Abstract:
Through agriculture, SSA countries contribute enormously to the
international market regarding food security. However, the agricultural sector
in SSA has become vulnerable due to external shocks and has affected
commodity prices as well as the economic stability of member countries. With
food prices being projected to increase by 14.84% from 2022 to 2023,
concerns have been raised about welfare in SSA regarding rising poverty, food
insecurity, and geopolitical tensions in the near future. This made it necessary
for this study to investigate how interest rates, exchange rates, and the price of
crude oil affect the prices of agricultural commodities in Sub-Saharan African
nations. In order to achieve the study's objectives, we used the fixed effect
estimating technique, which was supported by Hausman-Wu's test, and data
on 16 African nations from the World Bank and UN Food and Agricultural
Organization databases covering the years 2009–2022. The study discovered
that the price of crude oil and the exchange rate had a major impact on the
price of agricultural commodities. The inverse relationship between interest
rates and agricultural commodity prices, however, was not supported by any
statistical data, according to the study. Therefore, it is recommended that
governments in SSA countries must have balanced monetary policies, targeted
agricultural credit programs, promote regional trade and currency agreements
and encourage investment in alternative energy sources to reduce interest rates
exchange rates and crude oil price effect on the agriculture sector.
