IMF emergency financing has supported Guinea’s efforts to cope with the effects of macroeconomic shocks, underpinned by the authorities’ commitment to transparency in the uses of these funds
The outbreak of the war in Ukraine in February 2022 caused international food and fertilizer prices to rise sharply, exacerbating food insecurity in many parts of sub-Saharan Africa. Guinea was among the worst affected. By late 2022, 11 percent of the Guinean population–1.2 million people–were facing acute food insecurity. In December 2022, Guinea received $71 million under the IMF’s Rapid Credit Facility’s Food Shock Window (FSW) to address vulnerable populations’ needs related to the food price shock.
Just one year later, Guinea was confronted with yet another shock. In December 2023, the explosion of the main fuel depot in Conakry tragically led to loss of life, injuries, and destruction of property. To help the country deal with the aftermath, the IMF’s Executive Board recently approved another $71 million support package under the Exogenous Shocks Window of the Rapid Credit Facility. The explosion put further pressures on food security due to fuel shortages and high transport costs.
In the context of these challenges, we take a step back to look at three ways the FSW resources have helped Guinea address the food and fertilizer shocks–and the lessons are especially timely as the country grapples with this latest shock.
1. The Food Shock Window helped support a targeted response to the price shock.
The emergency assistance was used to provide urgent relief through food distribution, fertilizer purchases, and cash transfers to vulnerable communities. The funds were channeled through the government budget and implemented by specialized agencies.
The World Food Programme (WFP) used the FSW resources to provide emergency food assistance to about 790,000 vulnerable people in crisis-affected households. The WFP estimates that its cash and in-kind transfers program–which used FSW funds–had positive impacts on food security during the lean season, including improved consumption scores among the targeted populations. School feeding programs also helped to promote the schooling of young girls, which can help to reduce gender gaps in education which constraints female productivity and empowerment.
Another organization that helped to deploy FSW resources, the Agricultural Development Fund (FODA), mitigated the strong impact of the surge in corn prices on the poultry sector by financing 10,000 tonnes of corn imports that were then sold at an affordable price to operators in the sector. It also acquired 2,500 tonnes of rice seeds and 1,300 tonnes of corn seeds that were made available to farmers through seed banks in 35 major agricultural centers across Guinea. In-kind distribution of tailored nutritional supplements to 60,000 children aged 6-59 months is ongoing to help treat and prevent moderate to acute malnutrition.
The National Agency for Economic and Financial Inclusion (ANIES) is providing $25 million to help vulnerable groups, while the Social Development and Indigent Fund (FDSI) is distributing in-kind food and health care vouchers worth around $6 million.
2. Fund financing has helped finance smart investments to boost productivity in the agricultural sector.
FSW support allowed the government to temporarily subsidize the price of a 50 kg bag of fertilizer to remain at GNF300,000 during the 2023 agricultural season, compared with GNF500,000-700,000 in 2022. The purchase of 32 tractors and 30 harvesters with FSW resources helped reduce the post-harvest losses of corn and rice, which are typically substantial. Additionally, GPS tracking systems provide real-time monitoring to help ensure effective and efficient use of tractors.
The FSW funds were also used to operationalize the Sinko rice mill, which can process one hundred tonnes of rice per day, supporting the rice production. People from 109 villages participated in pilot training on how to farm Tongil rice from Korea, which can be harvested every 3 months instead of the usual 6 months for local rice.
3. Overall, despite setbacks, execution of projects has been high.
Most activities financed by the FSW have been relatively well-executed so far, despite initial delays. Although the authorities only transferred FSW resources to the WFP and other specialized agencies in May-June 2023, implementation was relatively fast once operational safeguards were established.
By the end-2023, the WFP’s execution rate was 80 percent, and the rates for the Agricultural Development Fund and the Social Development and Indigent Fund (FDSI) were 95 percent and 81 percent, respectively. However, the explosion of the main fuel depot in December 2023 has slowed implementation since.
Key lessons
Guinea’s experience highlights potential options to address food insecurity sustainably.
The implementation of the FSW has highlighted key programs that Guinea could adopt as part of its national strategy to address longstanding food insecurity. These include national school feeding programs, revolving funds, and programs to empower local populations. Guinea’s experience shows that targeted programs can make an enormous difference in alleviating food insecurity and should continue to be financed through budgetary resources.
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While the implementation has benefited from the comparative advantage and the expertise of the WFP and other organizations, it could have benefitted from greater coordination including on the targeting of program beneficiaries. Moreover, the initial delays in implementation highlight the necessity to put in place structures to scale up programs quickly during emergencies, as well as strengthen reporting and governance practices.
Going forward, the IMF remains committed to supporting Guinea’s efforts to address structural vulnerabilities and provide a stable basis for sustainable economic growth and future prosperity. Transparent and efficient implementation is key to guarantee the proper use of Fund resources. Good policies continue to be essential for the country to be able to develop its potential.
Pilar Garcia Martinez is a deputy division chief, Joseph Ntamatungiro is a senior economist, and Neree Noumon is IMF resident representative to Guinea, all in the IMF’s African Department.
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Publish date : 2024-06-20 16:23:45
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