Regions
A month into the Russian-Ukraine crisis, impacts and consequences are already starting to pour in, with the already fragile economies of coronavirus-ravaged African countries being thrown into a worrisome state after a series of weaker investment flows and higher commodity costs.
According to the United Nation’s Food and Agricultural Organization report, Russia and Ukraine are both big food producers and exporters in Africa. While Russia is the world’s largest wheat exporter, Ukraine is the fifth largest. Both countries supply 19 percent of the world’s barley, 14 percent of the world’s wheat, and 4% of the world’s maize, accounting for one-third of worldwide cereal exports. They also export 52 percent of the world’s sunflower oil, and Russia is the world’s largest fertilizer producer.
As the Russian war on Ukraine escalates, the effect of the war, coupled with trade sanctions awarded against Russia and the European Union, is directly having serious effects on international trade. It is cutting trade ties and restricting international trade flows with African countries that largely depend on the import of their maize products. According to experts, African countries will pay higher prices for wheat than others, and some could even face shortages in the coming weeks.
Historically, Russia and Ukraine can be traced to the same cultural roots of the Union of Soviet Socialist Republics (USSR) But developed different cultural and political identities over the course of time, the relationship has translated into a love-hate relationship as both countries. Despite the animosity between these two countries, Ukraine was still a member of the Soviet Union for more than seven decades.
The Russian President declared that military action was required to stop Ukrainian advances on the two breakaway areas of Donetsk and Lugansk, which Moscow recognizes as independent republics. While accusing Western nations of arming Kyiv against Russia through Ukraine’s NATO membership bid, Vladimir Putin said that unless the Ukrainian government’s power in the country is reduced, Russia could be attacked.
African countries at the receiving end
Since the Russo-Ukraine war escalated on February 24, both countries have suffered economically, with disrupted supply lines, lost revenue, and resources channeled to the war. Surprisingly, these countries are not the only ones in this predicament; many African countries too are directly and indirectly feeling the heat.
Their most pronounced challenge is the surge in prices of food and commodities, particularly of oil and wheat. In a statement issued by the head of Africa Research, Mhango Yvonne, African nations such as Ghana, Kenya, and north African countries are most affected by these surging prices since transport and food make up a large share of their consumer price indexes. For example, North African countries such as Egypt, Morocco, and Algeria absorb the most wheat per capita, about 128 kg per capita, which is twice the world average.
An Egyptian Daily news report claimed that Egypt is the largest importer of wheat. Egypt imports a total of 12 to 13 million tons every year and has become increasingly reliant on imports to meet its food demands. In 2020, it received 86 percent of its supply from Russia and Ukraine alone.
Kenya, like Egypt, relied heavily on wheat imports from Russia and Ukraine to the point where wheat prices have more than doubled in the two weeks since the war began, with a bushel of the product selling for as much as $13.48 a bushel, up from $7.50 when the war began.
Apart from this, the country’s exports of flowers, tea, coffee, and fruits to Russia have been hindered in the wake of sanctions imposed on Moscow by Western nations. The barricade of the exports came after major container and shipping lines suspended cargo shipments to and from Russia in response to the sanctions.
Hope for Africa
Even though African countries are experiencing a surge in commodity prices, reports have emerged that the situation has in fact created winners across some other African countries in the same way it has affected others.
Originally, Russia had a strong trade history of meeting 40% of the European Union’s natural gas needs. The country supplies a significant volume of fossil fuels to other European countries. But as the Russian invasion of Ukraine intensified, the European Union placed a series of sanctions against Russia, which has in fact caused many European countries to diversify their natural gas supplies and reduce their dependence on Russian energy. African countries are now sensing long-term growth opportunities from the crisis as they emerged as strong alternatives.
For example, Tanzania’s president, Samia Suluhu Hassan, claimed in an interview on the sidelines of the European Union-African Union summit in mid-February that the tensions in Ukraine are increasing interest in the country’s gas reserves, which are Africa’s sixth largest. In 2019, her predecessor, the late President John Magufuli, put a halt to talks with natural gas investors to evaluate the country’s production-sharing agreement system. Hassan, on the other hand, favors a more business-friendly stance and has restructured talks with energy corporations with the aim of obtaining $30 billion in foreign investment to restart offshore liquefied natural gas project development in 2023.
Several other nations, notably Senegal, where 40 trillion cubic feet of natural gas were discovered between 2014 and 2017 and where production is slated to begin later this year, could profit from Europe’s energy diversification. Nigeria is also constructing the Trans-Saharan Gas Pipeline with Niger and Algeria to increase natural gas exports to European markets. Nigeria, already a supplier of liquefied natural gas (LNG) to several European countries, is also embarking with Niger and Algeria on the Trans-Saharan Gas Pipeline to increase exports of natural gas to European markets. The three countries have signed an agreement to develop the pipeline, which is estimated to cost $13 billion. Strengthened by the EU’s controversial decision in early February to label investments in natural gas as “green” energy, Europe is likely to be a key financier and patronize of the $13 billion project.
