Anton Ferreira

Anton Ferreira

Soaring food prices may be hard to swallow in the short term but Africa could ride them to an economic boom, Nobel prize winner Michael Spence said yesterday.

Spence was speaking at a World Bank development conference in Cape Town that was opened yesterday by President Thabo Mbeki.

Mbeki urged economists to offer practical solutions to the plight of the poor. "The poor are knocking on the gate," he said. "If it does not open ... the masses will break it down."

Spence, who won the Nobel prize for economics in 2001, said that high food prices provided the incentive for increased investment in agriculture and other sectors.

"This is a huge opportunity for Africa," he said.

"Africa is very resource rich compared with any other continent in the world, and if that resource rent can be collected by governments and then invested in projects that promote job creation, then the growth that's already occurring can be sustainable."

He said food prices were spiking now because of supply problems but they should drop to "more reasonable" levels over five years if governments followed sensible policies.

Spence forecast that oil prices would remain high, but that this would give impetus to the development of new technology and place an emphasis on energy efficiency.

He said the world had responded to the 1970s oil crisis by reducing demand, and the same should happen now.