The Effect of the Russia-Ukraine War on Africa
Given the importance of both nations in the supply chains of several key commodities such as wheat and sunflower oil, the protracted war between Russia and Ukraine has had a long-term impact on the African food market. As a result of the continent’s reliance on items from the Black Sea Area, there have been food shortages and price increases. Wheat prices in South Africa grew by 25% year on year to ZAR 6,771.18 (USD 374.97) a tonne in July 2022, from ZAR 5,430.70 (USD 300.74) in 2021, the highest on record, while sunflower oil prices increased by 72% year on year to ZAR 230.44 (USD 12.90) per 5 litres. Countries have devised several measures to mitigate the harm, including obtaining items from other supplier nations. The AfCFTA (African Continental Free Trade Area) and the Black Sea Grain Initiative have given remedies to the current dilemma.
Imports from Russia and Ukraine
The majority of wheat and grains in several African nations are imported from Russia and Ukraine. Djibouti, Togo, Burundi, Cameroon, Rwanda, Mauritania, Senegal, Congo, Tanzania, Libya, and Namibia rely on the warring parties for over 70% of their wheat imports. Nevertheless, Madagascar and Egypt import about 80% of their wheat needs, Somalia buys more than 90% of their wheat needs, and Eritrea gets all of its grain from Russia and Ukraine. As a result, African wheat imports increased by 68% between 2017 and 2019, reaching 47 million mt. Wheat consumption is expected to reach 76.5 million mt by 2025, with 63.4% imported from outside the continent, according to the African Union Development Agency.
South Africa imports 1.8 million tonnes of wheat a year
South Africa alone imports 1.8 million tonnes of wheat every year, with 38% coming from Russia and Ukraine. The scarcity of black sea wheat in South Africa has had a significant impact on local prices. Wheat prices in South Africa grew by 25% year on year to ZAR 6,771.18 (USD 374.97) a tonne in July 2022, from ZAR 5,430.70 (USD 300.74) in 2021, the highest on record, while sunflower oil prices increased by 72% year on year to ZAR 230.44 (USD 12.90) per 5 litres.
The UN and Turkey Agreement
The UN and Turkey agreed in August 2022 to create a secure maritime humanitarian route in the Black Sea (the Black Sea Grain Initiative) to address food shortages caused by the conflict. Almost 600 ships carrying grain and other goods have departed three Ukrainian ports since then: Chornomorsk, Odessa, and Yuzhny/Pivdennyi. While unblocking the sea export channel has helped to solve Africa’s food security issue and cut grain prices, considerable export backlogs continue. As of January 2023, the Black Sea Grain Initiative had exported about 18 million mt of grain and other consumables.
Russia and Ukraine are also key markets for many African products
Russia and Ukraine are not only large exporters of food to Africa, but also important markets for African products. For example, Russia is the most important market for Egyptian oranges. The fighting, however, has created logistical obstacles, restricting supply to Russia. South African fruit exports have also suffered, as Russia is a major market for South African produce, accounting for 7% of SA citrus exports and 12% of SA apple and pear exports. Some governments have devised methods to mitigate the effects. Finding new markets while consolidating old ones is one of these tactics. Apart from Russia, Egyptian orange suppliers sought additional Middle Eastern markets such as the Netherlands and Saudi Arabia. According to Nidhi Kumari, Relationship Manager for Tridge in India, the South Asian country has also emerged as a big importer of Egyptian Valencia oranges.
South Africa begins in January, the export window to China in 2023
South Africa expanded its apple exports to China in 2022, shipping over a million mt, while South Africa pears entered the Chinese market for the first time, increasing shipments by 16% year on year to 287K mt. Given that the pear harvest in South Africa begins in January, the export window to China in 2023 will be longer than the previous year. This, together with growing knowledge of the availability of South African pears in Chinese markets, may result in higher volumes this year. According to Hortgro, South Africa’s main deciduous fruit producers organisation, this penetration of the Chinese market is predicted to increase SA pear exports by 10% by 2025.
AfCFTA as a tool for protecting Africa’s agricultural systems
The African Continental Free Trade Area (AfCFTA), which went into force on January 1, 2021 and now includes 54 nations, is another tool for protecting Africa’s agricultural systems. African nations may profit from the world’s largest free trade zone, which intends to abolish tariffs on 90% of items traded inside the continent over the next ten years. Increasing continental commerce might help lessen reliance on foreign markets like Russia and Ukraine. The AfCFTA is likely to enhance African commerce by more than 52% by 2023, according to the Trade Law Centre NPC.
But there’s more…
While the crisis in the Black Sea area rages on, affecting global markets, African countries want to reduce their reliance on Russia and Ukraine in 2023, boosting food security and fostering greater agricultural trade. So, the effect of the Russia-Ukraine War on Africa seems to be counterbalancing… it semmes, at the moment…
