By: Abdul Banya Brima
No sooner the first shots were fired in the war between Russia and Ukraine than Africa started experiencing the ripple effects.
Many countries in the African continent depend on both countries for food and fuel supplies. The conflict has caused a disruption in the global supply chain, which ultimately has ripple effect on the continent. The world is grappling with the negative impacts of the war, not least Africa, as shown below:
When Russia invaded Ukraine on February 24 2022, the effects immediately rippled out around the world. In Africa, the conflict has thus far been felt most acutely as prices of foodstuffs, costs of key goods imported from Russia and Ukraine have already spiked.
Russia and Ukraine are the world’s breadbasket. The two nations are the world’s first and fifth largest exporters of wheat, respectively, together furnishing about 30 percent of the world’s supply. Ukraine, meanwhile, accounts for 40 percent of the world’s sunflower oil exports and 14 percent of its corn exports.
Many sub-Saharan African countries, in turn, are major wheat, corn, and cooking oil importers, heavily reliant on exports from countries like Russia and Ukraine to maintain their food security. In east Africa, for instance, 84 percent of the wheat consumed is imported, and 90 percent of those imports come from Russia and Ukraine.
Since the crisis between Russia and Ukraine erupted, the global prices of wheat, sunflower or crude oil have reached unprecedented levels. African nations, which have been trading with Russia for years, are left short of supplies.
It is particularly the case for countries in the Maghreb, Northwest African countries like Algeria, Libya, Mauritania, Morocco and Tunisia which rely on Russian and Ukrainian wheat, importing more than 50% from them.
In the sub-Saharan region, coffee, tea or citrus fruits exports to Russia, have reduced significantly.
The war between Russia and Ukraine is steadily and painfully having a disastrous effect on the African continent. Both Russia and Ukraine are major suppliers of food commodities such as wheat, soybeans, and barley to African countries. In 2020, the combined value of this trade was estimated at US$6.9 billion. A disruption to this supply due to the fighting has driven up prices of commodities and exacerbated food insecurity across Africa.
Russia’s invasion in Ukraine has the potential to exacerbate hunger rates and poverty in Africa, leading the continent further away from recovery from the COVID-19 pandemic. As long as the war exists, so does the risk of pushing African citizens further into poverty.
Cereal grains and corn are not the only concerning factors in the analysis of how the war is affecting Africa and its citizens. The increased price in oil, which jumped dramatically to its highest price since 2014 after the announcement of Russia’s invasion, has negatively impacted the price of transport and subsequently bump up the price of groceries and other products across the continent, further digging into the pockets of people living in poverty on the continent, and pushing more people into poverty.
Russia’s invasion in Ukraine will also affect Global Goal 8, which calls for sustainable economic growth and employment, for African countries. This is not only because of the war’s potential impact on agriculture, linked to access to fertilizer, but also because of Africa’s need to service its debts.
According to the New York Times, the conflict will likely have a turbulent impact on the global economy, increasing interest rates and lowering access to credit. What does this mean for African countries? Governments that need credit to manage their debts will have to spend a lot more than anticipated to service them.
This will have a knock-on effect on the rest of the countries’ needs, as it has the potential to limit essential national budgets allocated to things like healthcare (Global Goal 3), education (Global Goal 4), employment, and other public investments.
Respective national budgets and African economies in general have already been strained by the pandemic.
In a nutshell, hunger rates are expected to rise and African economies will likely be pushed further away from recovering from the economic-knock dealt to them by the COVID-19 pandemic. Both have the potential to push African citizens deeper into poverty.
(Charlie Robertson, global chief economist at Renaissance Capital)
The Russia-Ukraine War has negatively affected Africa in terms of agricultural production and food security, as both countries are important grain exporters to Africa. African countries imported US$4 billion worth of agricultural products from Russia in 2020. Among these products, wheat takes the lead with a rate of 90%. On the other hand, Ukraine exported US$2.9 billion worth of agricultural products to Africa in 2020. While wheat represents 48% of the products, corn accounts for 31%. Furthermore, these two countries have a total share of 26% (Russia 18%, Ukraine 8%) in world wheat exports.
Nonetheless, in the Sahel region and West Africa alone, 26 million people do not have access to enough food. Therefore, the prolongation of the war and the disruption of agricultural trade can cause prices to rise significantly.
(Romesh Vaitilingam)
Christopher Pissarides at the London School of Economics (LSE) explains: “The effect will be through oil and other resources. Supply will be reduced so prices and production costs will rise.”
Franklin Allen at Imperial College London notes: “The invasion is affecting inflation already with oil, gas and many other commodities reaching high levels. Output may also fall.”
EFFECT OF THE WAR ON FUEL PRICES IN AFRICA
The global oil price surged past $105 per barrel after Russia sent military forces into parts of Ukraine, increasing fears of a war in Eastern Europe. Russia is a key producer of crude oil and the market is nervous that oil supplies would be disrupted.
Meanwhile, the spike in global price of oil since the start of the war is being felt in complicated ways in the entire Africa. In many countries, including major continental economies like South Africa, it is likely to bring rising costs to consumers for petrol and electricity. Other parts of Africa will definitely not be spared the price increase in petrol and diesel.
Russia is the world’s 3rd oil producer, the 2nd natural gas producer and among the top 5 producers of steel, nickel and aluminum.
On the day the invasion began, financial markets around the world fell sharply, and the prices of oil, natural gas, metals and food commodities surged.
The increase in natural gas and oil prices portends a serious crisis for oil-importing African countries. This means additional costs for African countries that depend on oil and natural gas in agricultural and industrial production.
“Oil is South Africa’s biggest import item, so the immediate impact on consumers’ pockets will be higher petrol prices.”
(Maarten Ackerman, Chief economist at Citadel Investment Services).
Russia accounts for some 10% of crude oil supply globally and sanctions have severely disrupted exports, subsequently leading to higher oil prices.
The rising price of crude translates into severely high fuel prices for African countries, my country Sierra Leone being no exception. In barely three months, prices of fuel products have increased three times, due first of all to scarcity of the product, and most importantly the spiral effect of the war between Russia and Ukraine.
In Sierra Leone and many other African countries, an increase in the price of fuel always conversely affects prices of foodstuffs, electricity tariff and almost everything, causing a boomerang effect in the country. There was scarcity of fuel products in the country in the first few weeks of the war in Ukraine, causing untold hardship and suffering for the general masses of the Sierra Leonean people. This, unfortunately, is not something the government can be blamed for or has control over.
Effect of the War on Food Supply Chain in Africa
It is certain that as a result of the war between Russia and Ukraine, food prices and global food insecurity will likely increase without adequate access to wheat, corn, and oil imports, deeply impacting North Africa, with Egypt alone importing 70% of its wheat from Russia and Ukraine.
Globally, food prices are expected to soar and hunger is expected to increase, as both Ukraine and Russia are major exporters of cereal grains and vegetable oil. On the African continent, the most impacted region would likely be North Africa; it is a region that is highly dependent on Russia and Ukraine for cereal grains like wheat and corn, and will be affected significantly by not being able to import grains.
Russia and Ukraine collectively supply roughly 30% of the world’s wheat, with Ukraine being the fourth-largest supplier of wheat and corn in the world. The war is hindering access to these grains, undermining African countries Egypt, Tunisia, Morocco, Libya, and Algeria that are reliant on that access the ability to feed their people.
According to Egyptian news platform Enterprise, Egypt is the world’s biggest importer of wheat, and depends on Russia and Ukraine for 70% of its wheat supply. Egyptians were already facing economic strain and limited access to food as a result of Russia adding taxes onto its wheat exports, and now with access to the grain in danger because of the war, Egypt’s food security and economic and political stability are at risk.
Russia is also one of the world’s biggest exporters of fertilizer, and the war has resulted in a sharp increase in its price. This has the potential to undermine the ability of some African countries, particularly those that are largely dependent on agriculture, to feed their citizens and manage their economies. This also has the potential to increase food prices, further cementing food insecurity on the continent.
More than one hundred days into Russia’s full-scale invasion of Ukraine, the fallout of the war and unprecedented sanctions on Moscow are shaking global supply chains and financial markets.
With many African countries already facing inflation of staple food prices due to conflict, drought, and economic crisis, the rising global cost of wheat could spike food prices in those countries higher. And rising food costs in the region don’t just affect consumers’ pockets, they “sometimes bring people into the streets,” Steven Gruzd, a Russia expert and foreign policy analyst.
In the rest of the world, the economic consequences will be felt mainly through the rise in commodity prices, which will fuel already existing inflationary pressures. As always when commodity prices soar, net importers of energy and food products will be particularly affected, with the spectre of major supply disruptions in the event of an even greater escalation of the conflict.
In my country Sierra Leone, the war in Ukraine has made life harder. Fuel prices as well as costs of basic commodities such as cooking oil and rice have increased sharply in Sierra Leone. (Iyesata Turay- Freetown)
The new direction government of HE Dr. Julius Maada Bio has done its best by providing foreign currency to importers of petroleum products, as well as reduced levies on rice, which is the country’s staple food, and other basic commodities. This unfortunately has not put an end to an increase in the price of rice, simply because the general cost of importation imparts the increase which is primarily due to the war in Ukraine.
The war in Ukraine has to end by all means very soon or risks having a disastrous effect on the world generally and particularly in Africa.
Abdul Banya Braima
Researcher/ Business Development Consultant
B. Soc. Sci( Economics) MBA ( Human resources) MA ( Development and Peace Studies)
