The Drought and Food Crisis in the Horn of Africa: Impacts and Proposed Policy Responses for Kenya

The drought In Kenya, more than 3.7 million people have been affected by the drought. The counties bordering Somalia in the north and east of the country have been the hardest hit. Drought-affected areas are also coping with the influx of refugees travelling from neighboring Somalia to the Dadaab refugee camp, creating an additional burden in the region that is now home to the largest refugee camp in the world. The drought-stricken region holds about 31 percent of Kenya’s livestock, which is at risk from the debilitating effects of the drought. Livestock is the main source of livelihood in arid lands and accounts for about 5 percent of total GDP. Estimated livestock mortality as a result of the current drought is about 10–15 percent above normal in the affected areas, equivalent to 5 percent of Kenya’s livestock population. Beyond the direct impact in the drought-stricken areas, the drought has contributed to food inflation across the country. Food inflation is driven by both a shortfall in production and the increase in global prices. While prices have dropped from their July 2011 peak, as of October, the price for a 90 kilogram bag of maize stood at US$43, which is 55 percent above world market prices and double the price of a year earlier. Agriculture policy and trade policy distortions are compounding the drought’s impacts. Kenya is a food deficit country even in a bumper harvest year, yet the country levies import duty on food grains that are only suspended on an ad hoc basis in times of crisis. The East African Community customs union partners also impose export bans on cereals when Kenya experiences a food crisis, and the country pursues a high food producer price policy. The combined economic impact of the drought and related shocks is estimated to cost the economy approximately 0.7– 1.0 percent of GDP. However, the direct impact of the drought As the world begins to feel the effects of climate change, the frequency of droughts is increasing in the Horn of Africa. In Kenya, the drought and food crisis affect welfare through two main channels. The first channel is the increased mortality of livestock in drought-affected areas, which are home to 10 percent of the country’s population. The second channel is by exacerbating increases in food prices, which are largely driven by worldwide price trends. Considering these two channels, this note identifies four broad policy changes that can reduce Kenya’s future vulnerability to such shocks: (i) investment in people in the arid and semiarid lands; (ii) reform of Kenya’s maize policy; (iii) review of the East African Community grain trade policy; and (iv) formulation of a unified social protection system. P ub lic D is cl os ur e A ut ho riz ed