Thread by @David_McNair

The breadbasket of the world is at war. What are the aftershocks for Africa? A 🧵

Russia’s devastating attack on Ukraine will have immediate and lasting implications for Africa’s economics and politics.

African students, which make up 20% of Ukraine’s international student population, have faced racial discrimination at Poland’s border while fleeing the conflict. theglobeandmail.com/world/article-…

At the beginning of March, around 660,000 people had fled according to the @UNHCR. EU humanitarian commissioner said eighteen million people will be affected. @CGDev has estimated that the costs associated with hosting refugees could amount to $30 billion a year. @EconMitch

These costs can be counted as aid under @OECDdev rules which, as it did in 2016 during the so-called European ‘migration crisis’, could cut into European aid to Africa, which amounted to $8.9 billion from the EU, $4.6 billion from Germany and $4 billion from France in 2020.

The humanitarian and economic implications don’t stop there.

Ukraine ranks first in Europe in terms of arable land and has 25% of the world’s total volume of black soil, which is particularly fertile and has helped make the country a global agricultural powerhouse.

Together Russia and Ukraine supply 34% of the world’s wheat, and Ukraine accounts for 16% of global corn exports.

The majority of these exports go through Odessa and other ports on the Black Sea, which are now closed to commercial shipping. ifpri.org/blog/how-will-…

While most wheat and barley crops are harvested in the summer and exported during the fall, maize exports tend to continue through spring.

Large areas of Ukraine’s production border Russia. The conflict could disrupt planting for 2022.

Disruptions in Russian exports of fertiliser could impact crop yields in African countries.

And the knock on impacts of disruption in supply of animal feedstocks could impact other agricultural markets.

This is already resulting in increases in food prices on international markets, which were already at their highest levels since the 1970s, but could also lead to physical shortages. fao.org/worldfoodsitua…

Wheat prices soared 50% in the past month to the highest level in 14 years.

African nations such as Nigeria, Ghana, Egypt and Kenya, where transport and food make up a large share of the consumer price indexes, are likely to be the most affected by these surging prices.
bloomberg.com/news/articles/…

Ghana, where inflation in January reached the top of the central bank’s target of 6% to 10% for a fifth straight month, also has the added pressure of currency depreciation.

Egypt is dependent on Russia and Ukraine for between 70% and 85% of its wheat, and bread subsidies currently eat up 2% of the government’s budget. reuters.com/article/egypt-…

In January, the UN’s Vegetable Oil Index was at its highest level ever recorded. Ukraine is the world’s top exporter of sunflower oil. Buyers are switching to palm which hit record highs on futures markets in early March. Palm is a staple in West Africa moneycontrol.com/news/business/…

Sanctions from the US and EU mean that half Russia's central bank's foreign reserves are held in countries that have frozen its assets. The country is now highly likely to default on its debts. reuters.com/markets/europe…

Not at the scale necessary to affect global financial stability and is unlikely to significantly impact existing African sovereign debt, the resulting volatility could drive up the cost of future borrowing.

High oil prices could ease pressure on exporters like Angola and Nigeria, but this is likely to be offset by increased costs of food and refined petroleum and gas.

.@BERcoza warned of an increase in petrol and diesel prices R1.46/litre implying that sustained supply chain pressure could lead to an increase in interest rates to calm inflation. ber.ac.za/BER%20Document…

Sanctions will impact Russia the hardest but will also have implications for Europe. Interest rate rises (from ECB and Fed) may now be delayed, which could ease pressure on the 40% of African countries facing debt sustainability challenges. one.org/africa/issues/…

But the fallout from sanctions will likely also mean that the reserve needs of European central banks will increase. They may be less willing to share IMF Special Drawing Rights.

Special Drawing Rights are one of the few meaningful financial packages being considered to support African countries recover from the COVID-19 pandemic. one.org/africa/issues/…

Europe will now rapidly transition away from its dependency on Russian gas. This could stoke demand for gas from Algeria, Mauritania, Mozambique, Nigeria, Tanzania, and Senegal.

But a lack of infrastructure could undermine plans for those countries to become viable alternatives

At the EU-AU Summit, the @EuropeanCommiss announced a €150 billion investment in Africa. This investment could respond to climate change, support Africa’s economic development & improve Europe’s energy security. ec.europa.eu/info/strategy/…

African countries will face pressure to take sides. A UN resolution condemning Russia’s actions passed with 141 countries voting in favour.

Half of the 35 that abstained were African inc. Mozambique, Senegal, South Africa, Uganda & Zimbabwe.

https://twitter.com/UN_PGA/status/1499067097711886340

For a continent grappling with multiple crises, including COVID-19 and the high unequal rollout of vaccinations, this creates another level of uncertainty and will distract political attention from the pandemic response and addressing the threat of climate change.

For more insights like this check out one.org/aftershocks

Here’s another good article on #Egypt mei.edu/publications/r…

And here’s a video summarising some of the food security elements.

https://twitter.com/oneaftershocks/status/1499678536050753538

Here's a breakdown of votes in the UN Resolution by population with thanks to @jriver_a

Absent4%
Abstain51%
Against3%
Approve42%