The invasion of Ukraine by Russia on the morning of 24th February marked a new period in world history. In what Russia’s president called a “special military operation” on Ukraine, Africa and the globe was not ready for what was to come. In spite of the geographical distance there are very important ties between Africa, Ukraine and Russia, some of which drive the economies of individual countries of Africa. With the tensions raging high, shifts in global markets are being anticipated in the coming days.
Some African countries could benefit from this shift in global markets away from Russia due to the crisis, although this short term potential impacts on livelihoods are worrying with implications for Pan African solidarity and adherence to multilateralism increasingly remaining uncertain.
Africa is a continent rich in resources and natural gas is one of these. Natural gas from African reserves could reduce Europe’s dependence on Russian energy like it has across the years. Tanzania’s natural gas reserves for example which are the sixth largest in the globe have recently been generating growing interests globally owing to the increased tensions between Ukraine and Russia. This is according to President Samia Suluhu Hassan’s remarks during the European Union- African Union summit in mid-February. Senegal, a country with an approximate of 40 trillion cubic feet of natural gas reserves which were discovered between 2014 and 2017 could also benefit from Europe’s energy diversification if the production begins this year as is expected
Nigeria a known supplier of Liquefied natural gas to several European countries is also embarking with Niger and Algeria on the Trans Saharan Gas pipeline to increase exports of natural gas to the European market. In mid-February the three signed an agreement to develop the pipeline estimated to cost $13BN.
Besides natural gas, further sanctions on Russia might benefit other natural resource exporters in Africa. South Africa for example, the second biggest producer of Palladium, a critical input in the electronic and automobile industry could experience growing demand as a result of international sanctions placed on Russia. Global prices of gold have been rising rapidly which has led to the South African Rand strengthening overtime.
In spite of Africa reaping big from these possibilities in the near term, the agricultural sector especially in matters food security will be greatly affected. Global oil prices may skyrocket over time which will have direct impact on the cost of transport. After Thursday’s invasion, the global price of Brent crude surpassed $100 a barrel, a first since 2014. Russia is a major crude oil producer and exporter, accounting for about 12% of the world’s supply, a hold back in supply could further rally the price.
Rising energy costs will affect the production of fertilizers, a critical input in the agricultural sector and further elevate food costs. The farm input sector is already ailing and the sanctions on Russia will worsen the already dire situation. By the end of 2021, the cost of Urea and Phosphate, two of the major components in fertilizers rose by 30% and 4% according to Global Newswire. Many African countries experience low soil fertility which means chemical fertilizers are essential for food production.
Should Ukraine be driven to its knees, the cost of bread and wheat flour will go up in many nations across Africa. These countries have a very high dependence on wheat imports from both countries. In 2020, African countries imported agricultural products worth $4 billion from Russia. About 90 percent of this was wheat, and six percent was sunflower oil. Major importing countries are Egypt, which accounted for nearly half of the imports, followed by Sudan, Nigeria, Tanzania, Algeria, Kenya and South Africa. Market analysts are worried about Russia blockading Ukraine’s Black Sea Ports which would prevent Ukraine from exporting harvests from last season seeing that most of Ukraine’s fertile agricultural land in the East have already been attacked.
“It’s yet one more instance of conflict surfacing in the world at a time when the world just can’t sustain it,” said Steve Taravella, senior spokesperson at the World Food Programme (WFP) of the United Nations. “Hunger rates are rising significantly globally, and one of the largest drivers of hunger is manmade conflict.”
African governments have continued to show interest in building lasting relationships with the West and East in a bid to diversify trade, aid and investments but is finding themselves at a tight spot with neither of them wanting to show allegiance to either sides. However the key question now is how Africa will maintain its relationships with these external partners as the geopolitical context shifts dramatically as the uncertainty continues to loom.