in the past. We cannot afford it in the future because we're reaching our boundaries on that.
So these are sort of three of the big issues that define the trade-off between, you know, our security and our food supply.
BROADMAN: Gary, what's your -- what's your perspective? I really want to bring out -- sort of take -- sort of double-click on this and talk about what are the determinants beyond the climactic (sic) issues, perhaps in the political realm -- Jendayi also, as well, the economics, you know, the technological -- what's driving sort of, in a first-order sense, the kinds of things that Juergen has mentioned.
GARY WEIR: Well, my expertise in the area -- by the way, I'm an historian by training, so -- I'm probably the only historian in the room. And I have to bore you for one second by saying -- and this will please my employers no end -- I'm not a representative of the U.S. government. (Laughter.) I'm not a spokesman for DOD, and I'm not a spokesman for my agency, which is the National Geospatial Intelligence Agency. Now that we have that aside, I can move on. (Laughter.)
I'd like to take some of Juergen's comments and bring them down to grass roots. A number of years ago, when I was working for the U.S. Naval Historical Center at the time, we were asked to do a white paper on the historical perspective on the application of naval force in the region as a possible partial solution to the piracy issue that was emerging. And one of the most interesting aspects, once again, focusing on what you just mentioned -- one of the most interesting aspects I found in my early research was people who were experiencing pirate seizures and were debriefed afterwards were talking about the people were seized their vessels.
And these people were arguing that they weren't pirates; they weren't criminals. They were their coast guard. Right, right, hardened criminals will tell you that, of course, won't they, because it makes it sound good. However, you continue the research, you look more closely and you go a little bit more deeply, and you'll find that a good many of these people who were active in pirate crews were former fishermen. When their government collapsed in the mid-'90s and the UNOSOM forces had to leave in '95, there was nobody to control their coasts, nobody to protect their economic exclusion zone, 12-mile limit, whatever it was they were -- whatever it was they were going to establish. And factory ships began to come in, and they were skimming off the best in one of the most rich fisheries in the entire -- fisheries in the entire world. These people were arguing that they were protecting what was their own.
Now, granted, among pirates -- a lot of them are hardened criminals -- that's not an issue. I think there were a great many people there who were experiencing the kinds of shortages that you -- to which you referred. Their livelihood had gone away. They were using their own instruments, their own little dhows, their boats -- their speedboats to seize people's property -- we would call it property, of course -- but this endeavor on their part was an effort to seize back what had been taken from them. And they saw this fishery as being essentially raped by people who were coming in from the outside.
Now, this does not justify piracy, but it does put a perspective on how one -- given the task I was given, how one would apply naval force, if that was necessary, and what kind of solution, because a solution's got to be on land; it's not on the ocean, right? The land is the problem, the political instability and difficulties they've had there. That's the real problem.
But this is indicative of the fact that they were deprived of their livelihood. Their fisheries were no longer serving them, so they chose the only other option they could possibly have. So that's the way I took my research, and I took a good long look. And you want me to share with my colleagues here, of course, so I'll close my mouth in a minute. But the important thing here is that to my mind, looking at it from a naval perspective, what I discovered was that the fisheries were key. To bring those fisheries back online for those people solved a variety of problems.
And I would suggest bringing them back online in a certain way would be even better, within the context of regional fisheries organizations like RECOFI, for example, where you have larger players helping a struggling Somali government, which we just recently reinvigorated and rerecognized, I believe in early 2013, helping them achieve wider international recognition, best practices from their fellow colleagues in these fisheries organizations, while naval force could be applied sometimes ever so slightly in a light fashion, because of course, the commercial shipping companies have learned best practices and have finally allowed some security companies to come in and supply them with security onboard the ship. And, of course, the International Maritime Bureau has contributed a whole series of statistics that we can follow and study and learn from and a place to report and become -- to notify when these -- when these events take place.
But the point is I think it's got to be done in a larger regional context with international assistance. And naval force can be applied in a moderate way to enable. But once again, you know, the shortage of food in the area was key as far as I was concerned. It drove everything for these people, because a great many of the people who were acting as pirates, especially 2005, 2005, 2006, at the real height of it -- these are people who used to earn their living with fishing nets, and now they were having to tote around AK-47s and RPGs, right? And there were -- there were alternatives, and we need to bring those alternatives back to them.
BROADMAN: Jendayi, there's clearly a political element to this as well as a political-economic element to this. And I wonder if you could share some insights both from your former role in the State Department and the work that you're doing now as to sort of again delayer this a little bit more as to the causes and the determinants, because only once we do that can we sort of have a robust discussion even broader than before about the policy solutions.
FRAZER: Well, it's interesting -- when I was asked to speak on this panel and I got the topics, resource scarcity and conflict, I thought -- when I think of conflict, I think of resource abundance in Africa, and that is conflict, in fact, over the natural wealth that the continent has, whether we're talking about, you know, Eastern Congo -- it's resource-rich -- or we're talking about Nigeria -- again, resource-rich. And a lot of the conflict is over -- even when you think about arable land, Africa has so much arable land; certainly water you could talk about, especially when you talk about the Nile River basin.
It's been a resource scarcity framing of the conflict. But really I think at the heart of it is about resource management and effective resource management or ineffective resource management as a source of conflict more so than a scarcity. Perhaps when you talk about environmental degradation and people migrating and moving, you can start saying that, you know, they're -- you know, the pastureless are hitting, you know, settled people when, you know, there's a -- there's a -- there's a theory around that. There's a narrative, is what I would say, around that. Others would say maybe it's going the other way around, that they're moving because of conflict and that conflict and that movement is creating the environmental degradation. So they -- you know, we talked about causation, and I'm not so sure that we know which way or that we can universally talk about it given a continent as diverse as Africa with, you know, local histories and local dynamics.
But in my own experience, where I came across this issue of resource scarcity contributing to conflict and certainly preventing or making more difficult conflict resolution and conflict prevention was along the Nile River basin. And in that case, Egypt in particular always looked at the question of South Sudan from the perspective of the Nile, you know, and control over the Nile waters being downstream and being very concerned about what position Sudan or a South Sudan, an independent South Sudan, would have over those Nile waters and the use of the Nile waters.
You also -- I also found it was the tensions between Ethiopia and Egypt, with the Ethiopians going so far as to say that the Egyptians were actually trying to destabilize the country so that they could undermine their capacity to control those Nile waters. And we do now know that, you know, Ethiopia's doing a major dam project that Egypt and, for that matter, Sudan object to. And so it's contributing to instability within the horn of Africa.
But overall, as I said, I really do think this is more a question about the management of resources. And the effort on the positive side of the Nile River -- Nile basin initiative as an effort to collectively manage those -- you know, the Nile waters is, I think, a positive example.
But you know, I guess, you know, where I'd like to stop -- you know, as we continue the conversation, we can get deeper -- is that many of these conflicts in Africa, as I see it -- it is not only about management of resources, which they're fundamentally -- and governance becomes a point of issue there, about state capacity and institutional development -- but it's also about colonial history and trying to exist within states and with treaties that were established during the colonial period, for instance, the 1929 agreement between Egypt and the British, basically saying that Egypt has control, essentially 100 percent authority over the use of the Nile River, and then when Sudan was becoming independent in '56, saying Egypt and Sudan (does ?), which of course creates all types of conflict and crises with the upstream countries, Ethiopia, Uganda, Kenya and the rest, but those three in particular.
And so this is -- this carries over as well, I believe, in terms of agricultural development, the movement of people who don't necessarily organize their lives according to national states. And this is especially in that Sahel area, where you have more nomadic people moving in and out. You could even talk about Abyei, where you have nomadic people moving in and out of Abyei and seeking to use those resources and the people who are settled saying, no, they control them.
And so I really do think it's a fundamental issue about the organization of the state, the capacity, governance and natural resource management, more so than I think it is scarcity. And I say that from the point of view that I believe in human ingenuity. I think human beings have the capacity to -- there's no -- there's no -- to me, there's no absolute scarcity because that's where invention becomes important, and relationships, and how you actually develop initiatives across boundaries to actually promote more cooperative resource management rather than competitive.
BROADMAN: You know, it's the -- I'm so glad I heard the word "competitive" because I was about to inject into this conversation sort of the economics of the actors, whether it's the Africans themselves, whether it's foreign investors, whether it's the colonial foreign investors or the Chinese and the Indians and the -- the new foreign investors, and overlaid with the colonial heritage of artificial borders, ethnic rivalries and the like.
And you're going to -- you know, I'm sure the bank has done work on sort of the economic side of this equation as to what are the economic forces that couple with the political, that couple with the security, that couple with the climactic (sic), that may be exacerbating the situation, and does -- you know, what can we tease out from sort of the competitive nature of markets, if you will, and incentives that people are responding to, whether consumers or producers, the trend towards urbanization, as opposed to -- and you know, I'm sure the bank, at least when I was there, would do a lot of -- (inaudible) -- on this. I'm just curious what's the -- what's your thinking on this?
VOEGELE: And obviously, this has many dimensions, right? What you described about resource management -- just like you, I believe in human ingenuity, right? There's no question that was as humans are capable, in theory, of feeding 9 billion people going forward and managing our resources in a sustainable fashion if we choose to do so. I have no doubt about that. That is possible, in theory.
This has never been our challenge, I believe. Our challenge has always been can we do it in practice. Can we overcome all the things that make us not do it? So we had this conversation around, you know, 30 years, 40 years of U.N.-led global conversations, why is not leading to action? Everybody agrees; we know what the problem is, and we know what needs to be -- but we can't do it. So I think that's where the economic incentive and other issues have to come in.
The solutions cannot be government alone, whether there's colonial history or all over. The solution has to be a combination of all the actors. And clearly, the private sector is a key to any solution going forward of anything we talk about, because it's now about resource scarcity. And nobody knows better than private companies how to deal with these things if they have the right incentives and if they are on the right tracks.
I think creating these partnerships that bring together civil society, local communities, governments and private actors can lead to the kind of change that you want.
The existing partnerships, as we have them -- you separate these different tribes -- don't really lead to solutions.
In the Africa-specific context, I think 30 years ago some of these resource conflicts were really not such a big issue, but the population has doubled since in many parts of sub-Saharan Africa.
And there was a sort of evolution of traditionally herding communities moving into farming. Now that the population has grown dramatically, we see a reverse genesis, basically. We estimate that up to 30 (million), 40 million people will actually move away from farming back into herding, back into grazing, back into migration. And in the current scarcity environment, this is going to be an absolute nightmare from a security perspective. I just want to bring this particular point up. This is actually very, very scary.
Africa -- 75 percent of the African landscape -- yes, there is a lot of abundant land, but 75 percent is dryland, with basically very little even opportunity to irrigate in a sustainable fashion. So you cannot really compare this to agricultural land in Asia or in other parts of the world. So taking all these dynamics, I think there is some major, major potential for conflict.
Of the economic incentives there, I think this is a very -- this is a much broader conversation. This requires governance. It requires institutions. Private sector has to have the confidence to invest. There has to be a win-win for everybody. You don't want to have something on top of an existing structure. Particularly in socially -- in very, very complex environments, such as the African countries, you cannot just parachute something in and hope it works, because there are -- there's a history, there are existing cultures and structures, and building these partnerships as a win-win is a real, real big challenge. But that's the one that we need to take on.
BROADMAN: So let's now, you know, end the conversation by really focusing on these types of solutions beyond public-private partnerships and get down to the -- to the -- to the nitty-gritty, as it were.
Gary, from your perspective, if there were two things that you could wish for in terms of a policy response to try to deal with this nexus of issues, I presume, you know, mostly on the -- on the -- on the scarcity-security nexus, from your own particular prism, what two things strike you as sort of the big headline solutions that people need to devote time and resources and political capital to?
WEIR: We need to try to return to people in the localities the things they've been deprived. In the case of the studies that I've done working on Somalian piracy in the Horn of Africa, those fisheries need to be returned to the people who need them for their subsistence living. Right. That's the first step to that solution.
The second step is, as I mentioned earlier, probably jumping the gun a bit -- sorry about that -- as I mentioned earlier, trying to integrate their --
BROADMAN: Pardon the pun also -- "jumping the gun."
WEIR: -- that's right that's right -- the -- trying to construct a solution that not only invigorates a weak government, like the Somalis have right now, but also does so in a regional fashion. I don't think a solution imposed from the outside by the U.S., the U.K., the EU or anybody else is really going to stay intact for very long. That's why I mentioned the use of a framework that might come from one of the local -- the regional fisheries organizations, or I mentioned RECOFI earlier. And there are a number of others.
The point is, you'll have major players there interested in those issues, who have already established best practices, who can help a recovering government like Somalia place their own circumstances in that context.
And in terms of outside application of assistance, you know, as Secretary Clinton says, it takes a village, right? In this case, it takes the international community. You know, armed force can be used in a -- but applied very, very gently and very, very cautiously in certain instances, to promote a local, a regional solution that might come out of the fisheries issue as a first step.
I think that the -- one of the most important things is to try to minimize the amount of external influence, I think, minimize the footprint of navies and such, because we don't really need to be there unless we absolutely have to.
I think one of the best things they've implemented is the internationally recommended, you know, traffic corridor, which is a variation on convoying, of course. But the point is, if you need to be convoyed, we are here for you, this type of thing, and you make that choice.
One of the most odd things that I discovered in some of my research -- I went to a symposium held by the Office of Naval Intelligence back in the fall of '08, when this was really still very, very vital, very, very growing a problem. And one of the large transport firms was represented by a major executive. The name of the firm, of course, will not be mentioned here. And he said, you know, we've just dealt with piracy as part of doing business; we factor it into the cost. And of course, 90 percent of the people in the room are wearing uniforms and really wanted the pirates to see the business end of an Arleigh Burke Class destroyer, and it did not really go over that well, OK? But -- so this is reality, but what's happened since?
Well, a lot of these transport companies have brought on independent security organizations. That presents legal issues, as well, but the point is, it's one of the steps they took to try to ameliorate the problem.
These things can be applied in a very, very gentle, needed fashion, but the solution has to be regional. The solution has to be based on what the people need to have restored to them.
BROADMAN: Jendayi, what -- if you were queen and you had the magic want to bring forth some solutions, where would we devote our resources in, you know, sort of the top two issues, in your mind?
FRAZER: Well, you know, let me be clear. I mean, I agree with most of what has been said, particularly that the solutions will come from within the countries themselves and from within the regions themselves, particularly if it's on a sustainable basis. But I think the first thing that we need to recognize is there are going to be winners and losers. Conflict is human, and states are the mediators of that conflict within societies today. We can't get around it. And so it's nice for us -- and we have to have multi-stakeholder approaches, but not all the stakeholders agree. So there are going to be winners and losers.
And so what I would do if I were a queen with a wand, an outsider, I would really start building and working on state capacity and better governance, because states are kings, right, in the international system that we live in today, and trying to encourage greater cooperation between those states.
What I would do as a private-sector person and what I'm doing as a private-sector person is in fact investing in agriculture across Africa, but particularly in organizing markets, because some of the failure of the productivity of small-order farmers is they don't have access to pricing. There are middlemen who are taking advantage. And so if you can get greater market mechanisms, if you can put in place warehousing so that they are not forced to sell to the first buyer because of spoilage, so that you can, you know, build that capacity for people to actually share in the wealth of the nation through better markets, organized markets, through better governance, then you're building a future where conflict is less likely but not eliminated, because there's going to be conflict.
I think that the dam in Ethiopia is a great example. You have really very serious competing interests, right? The Ethiopian government wants electricity. Others want, you know, the local communities protected for fisheries. That's a major -- both of them are absolutely legitimate desires and expectations.
I have a view on it, and it's a view about the role of outside actors, in which, for instance, the United States and government, which, you know, responds very much in Africa to NGO pressures and, you know, pushed out the Africa Development Bank, right, so the Africa Development Bank could not actually be part of that project. And it's all gone to China. The project's being done by China.
And I'm not saying China's all bad, but China doesn't have the same environmental standards that the Africa Development Bank has, that would have been put in place if the Africa Development Bank was an investor in that dam. And the government of Ethiopia was not going to be dissuaded on the basis of a local community, you know, of a few hundred people who would be negatively affected versus being able to light up, you know, 70 million and plus because of the power generation going beyond its borders.
But those are all legitimate interests, competing interests. And often the state is going to be the dominant player. And I think we need to get smarter about the type of regulations, the type -- you know, I think the Office of Private Investment Cooperation can only do a certain number of coal plants, right? They can only invest in a certain number of coal plants globally in a year or something. I think it's two. But I would imagine that if they could get American investors in there with certain standards, that it actually could be constructive rather than negative, rather than pushing us out.
I'm not talking about private sector -- pushing the private sector out and leaving it entirely to others who don't have the same type of environmental, you know, standards and -- I don't want to say "values," because it's really -- that's -- it goes too far to say "values," but practices is what I would say. And so I think it's very complex, complicated. I do definitely think that there are market mechanisms that can be put in place, but I don't think that they will entirely eliminate the inherent conflict in competing interests.
BROADMAN: OK. Let's open the floor up. And we have microphones. We have some questions up here? Or we don't have microphones? No? Yeah? Right here. There you are. And would you mind just identifying yourself so --
QUESTIONER: My name is Roger Parkinson (sp). Thank you. We talk about solutions. And this may sound too -- may be too simple, but it seems to me that two big issues are energy and water, as I hear it. There's others. But wouldn't the solution to -- be fusion for energy and desalinization for water? And right now we don't have it, but couldn't we put 10 million -- huge price on whoever can invent desalinization at a cheap price and at cheap energy, and similarly something for fusion? Because it seems to me if we got those two, we're way down the road to solutions. And so that's my question. And why not put those two front and center as possible solutions?
BROADMAN: Let's take two or three questions and then let the -- let the panel -- right next -- yeah.
QUESTIONER: Dick McCormack, CSIS. Just two quick questions. One, I wonder if our friend from the World Bank could address the broad issue of waste of food from the -- from the field to the table and whether there's potential for addressing the shortage issues by a more intensive addressing of that issue. And the second, Jendayi, if you could say a word or two about the clash that you saw in Africa between commercial farming practices and traditional farming, and with Zimbabwe as an example of what can happen if that's not well-managed, and where you see that heading in the future.
BROADMAN: And then this lady in that table right there, the glasses. And then -- and we'll do the fourth at that table as well, so the other gentleman.
QUESTIONER: Hi, I'm Abigail Watrous. I work for Congresswoman Betty McCollum. There's been a lot of talk in the food community lately about food aid versus local and regional purchase, in Africa particularly. Could you talk about how U.S. food aid impacts African markets?
BROADMAN: And do you want -- the gentleman -- (inaudible) -- I'm sorry. Go ahead.
QUESTIONER: Thank you. Vivian Lowery Derryck, the Bridges Institute. Two points, one on state capacity that's -- it's so important, but it also needs to have some bench strength and some depth in Africa. But my question is if we use these partnerships, public-private partnerships, to build this state capacity, what incentives does the private sector have for that? Because it's such a long-term investment. We talked before about short-term -- need for short-term gains, particularly in the market, and that USAID doesn't have very long time frame.
And the second point is, Harry, you talked about operative actors, and I'm going to suggest two. I think for us to really think about Africa, the environment and the nexus between security and the environment and development, that we've got to think about having a champion in somebody like Wangari Maathai or someone else that can be a champion for the continent, because most African countries' citizens respond to that, and secondly, to think about using women as a -- as a major interlocutor here, because it's women who are in the markets -- market, women who know what's happening, who can carry messages, and it's also women farmers and now certainly women in agribusiness in Africa.
BROADMAN: Thank you very much. We have a question about essentially a big bet. Anybody want to -- want to take a shot at that? And then the rest of the questions will go to -- but our first -- you know, these kinds of questions obviously are of great importance and obviously require a lot of resources, so just --
VOEGELE: Yeah, I think it's a great idea, right? Desalinization is an existing technology that is being applied, used extensively in countries that can afford it. Should we push it to the level where more countries can afford it? Absolutely, because it is a clean and future technology, so we should definitely do whatever we can. Whether a pool mechanism or something similar a price is a good thing -- probably. I mean, absolutely nothing speaks against it.
Water is a very interesting, if I -- if I may, in that context it's a very interesting question. It's not only about having it yourself or taking it out of the ocean; you also trade water. I was listening to the conversation this morning. You know, China is really water short, and somebody mentioned this south-north water transfer from the Yangtze River to the Northern China Plain, which is a hugely expensive project that will transfer about 30 billion cubic meters of water per year from the north to -- from the south to the north.
Actually, China imports currently 60 million tons of soy beans, about half of which comes out of this country, out of the United States. Importing 60 million tons of soy beans is equivalent to importing 60 billion cubic meters of water because that's the amount of water you would need to grow it yourself in China. And the reason they're importing it is not that they couldn't grow it but that the cost of growing it is so high because of the water shortage that it's cheaper to import it.
So the global water trade is a hugely important conversation to have. And China's strategic decisions have more to do with water scarcity than with food scarcity. I think the world actually needs to be very grateful to China for feeding itself, by and large -- with the exception of the 60 million tons of soy beans, which are fed to the animals, which feed the meat consumption increase in China -- but fundamentally, China feeds 21 percent of the world's population on 9 percent of the world's agricultural land. And it comes at a very, very high cost to the country, as you all know -- in terms of pollution; it cannot develop some industries in the north; et cetera, et cetera.
In terms of the wastage, if I may come to that point, absolutely critical part of the equation. We waste far too much food, starting from the farm all the way to our dinner plate. Everybody knows in this room how much goes into the trash bin at home, and we all know what happens in restaurants, what happens in supermarkets everywhere. It is an issue that we need to tackle because we cannot continue to afford to waste that much food. And we at the World Bank certainly are going to continue to focus on this.
U.S. food aid, I don't really want to comment on it in detail. I think the U.S. food aid program is undergoing a transition where particularly USAID is really focusing on development much more than handing out food; that was more common the past. I think there is a clear awareness that there are issues with that, that you interfere in domestic markets, and it's always a trade-off, right? I think obviously, the vision is to move beyond that over time and have the food produced locally rather than have it either for free or have to purchase it in.
I think one thing is important to know that, you know, only 15 percent, 15 percent of the total food produced globally is actually traded internationally. Eighty-five percent of the food we consume globally is produced in the country that we consume it. Going forward, as we will move from 7 billion to 9 1/2 billion people on this planet -- we'll add 2 1/2 or 3 billion people on this planet -- that trade will double because of all of these 3 billion additional people will be born in food-insecure environments, more or less. They won't be born in Europe. They won't be born in Japan. They'll be born in countries that are food import dependent, which are 50 or 60.
So any destabilization globally has massive immediate security implications. We heard about this a little bit this morning. When the food prices doubled in 2008, in the spring of 2008, we had over 50 riots -- in 50 different countries we have riots, partly because people didn't know how to anticipate it, and they didn't know what to do with it. Last time the food price spiked last year, we had basically none -- one or two.
So the world is learning. This is a little bit on the positive side. The world's actually learning not to impose export bans when there was a shortage. The world's talking to each other on these things. Governments are being more prepared for it. There are more mechanisms in place to deal with it. I just wanted to make this more general point.
But the fact is still that we can at any point in time, if we have two or three global events -- and they can be of different nature, another drought like we had last year -- if that comes together, we will see very high food prices, and we will see a lot of people locally, in Africa and other places, not being to afford it, and that will have immediate security implications.
And our challenge -- and this is part of the solutions -- is to help governments build the capacity to anticipate it, have risk management frameworks in place, have mechanisms and tools in place that can deal with this.
BROADMAN: Can you deal with the question on public-private partnerships, which is where I spend a lot of my time working on the corporate side as well as with governments and the IFIs and the notion that we need not your grandfather's PPPs, but we need something a little bit more energized with the right kinds of incentives?
VOEGELE: Right. The previous panelist was talking about that there was a buzz out there, and things are changing. From where I sit at the World Bank, we see this everywhere. The interaction between private sector -- and this is (be ?) corporate but also local -- and the public sector is really changing.
You know, five, six years ago, when big private companies talked about environment sustainability, they talked about corporate social responsibility, basically, right, a little department introducing good stuff. This is fundamentally changing. These companies really -- most of them really want to do sustainable sourcing in the long term. They want to be engaged at the -- at the level where they source, which is in many of these developing countries, and that brings you to the interaction.
The solution is not for a company, in my view, to buy a hundred thousand hectares somewhere, put a fence around it and apply best technology and basically fight everybody around them off. That's absolutely not the solution. The solution is a model that's supporting the local economy, building on small-holder farming capacity outreach programs, bring them into the market and value chain and have a deal. Bring in the technology to finance from outside, but use the local resources where you are -- where you operate. And there are some examples that really show that this is working now.
The narrative of these interactions is changing completely. This is not just a greenfield business proposition. It has to be an interaction and a connection on the ground. That's certainly where it's going from where I see it.
BROADMAN: Jendayi, there was -- there was a question directed at you in particular, but I also -- maybe you might -- and Gary -- take a shot at -- and I also have my own view about this question about champions, which is always a perennial topic that we face on the continent. It's not unique to Africa, of course. But I'm wondering if you could address the question that was specific to you and then, you know, who's going to be the champion?
FRAZER: Sure. I think that the issue -- the question that was addressed to me was commercial farming versus traditional farming in the case of Zimbabwe and how it led to conflict, and I think it's more about commercial farming meaning large-scale farming and traditional meaning small-holder farming.
And the conflict area comes in from the point of view of land tenure, land rights and property rights, right? And so, you know, in the case of, you know, Zimbabwe, obviously the large commercial farms were distributed during the colonial period to British, right, and then to South Africans, in fact, later. And at independence, I think everybody knows the story. You know, the government is taking some of that back, trying to redistribute as such. Now of course, the redistribution tends to go to the elite and not necessarily to the -- you know, the wider population on the land. But this is also a problem in South Africa, you know, the question about land reform. It's a problem that came up in the elections in Kenya, about land reform.
But I think that really we're trying to make small-holder farming more profitable and more commercially viable. And so for me it's not really a question about the size; it's a question about the -- it's a question about the commercial viability. And the way you see this becoming more commercially viable in many parts of Africa is through cooperatives.
There's a Kenya tea development authority, which is really an aggregation of small-holder tea farmers, right, who are -- who've been brought together in a corporation, a commercially viable corporation that controls 60 percent of Kenya's tea market now. And so I think that it's how do you set up the type of businesses, you know, that can allow small-holder farmers to be more successful.
Now, there's also another issue, which is the quote, unquote, land grab, right, which is again about big farm, big plantations versus small holders. But it's not really about small holders; it's about local communities and who owns that land and who has the right to give these, you know, commercial deals to outside companies and et cetera. And so it's again a land rights, land tenure, land property or property rights issue.
What you see on the -- on the smallholders -- and it gets back to the question you also asked about the waste -- wastage of food -- I mean, there's a huge push right now across Africa to develop commodity exchanges -- food, agricultural commodity exchanges. It's partly based on the seeming success -- and I only say "seeming" because we still need time to study -- of the Ethiopian commodity exchange, which was very much backed by the USAIDs and the World Banks and the UNDPs. And so it was -- and also the state of Ethiopia, which mandated trade, particularly in coffee, on that commodity exchange. And its location in Ethiopia was very strategic, because that's -- or in Addis Ababa, because that's where all the African heads of state come every year for the African Union summit, and they all took a trip through the Ethiopian commodity exchange and said, I want one of them. (Laughter.)
MR. VOEGELE: Exactly.
FRAZER: So -- this looks good -- (chuckles) -- and this is a way to get my smallholder farmers more profitable, more commercially viable.
And that whole ecosystem of development around commodity exchanges -- you do have people investing in warehousing, in a warehouse receipt system, so that they could commercialize or they can monetize their product and borrow on it or at least save it and sell it another day, when prices may be higher.
Obviously there are some people who are concerned about hedging, right, and you know, what impact this will have. But really the development of agricultural commodity exchanges is a capital markets development approaching an organization of the agricultural sector, which can lead to greater agribusiness, more employment, you know, get people out of the cities, as consumers of scarce food product, but as producers now of those food products.
And so I think if it works, it has an impact on the infrastructures across country. If it can work, I think it's -- it could be transformative.
And that comes to the issue of champions and public-private partnerships. And I have to say I'm scared to say anything negative about the World Bank, because anybody who does business in Africa knows that if you go up against the World Bank, you will be squashed. You will be squashed -- (laughs) -- you know, I'm just saying, you know.
And IFC is a competitor, potentially, because they invest in other businesses and they do push those who they are competing against to the side.
And the reason why I say that about the World Bank and public-private partnerships -- because many -- the World Bank is very much a big player on the -- on the market side of Africa. They're doing studies. They're doing studies all over the continent, and there are private-sector people who want to invest but they can't invest because the government is engaged with the World Bank on a long study of the viability of particular project. And so instead of the risks being carried by the private sector, and in that risk perhaps speeding up the process to actually get to, you know, the productive outcome, you're in fact engaged in studies and studies and studies and studies upon studies. And so that's a problem. That's a challenge.
I would also say that there's a distortion of the market, right? And it's not just the World Bank here. It's the U.N. It's, you know, the international -- you know, the U.S. embassies, in which they inflate prices and wages, right? And they inflate packages, right?
And so when you're a private business trying to invest and you have to put together a package that looks like the U.S. embassy's package -- (chuckles) -- you know, of cars and drivers and this and that and the other and, you know, children's education, et cetera, et cetera, et cetera, all of a sudden you realize that you can't make a profit. And it's particularly true when you have to do a long-term investment, where there's not -- if you're -- if you're -- if you're investing in a mine or natural resources, probably it's going to be high-risk but high-return. But if you're investing in building these types of institutions, as a champion, as an impact investor, right, who's looking for a transformative outcome that has social value, so you're not going to realize your return for eight, nine or 10 years, you can't afford all these high costs, which is part of the reason why I say the Ethiopian commodity exchange needs studying, because obviously -- because it was backed by USAID and UNDP and World Bank, et cetera, they had huge packages for expatriate Ethiopians who came home to establish the exchange.
Now it's been quote-unquote "localized," and we will see -- we will see if it can maintain its seeming success -- its early success, I should say, not seeming but its early success.
And that gets to the champions, who are some of the champions. And you're right -- (inaudible) -- but I'm telling you about the problem of -- I believe in public-private partnerships, but I also believe that, you know, you get into this very long process with governments who are studying with international backing, and so the viability of the project (goes north ?), so who can afford to do that?
And some of those champions are obviously local entrepreneurs, and they're -- these people are giving away all their money, right? It's your high-net-worth investor who's taken that pledge, right -- I'm talking about your Gates an your Warren Buffetts and your others -- who've taken that pledge and they want to do something of value, and so they're prepared to put their money behind a project that's not going to have a return for 10 years but has a social transformative value.
And so linking those high-net-worth individuals with local entrepreneurs, you know, who have the knowledge, who understand the market, who have the drive and the desire. And I think that's where you get the type of champions that can actually have a transformative impact on, you know, the agricultural sector and the others and build the markets.
BROADMAN: I'm sure you're going to want to respond to -- (laughter) -- for some reason, I think you'll want to respond to the World Bank issue. And having left the World Bank five years ago after working there for 15 years, I have my own view. I think the good news is that, particularly in Africa, but in other emerging markets, the governments are actually getting really smarter and they're coming to third parties, like the work that we're doing, in fact, which is independent organization -- luckily, we're a regulated auditing firm, and so we subscribe to all kinds of covenants, and those of us who have worked at the World Bank and development institutions and know the private sector, we're finding, frankly, we're carving up market share from the Bank. So we're very happy about that.
On the champion issue, I think you said something about the exchange in Ethiopia, which I'm also seeing a lot of around the world, particularly in Africa, which is the notion that states in Africa, leaders in Africa, businesses in Africa, in different countries, have their eye on each other. And they're competing against each other about who's going to come forth first with different solutions.
Now, obviously, these solutions have transboundary characteristics to them and they're not going to be solely domestic solutions. But one of the things that I'm seeing unleashed a lot, as was the case when I worked in China many, many moons ago, where you had competition among the states -- and you still have that -- is you are now seeing competition and emulation among African countries. And I think that is something that ought to be fostered.
Gary, why don't you pipe in with some comments that you might have on some of these --
WEIR: The only issue that came --
BROADMAN: Just don't -- just don't defend the World Bank, because Juergen's going to -- (inaudible).
WEIR: No, it's up to him. That's his bailiwick.
No, the only comment that I wanted to make -- because, you know, what the two of you are addressing is not really my field of expertise, but one advantage that the historical work that I've done and others have done on Somalia and piracy and things of that sort, that's what happens when scarcity takes over. All of the things that we've just heard about require government infrastructure, require international partnerships, require governments that compete and are aware of problems and want to solve them.
What happens when none of that takes place? Somalia happens. It's an unbelievable tragedy. And I think one of the reasons why we should take a closer look at that and the solutions that are evolving there is because that's the alternative. If we work our way out of the worst possible alternative, it will inform all of the others. But most fundamentally, that whole situation is being caused by profound scarcity.
So we're talking about do we generate plenty here, how to create partnerships that allow governments and people to move forward. They don't see much of that now. And that's one of the things that we have to try to bring back to that country, with international partnerships, with investments, with international intention, and perhaps even with a small measure of military force that would probably try to monitor it a little bit.
But I'm not an economist and I'm not going to pretend to be, but Somalia is what happens when it all fails and when scarcity succeeds.
BROADMAN: Let's open it up for some other questions, right here and over there, and then we'll work our way to the back of the room.
QUESTIONER: William Hauser, Inter-University Seminar. Turning, if I may, to mineral commodities, specifically perhaps also including rare earths, is Katunga, a festering locus of possible interstate conflict.
BROADMAN: OK, we had -- we had a question over here, this lady.
QUESTIONER: Monique Derfuss, Conservation International. Coming back to this common theme of private sector partnerships, within the African context, my question is around the investment of the Chinese private sector and just the sheer scale of it, both the legal investments as well as in the illegal destruction of natural resources, thinking of trafficking in wildlife. We've got the ivory issue there. So then my question is long-term -- the gentleman just talked about the scarcity issue. What does this mean for the long-term resource needs of Africa's citizens? And I would welcome your ideas on what we might do now to try and counter that. Thank you.
BROADMAN: OK, and we have this gentleman in the back corner. We'll get the rest of the room in a second.
QUESTIONER: Thank you. John Doyle with the Aviation Week Group. I wanted to ask about United States Africa Command. What role does it have to play in this? And perhaps more importantly, what role do you think it needs to be playing that it isn't playing?
BROADMAN: I'm surprised it took so long for that topic to come up. And then this gentleman and this lady, and then we'll do another round.
QUESTIONER: In light of -- Alan Wendt (sp). In light of Ms. Frazer's comments about the World Bank in Africa, I would like to ask Mr. Voegele about the IFC. How active is the IFC in Africa? And are they -- are they getting good results?
BROADMAN: (Inaudible) -- right -- (inaudible) -- right behind, yeah.
QUESTIONER: Paula Stern (sp). I would like you to parse this notion of private-public partnership because I think we think about different things when we hear it. There was a reference earlier to the profound changes over the last five years, I think you said, among corporations and how they view partnerships. And presumably, they would be part of a private-public partnership.
There was another reference to private-public partnership with reference to huge philanthropists who were not for-profit organizations who are just willing to put in money without worrying about the bottom line like a corporation might have to consider.
So I just would like to get a little more disciplined in what we are talking about. And maybe we're talking about both, but maybe we should use different language, or maybe -- but I'm particularly interested in the private sector, the corporations and how they have shifted, and is it just because their customers are demanding it, and that's why they are going sustainable? And that may be enough. But I just wanted to get a little better idea of where the corporations, the private sector is going.
BROADMAN: OK, let's take those questions. Juergen, do you want to -- you want to start it off, or do we want to go to --
VOEGELE: The first two were for you, actually, I think, on the Katanga thing.
FRAZER: Yeah, Katanga and whether that's a possibility of a future conflict -- you know, it's interesting. I've never been to Katanga. And I -- and I -- and to be honest with you, I often have difficulty talking about a place that I haven't actually been to, seen, you know, touched, smelled and worked with the people. So I can only give you an impression of what I hear from others and what I've -- you know, what I've learned, which is that it's -- it -- I think there's -- you know, what I've heard is that there's confidence in the governor of Katanga, and he's quite popular, and that there's been tremendous development and that, you know, a lot of the citizens can see that development.
In terms of the transborder, there's no conflict because it's all going to Zambia and to South Africa, and there's -- (chuckles) -- there's South African corporations who are just taking out Congo's resources -- (chuckles) -- you know, just pulling it out. And that's what I hear, right? And there's not a lot of attention. Everybody's focused on that eastern border. And you know, I've even heard that there's a conveyor belt of a company that's just taking coal right out of Congo and landing it right into Zambia, and it's now Zambian coal.
And so I don't -- I don't know because I -- you know, I -- but what I've heard is that it doesn't seem -- I mean, obviously there are secessionist -- continued secessionist tensions in Katanga. But that's not necessarily about -- maybe it's about resource abundance again, maybe a little bit like Biafra and in other places where you have the abundance of resources and don't really need the rest of the states; they can go your own way. So those are the historical tensions.
But I don't think of it as a story of resource scarcity. And I think it's probably a story of local governance that's positive. The question is also can the state capture some of that revenue through systems of taxation so that it is distributed more broadly than in Katanga. And that's certainly an issue that the Kasali (ph) state has been dealing with, which is how does it actually better tax the natural resources coming out of the country so that it can be, hopefully, you know, productively used.
The issue of -- I'm just going to take them and then others can -- the issue of the Chinese private sector. And, yeah, it's a big problem, especially, you know, the growing stories that are coming out about the impact on wildlife, and the ivory trade in particular.
I think China's role in Africa is more complex than -- it's not a "red scare," you know what I'm saying, and it's also not the savior of the continent. And I think the Chinese -- you know, they've made Africa strategic for those natural resources, and I think that that strategic engagement is going to translate into political influence and geostrategic influence. And I think it will show up in forms like the U.N. Security Council and how votes start to go and in the General Assembly and other such venues.
Right now the main strategic issue that they require of their partner African countries is Taiwan, right? And you're with us, you're against us. It's a fundamental point that they constantly are trying to get countries not to recognize Taiwan. That's amazing right now. But with, you know, the BRICS and, you know, if South Africa really gets to establish itself as that "S," then -- South Africa always punches above its weight globally and it certainly will try to organize African countries around an agenda that I think would be more aligned in many ways with China.
So I think China's influence is constructive in some ways on the economics front from the infrastructure development, and that taking place in that was necessary to unleash, you know, this new, quote-unquote, "rising Africa," if you want to believe that story, and it's a good one. I see no reason not to, you know, to hang my hat on a rising Africa. And China certainly is part of that story, not only for its demand for commodities but, like I said, creating the enabling environment through the infrastructure development.
But African citizens are becoming increasingly impatient with the flood of Chinese labor, and particularly cheap goods in the supply chain that many of those small Chinese traders are having in their markets. And they're major competitors. And so there's been a push for some African governments to cap the immigration, right, and not allow -- or to use their immigration system to limit the number of Chinese coming into the country.
So there's a lot of negative, I guess one would say, externalities as well as positives. And China will adjust, and the Chinese will say, we don't control all of our citizens. But I think their model of supporting business and their strategic outlook on Africa is something that we in the West should emulate, and we should do a better job of helping our private sector. We've almost abandoned even the competition. (Laughs.) That's how I put it, not that one's competing, but we've almost abandoned even trying to, you know, be more commercially present, I Think, in Africa.
On U.S. Africa Command, I think I'll leave others to talk about U.S. Africa Command. You know, I was one of the people who very much supported having U.S Africa Command; felt early on that it got its mandate a little wrong and its mission. I didn't need a military that -- or as we said at the time, USAID on steroids. (Laughter.) I mean, I -- we don't need that. I think we actually need a military that engages with African militaries to build the capacity of the state to actually do territorial security, you know, to do the things that militaries actually are supposed to do and to paint fewer houses and schools and, you know, and dig a fewer -- a lot fewer wells.
On public-private partnership, I apologize. I wasn't -- I did talk about, you know, these big philanthropists, but when I was thinking about it, I was actually thinking about the philanthropists who invest in corporations and invest with private sector, you know, business entrepreneurs. And so they're actually investing on the private sector side.
They're not the -- I mentioned Gates and I shouldn't have, because that's, you know -- you know, the HIV/AIDS and maybe some education and stuff, but I'm actually talking about philanthropists who are doing it through impact investment, you know, and they're looking for profit, bottom line, for sustainability. They're not looking for high returns over the shortest amount of time. So I was talking about corporations.
BROADMAN: We have about five minutes -- four minutes left, so let me turn it to Juergen, and then you get to --
WEIR: Leave me a minute. That's all I need.
VOEGELE: Briefly, the World Bank 20 years in -- ago in Africa had significant influence. I don't think that's the case today, to be honest. Africa gets billions in terms of money, gets billions and billions of dollars of investment today. China is one example, many others out there.
In terms of the actors and players and -- who advise government, Harry mentioned it: private sector is very, very big. Everybody is in that space. We are actually a small player today in Africa.
The IFC as the private sector investment arm gets a lot of requests from African governments to come in and sort of help catalyze investment, bring investment in from outside. Does (that ?) sometimes compete internally? For sure, I believe so. And we're going to have lunch, and I'm going to learn more about what got you so totally upset about -- (laughter) -- there must be -- there must be a reason, because that's not what I normally hear. I mean, I do -- it's very clear that when we engage -- (laughter) -- it creates a dynamic, right, and there -- and there -- those who say, my God, now, you know, the IFC's coming in, then all of -- it's the big players, and that's absolutely legitimate, for better or worse.
Just one thing I wanted to pick up on on something that was talked about earlier. This was the large-scale versus small-scale farm. I think you have said small-scale. We totally believe that. There was a misconception out there that successful or future farming has to be large-scale farming. That is not the case. The Chinese produce all the food they produce on small -- very, very small farms profitably because they do exactly what you describe. They call it farmers' associations, producer groups, producer associations. They link it in to commercial markets; they get the technology to finance and everything else. The size of the farm is irrelevant. In fact, when it comes to productivity per hectare or per acre, they're typically higher than the large-scale farms, because they really squeeze everything -- every drop out of the resource that you have.
So I think the future vision is not to say, let's get rid of small-holder farming and bring the big companies in. Absolutely not, not only for social reasons, in a way, but it's obvious that you shouldn't be doing this, but also for commercial reasons. I just wanted to leave that point in the room.
WEIR: I thought perhaps I'd comment on the AFRICOM question, the -- I think it came -- it should have come a lot sooner than it did. I think being aware of what's going on in Africa was absolutely significant for the development of events.
I think what drew us to do that was a combination of a terrorist threat, which is one of the reasons, for example, that Combined Task Force 150 was created in the Indian Ocean; the piracy threat, which created 151 there at the same time; but also the fact that we were becoming increasingly aware from the history of armies in conflict over time, something that General Petraeus mentioned very early on in his deployments in the -- in the Afghan War, that if you know the ground and the territory that you may have to fight upon as well as -- as well as or almost as well as the people who live on it, you have an important strategic advantage.
And that's why, for example, in my own agency, the National Geospatial-Intelligence Agency, not too long ago, we had a major pilot project on human geography, understanding the people of the region as intimately as we possibly can, because strategic threats emerge in those areas, and that knowledge is an advantage. And we have what we call at NSC an NGIA support team at AFRICOM giving them the advantage of our human geography work and all the other things that we do so well that I can't possibly talk about here. (Laughter.) So AFRICOM should have come sooner, in my own personal opinion, but the kind of work that it's doing -- and perhaps part of the human geography effort is digging the wells and painting the schools, and surely that's not a bad thing to do. But they -- but to be more substantive than that, of course, is why they're there -- and to teach security methods, right, to be there as a backup when somebody needs some international support, that's absolutely necessary, of course.
So it's -- I think it's an advantage for the U.S. Department of Defense and for our own national security to be there, and also, it fosters international relationships, which are actually absolutely critical to sustaining our own national securities, well and be -- as well as be part of the family of nations in good standing.
Did I use my minute?
BROADMAN: You did. Very effectively.
BROADMAN: Thanks to the panel. Please join me in thanking them. (Applause.) And we're now breaking for lunch. Is that correct? Yes. Thank you.
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