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April 2016, Volume 22, Number 2

Climate, Africa, Billionaires

The year 2015 was the hottest on record, in part because an El Nino weather pattern, one of the largest in a century, is releasing an immense amount of heat from the Pacific Ocean into the atmosphere. The last powerful El Nino was in 1998.

The average temperature in the lower 48 states was 54.4F in 2015, and 2.4F above the 20th century average. In the US, December was warm in much of the eastern US, and there was heavy rain that led to flooding.

Coral reefs are showing the effects of climate change, with bleaching evident in up to a third (bleaching speeds the metabolism of the algae so that they create toxins that can kill the coral). Australia's Great Barrier Reef shows signs of bleaching from rising water temperatures that reflect long-term trends and short-term events, including the 2015 El Nino. Previous mass coral bleaching occurred in 1998 and 2010, but they were short-lived and did not kill coral extensively.

Africa. Africa has the world's fastest-growing population. Its population of 1.2 billion is expected to increase to 2.1 billion by 2050. Only Nigeria has more than 100 million people today, but four countries are expected to have more than 100 million by 2050: Nigeria, 400 million; Congo, 195 million; Ethiopia, 165 million; and Sudan, 105 million.

Africa in the past has been associated with famine and disaster, raising the question of whether Africa will be able to feed itself. Most African farms are small; two-thirds are less than a hectare (2.5 acres), and yields are much lower in Africa than elsewhere in the world. Only four percent of the crop land of sub-Saharan Africa is irrigated. Staple crops vary by region, requiring much more scientific work to improve seeds, a contrast to improved wheat and rice that fueled the green revolution in Latin America and Asia.

African food production has increased four fold since 1960, primarily by bringing new land into production; crop land rose from 1.5 million square km to 2.3 million over the past half century. Africa's farm exports are less than those of Thailand, reflecting low yields and a very poor infrastructure to move farm commodities to ports. Policies often tax poor farmers, charging them high prices for seeds and fertilizers and offering them low prices for their output, with the difference often pocketed by monopolies linked to politicians.

There are several contrasting trends. Many smallholders are moving to cities, but ambiguous land titles and uncertainties about prospects there encourage some to retain their land, slowing consolidation into fewer, larger, and more efficient farms. In some countries, governments are leasing thousands of hectares to foreigners who plant crops to be exported. Many aid groups try to improve the productivity of small farmers by introducing hybrid seeds and better fertilizers or more productive animals.

Challenges remain, including lack of secure land titles that discourage long-term investments and impeded access to credit. Once harvested, farmers need market information to reduce the power of buyers, and they need secure storage facilities so that they are not forced to sell at harvest time for low prices.

The African growth miracle of the past decade was based on exporting commodities. Over 60 percent of African exports are fuels, ores and metals, while only 15 percent are manufactured goods. About 10 percent of Africans are employed in manufacturing, the sector behind the Asian economic miracle. Proposals to increase the share of African workers employed in manufacturing promote industry clusters, such as a dozen shoe factories rather than one, that export many of the goods they produce.

Billionaires. Forbes reported 1,826 billionaires in 2015, including 30 percent in the US, 28 percent in Europe, and 25 percent in East Asia, while Latin America had seven percent, Middle East five percent, and Africa one percent. Some billionaires are likely missed because they hide their wealth, including some current and ex-leaders.

Of the world's billionaires, 30 percent inherited most of their wealth, 37 percent were company founders or owners and executives (self-made), and 33 percent obtain wealth via political connections, natural resources, or the financial sector. These shares vary by region: they are 29, 40, and 31 percent in the US, compared to 49, 25, and 26 percent in Latin America, meaning that much more wealth was inherited in Latin America, and that the share of company founders was lower. Argentina has no company founder billionaires.

The UN's Sustainable Development Goals aim to end extreme poverty by 2030, defined as living on less than $2 a day. The share of the world's people living in extreme poverty fell from almost 40 percent in 1990 to less than 10 percent in 2015, largely because of rapid growth in China and other developing countries. The 700 million people still in extreme poverty are mostly in South Asia and sub-Saharan Africa, and many are farmers.

Oxfam in January 2016 reported that the richest 62 people worldwide had as much wealth, about $1.7 trillion, as the poorest 3.5 billion people, almost half of the world's population. In 2015, it was the richest 80, and in 2010 it was 388 people, suggesting that the wealth of the richest is increasing.

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