- June 6, 2023
- Posted by: AITRC 2
- Categories: Blog, Report
WEEKLY TRADE POLL FOR AFRICAN COUNTRIES
MAY 2023
Impact of the Russia-Ukraine War on Africa
The conflict between Russia and Ukraine significantly threatens the world economy, directly affecting several African nations. The war has unquestionably had catastrophic effects on the African economy; among the effect is the higher prices for commodities like oil and agricultural raw materials. Over the last ten years, the demand for cereal crops, such as wheat and sunflower, has increased across the African continent. This demand has been primarily sustained by imports rather than local production; Africa accounts for 80% of wheat imports. Russia and Ukraine are major contributors to the export of wheat and sunflower to Africa, which are both sometimes referred to as the “breadbaskets of the world.” Trade between Russia and Africa has been further hindered by the sanctions imposed by Western nations on Russia, one of the world’s top producers of fertilizers, leading to the shutdown of Black Sea port operations. Many individuals are expressing concern over the possibility of a worldwide fertilizer shortage leading to increased prices of food. This could potentially affect agricultural production and the security of our food supply.[1]
The implication of the war is widespread, according to the United Nation[2], as refugees are moving into Western neighbouring nations such as Poland, Romania, Slovakia, Hungary, Moldova, Belarus, and even Russia, as shown in Figure 1:
Figure 1: Humanitarian effect of the Russia-Ukraine War
The image in Figure 1 shows a migration that is moving at an astonishing rate. It’s unfortunate that a humanitarian crisis of such magnitude and intensity has not been witnessed in Europe for many years. In today’s globally connected society, even seemingly minor disagreements can have significant consequences. For example, Russia’s invasion of Ukraine has had economic and political repercussions that extend beyond its borders. Although Africa doesn’t rely directly on Russian oil imports, it still experiences the impact of resulting price increases, which affects the rest of the world. This is particularly true for energy generation since diesel generators account for over 40% of West Africa’s total electricity consumption. The increasing cost of gasoline has a ripple effect throughout the continent, causing many African businesses to struggle as diesel prices increase by more than 200%. As a result, utility-scale power generation has become much more expensive in various African markets due to the rising cost of natural gas.[3]
The conflict may have far-reaching consequences that could lead to significant debt distress in Africa, making it difficult for nations to repay their debts. The impact could be particularly severe on the most vulnerable households, as rising food and gasoline prices could further widen the income gap. Many households could become multidimensionally poor with reduced access to power and cooking fuel. Furthermore, budget cuts may force households to sell off their assets, reducing their ability to cope with future shocks. All of these indirect effects could curtail economic activity and fuel social unrest.
Figure 2 below shows the poll’s findings regarding the effect of the Russia-Ukraine conflict on the continent of Africa:
WEEKLY TRADE POLLS (FIFTH WEEK MAY, 2023)
Figure 2: Impact of the Russia-Ukraine War on Africa
From this backdrop, Africa International Trade and Commerce Research (AITCR) conducted a weekly trade survey for African countries to evaluate public opinion and obtain responses on the area of Africa mostly affected by the Russia-Ukraine war. Findings from the polls, show that 51 percent of the respondents assert that Africa is mostly affected by the Russia-Ukraine war in the area of “food security“, 33 percent opine that Africa is mostly affected by the Russia-Ukraine war in the area of “oil and gas”, 2 percent opine that Africa is mostly affected by the Russia-Ukraine war in the area of “security” and 14 percent posit that Africa is not affected by the Russia-Ukraine war in any area i.e., “none”. Therefore, the poll found that the war disrupts global commodity markets and trade flows to Africa, raising the region’s already high food costs. Consequently, UN agencies are warning that price increases triggered by Russia’s invasion of Ukraine will exacerbate a food crisis in Africa, where tens of millions of people have already been pushed into extreme poverty as a result of the COVID-19 pandemic, armed conflicts, climate shocks, and economic turmoil.[4]
The ability of African nations to implement continental and regional solutions to increase and sustain resilience in the face of external shocks will be a key factor in the transformation of African food systems. Consequently, some African export markets could benefit from new prospects as a result of Europe’s pressing need to diversify away from its reliance on Russian oil and gas. A few nations are detecting the potential for long-term growth as a result of the crisis. Particularly, the natural gas from Africa could lessen Europe’s reliance on Russian energy.[5]
In conclusion, African countries are becoming more interested in establishing ties with both the West and the East in order to expand their possibilities for aid, commerce, and investment. Russian influence on the continent has grown recently in terms of security and economics. However, Policy directions for Africa in the context of the Russia-Ukraine war can include:
Diplomatic Engagement: To promote peaceful dialogue and resolve conflicts, African countries can engage in diplomatic efforts. This may entail supporting international mediation efforts, advocating for dialogue-based solutions, and participating in diplomatic forums where the conflict is discussed.
Strengthening Regional Stability: Africa should prioritise enhancing regional stability and security to prevent any potential spillover effects from the conflict. This can be achieved by strengthening regional organizations like the African Union (AU) and regional economic communities. These organizations can address security concerns and promote conflict prevention mechanisms effectively.
Economic Diversification: Considering the potential ripple effects of the ongoing Russia-Ukraine conflict on the economy, African nations can adopt economic diversification strategies to decrease reliance on specific markets or trading partners. This can entail exploring fresh trade relationships, expanding regional trade integration, and enhancing intra-African trade to minimize susceptibility to global geopolitical upheavals.
Strengthening Governance and Institutions: To effectively navigate geopolitical challenges, African countries can focus on strengthening governance structures, transparency, and institutional frameworks. This can help build resilience, attract investments, and foster stable political environments that are less susceptible to external shocks.
International Cooperation: African nations have the opportunity to participate in international forums and platforms to express their issues, converse about common goals, and push for fair global governance. By working together with other countries and regional organizations, Africa can play a role in shaping worldwide policies that encourage peace, stability, and economic growth.
Finally, Africa is a diverse continent with unique challenges and opportunities, and policy responses to external conflicts should align with national and regional circumstances.
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[1] How the Russia-Ukraine conflict impacts Africa | Africa Renewal (un.org)
[2] The Russian War In Ukraine And Its Impact On Africa – Analysis – Eurasia Review
[3] How Russia’s Invasion of Ukraine Will Impact Africa’s Energy Transition | Council on Foreign Relations (cfr.org)
[4] Ukraine war fuels food crisis in distant Africa | Reuters
[5] What does the war in Ukraine mean for Africa? (brookings.edu)
