Opec Fund allocates $1bn to boost food security in developing countries

Vienna-based body will offer public and private sector loans and grants to developing countries amid Ukraine conflict

A shopkeeper sells wheat flour in Somalia. The Opec Fund will assist developing countries in covering the import costs of basic commodities amid the Ukraine war. AP
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The Opec Fund for International Development has allocated $1 billion to boost food security in developing countries hit hardest by the conflict in Ukraine.

As part of its Food Security Action Plan, Opec's development finance arm will provide “immediate assistance” to its partner countries to help them to cover the import costs of basic commodities such as seeds, grains and fertilisers over the next three years, the Vienna-based organisation said on Monday.

“Millions of vulnerable people could face famine over the next few months unless the international community responds swiftly and effectively to the global food crisis,” said Abdulhamid Alkhalifa, the fund's director general.

“The Opec Fund’s nimble model has enabled us to dedicate $1bn of our investment programme to ensure food security where — and how — it is needed the most.”

Russia and Ukraine collectively supply about 30 per cent of the world's traded wheat and 15 per cent of global corn exports. The conflict means Ukraine’s grain shipments remain out of the market as seaports remained closed while new crop production is jeopardised.

Grain shipments from Russia are also on the decline due to reduced trade finance and market boycotts of Russian produce due to its military assault on Ukraine.

Egypt, Jordan, Lebanon, Morocco and Tunisia are expected to be among the hardest hit because of the conflict as their net food and energy imports account for between 4 per cent and 17 per cent of their gross domestic product, according to a recent S&P Global Ratings report.

As part of its plan, the Opec Fund will channel public and private sector loans and provide grants to developing countries to help them to overcome the food shortages.

“In addition to providing immediate relief, the Opec Fund Food Security Action Plan is geared towards building the resilience of partner country agriculture sectors and strengthening regional food value chains to future-proof against global shocks,” the fund said.

The Opec Fund was established in 1976 by Opec, including the UAE, to provide aid to developing countries.

To date, the fund has committed more than $22bn to development projects in more than 125 countries, with an estimated total project cost of $187bn.

Last year, the fund also pledged a $25 million loan to help small and medium enterprises hit by Covid-19 disruptions and the devastating effects of two hurricanes that hit Honduras in 2020.

The fund will host its inaugural Development Forum in Vienna on June 21, with a focus on climate, energy and food security.

Government leaders, heads of institutions and experts from the public and private sectors are expected to participate in the forum.

Updated: June 06, 2022, 10:11 AM
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