The war between Russia and Ukraine — both major producers of food commodities and energy — has disrupted global production, trade and supply in these areas, leading to a surge in prices.
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Queen Maxima of the Netherlands has told CNBC that she is very worried about the impact of soaring food and energy prices on families, adding that this could lead to increased instability in certain regions.
The war between Russia and Ukraine — both major producers of food commodities and energy — has disrupted global production, trade and supply in these areas, leading to a surge in prices.
According to the World Bank’s latest Commodity Markets Outlook report, energy prices in 2022 are expected to rise by over 50%, while wheat prices forecast to soar by more than 40%.
“An increase of food prices of the magnitude that we’re seeing, of energy prices, basically will mean that a lot of families are going to have from three or two meals a day to have one meal a day. And this in turn, will actually give, probably, will be the source of even more instability in other regions. So that worries me a lot,” Maxima said, speaking exclusively to CNBC last week at the World Economic Forum in Davos, Switzerland.
Maxima, the U.N. secretary-general’s special advocate for inclusive finance for development, told CNBC that the pandemic has pushed many more into extreme poverty and increases in the price of fertilizers could have short- and longer-term implications. A trained economist, Maxima previously worked in international finance and emerging markets.
“We’re going to be seeing now because of inflation, but we’re going to be seeing also in the next year, because when you don’t have fertilizers, you cannot increase your yield. So therefore, you’re going to see less produce coming out from Africa, which actually feeds each other there. So, you’re going to have less food, so the prices are even probably going to go up by even more, so very worrying,” she said.
Access to finance
When asked how concerned she was about the conflict in Europe, Maxima told CNBC: “Well, sadly the concern is not only the conflict in and by itself, but in my role in financial inclusion for development, which is I want to reduce poverty, I want more girls to go to school, I want more people to have better futures.”
She said that while the Covid-19 pandemic has had a negative impact on many, it has also led to some positive steps toward financial inclusion.
The shift toward digitalization during lockdowns led many governments to discover the importance of using tools such as mobile phones to reach those in need of financial relief.
A Ukrainian army officer inspects a grain warehouse shelled by Russian forces on May 6, 2022, near the front lines of Kherson Oblast in Novovorontsovka, Ukraine. Russia has been accused of targeting food storage sites in front-line areas and disrupting Ukraine’s wheat production, potentially causing a global shortage.
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“A lot of governments when the pandemic and the lockdown started, thought … this is the way for us to send money to the poorest and the most vulnerable people, that had to stay locked down, they couldn’t go to the markets and sell their produce, and this was a very important issue,” she said.
“So many, many countries have increased this, I would say, government-to-people payments in these two years, and they’ve actually discovered this financial inclusion tool to actually do a lot more other goals that they’re trying to attain.”
At the World Economic Forum, Maxima said “1.2 billion adults had gained access to financial services in the last decade,” but she told CNBC there are probably 1.5 billion more to go. The latest data from the World Bank’s Global Findex, which measures how adults in 148 economies save, borrow, make payments and manage risk, is expected this summer.
Maxima said technology is crucial to connecting people.
“Without technology, we would not have been able to reach the billions of people we’re being able to reach now … so fintech therefore, can actually play a very good role. Why? Because they think differently and they can really listen to the needs of a population and actually design products that really cater to those needs,” she said.
She said that women, rural smallholder farmers, micro enterprises and the world’s most poor and vulnerable are in greatest need of digital solutions to improve access to finance.
“Sadly, after this pandemic, we even have seen groups of women that actually are less connected to the internet, because between the money to spend to actually have a phone and to put food on the table, well they chose putting food on the table,” she said.
“So, there is a very big connection between the affordability and accessibility to digital solutions as well, to be able to have people financially included.”