The Russia-Ukraine war will hit Africa hard and could even lead to conflict – World Bank
The World Bank warns that while trade lines between African countries and Russia and Ukraine were low, exposure to commodity price volatility remained high.
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- The war in Ukraine is likely to increase pressure on food, oil, gas and other essential goods in sub-Saharan Africa, the World Bank says.
- But the biggest risk isn’t to economies – it’s that increased pressure could lead to conflicts at the local level.
- Africa imports $ 40 billion in food per year, and soaring grain prices have hit the region.
The Russian invasion of Ukraine added to the headwinds existing in the global economic recovery from the Covid-19 pandemic, with African countries set to feel greater pressure on food, fertilizer, oil and gas.
This, in turn, would increase the risk of local conflicts.
This is according to Albert Zeufack, chief economist at the World Bank for Africa, who spoke at a virtual event publishing the organization’s latest report on regional economic developments affecting sub-Saharan Africa.
The report says the effects of the pandemic, coupled with climate-related issues, present long-term risks to the prospects of African economies, which could stifle efforts to end poverty and achieve shared prosperity.
War in Ukraine would increase this pressure, Zeufack said.
“These forces are weighing on economic activity and leading to further inflationary pressures, thus posing challenges to the conduct of monetary policy among central banks around the world,” he said.
He added that Africa imports $ 40 billion in food per year and any pressure on the supply of food products such as wheat would be particularly pronounced.
“Russia and Ukraine account for a substantial share of imports of wheat, maize and seed oil to numerous countries. These imports could be almost entirely halted if the conflict persists. Russia is also the world’s largest exporter of fertilizers and recommended that fertilizer producers stop exports, which will hamper food production elsewhere, “Zeufack said.
The World Bank report says global commodity prices have continued to rise across the board, a trend that has been accelerated along with hostilities between Russia and Ukraine.
“As most commodities are produced and imported into the region, a generalized rise in commodity prices would involve compensating forces that could mitigate the terms-of-trade impact of some African economies,” the report said.
The report says that while the war’s overall direct impact on regional growth would be marginal, its greatest impact would be the growing likelihood of civil strife due to food and energy-fueled inflation in an environment of heightened political instability.
Overall trade links in the region with Russia and Ukraine are small, with exceptions such as the Republic of the Congo, Gambia, Togo and Sudan. However, disruptions to world trade are affecting not only oil and gas prices, but also the prices of food, particularly grains and edible oils, and fertilizers.
“Rising wheat prices are affecting importers in the region, and in particular those who depend on imports from Russia and Ukraine, for example the Democratic Republic of the Congo, the Republic of the Congo, Uganda, Ethiopia. and Mauritania, “the report states.
The report says high fuel and food prices are expected to translate into higher inflation in African countries, hitting poor families and communities more.
“The conflict is exacerbating pre-existing inflationary pressures, which could lead central banks in advanced countries to raise policy rates earlier and at a faster rate than expected at the cost of withdrawing support for a still sluggish economic recovery,” he said.
Brent crude oil prices hit a 10-year high of $ 130 a barrel in early March when the US and UK issued import bans on Russian oil, he noted.
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