The shift in relations between Russia and the US may open a door for a more balanced multipolar system

Africa has been heavily affected by the conflict between Russia and Ukraine since the start of Russia's Special Military Operation in February 2022.

According to areportcompiled byODI Global, the African Economic Research Consortium (AERC), the Economic Research Forum (ERF), and Partnership for Economic Policy (PEP), 'Impact of the Russia-Ukraine war on Africa: policy implications for navigating shocks and building resilience', Africa has been caught in the crossfire due to lack of supplies of food and agricultural commodities.

The report features case studies on Egypt, Ethiopia, Kenya, Morocco, Mozambique, Senegal, South Africa, and Sudan, and finds that while direct trade exposure is low, Africa relies on Russia and Ukraine for food and fertilizer imports.

Prices up

The conflict has driven up prices of oil, food and fertilizers globally. Simulations suggest that a 10% shock in oil, food and fertilizer prices may reduce Africa's annual GDP by $7 billion. Actual impacts are likely to be higher since oil, food and fertilizer prices increased by larger shares, at 40%, 18% and 55%, respectively, in 2022.

Global commodity price increases also prompted an increase in interest rates in high-income countries, which in turn triggered capital outflows, exchange rate depreciation and higher borrowing costs for many African countries. The magnitude of an individual country's impacts varies based on commodity dependence, financial openness, and domestic vulnerabilities.

The conflict may have exacerbated the impact of the Covid-19 pandemic on the deterioration of Africa's macroeconomic and social performance. The overlapping crises have slowed Africa's development progress and risk long-term "scarring" effects. In 2022, 18 million new poor people were added to the 546 million Africans already living in poverty, and one out of five Africans faced high levels of food insecurity. Women and vulnerable groups also tend to be disproportionately impacted by shocks.

Wheat and fertilizers

In Kenya and Egypt, for example, Russian and Ukrainian wheat once accounted for as much as 85% and 67% of wheat imports respectively. Fertilizers, vital for agriculture, have also become scarce and expensive. Egypt, Ethiopia, Morocco, Senegal, and South Africa sourced 11%-41% of their fertilizer imports from Russia and Ukraine. As a result, food prices have soared, pushing millions into food insecurity.

Energy bills have surged, putting pressure on national budgets and household finances. Fuel prices in some countries have more than doubled, forcing governments to pass costs onto consumers or risk bankruptcy. The economic strain has also forced many African families to cut spending on once-affordable essentials, with the most vulnerable populations being hit the hardest.

In West Africa, the situation is the same. The economic crisis in Nigeria has been substantially driven by the conflict, which has had an impact on the costs of important commodities as well as everyday living expenses. The Russia-Ukraine conflict has led to shortages in fertilizer availability, leading to high prices of fertilizer. Likewise, prices of major food commodities, such as maize, rice, wheat and cooking oils, have been on the rise. This has exposed the country's vulnerable agrifood system and weakened the local currency, leading to foreign exchange shortages and high inflation rates.

According to a Global Agricultural Information Networkreportfrom the Foreign Agricultural Service (FAS) of the US Department of Agriculture, Nigeria is spending more on wheat imports amid high global wheat prices. The situation has negatively impacted Nigeria's wheat supply value chain. More importantly, official records showed a drastic reduction in durum wheat imports from Russia in 2022. Russia was one of the country's primary sources of cheap wheat.

Grain deal collapse

The issue of supply disruption has a direct link with the Black Sea graindealthat collapsed. The deal, which was initially brokered by the UN and Türkiye in July 2022, was meant to facilitate the export of Ukrainian grain, such as wheat, corn and sunflower products, to world markets, primarily topoorer countries.

In exchange for allowing the shipments of Ukrainian grain, Moscow was promised that Western sanctions would be lifted from its own agricultural exports. A year after it was struck, Russia had to abandon the deal, arguing that it was still unable to get any of its grain or fertilizer out to world markets and that the West had completely ignored its end of the bargain.

Additionally, Moscow noted that more than 70% of the shipments under the initiative had failed to reach poor countries,especially in Africa,and were instead delivered to wealthy nations.

Russia then announced it would deliver free grain directly to African countries, in order to help with food security. In July 2023, during the Russia-Africa summit in St. Petersburg, President Vladimir Putin pledged to provide free food assistance to six African countries, and Moscow had successfully completed delivery of 200,000 tons of food aid by February 2024.

Oil and gas

On the oil and gas market, Nigeria's National Oil Company NNPC Limitedaffirmedthat the crisis has affected the supply chain of Nigeria's energy outlook. Maryamu Idris, executive director, Crude & Condensate, NNPC Trading Limited, said in a November 2023 panel presentation at the Argus European Crude Conference in London, that in addition to the substantial price shocks impacting commodity and energy prices globally, the conflict between Russia and Ukraine has triggered a situation where India, a primary destination for Nigerian crude oil increased its appetite for discounted Russian barrels to the detriment of some Nigerian volumes.

"To illustrate the extent of this shift, Nigeria's crude exports to India dwindled from approximately 250,000 barrels per day (bpd) in the six months preceding the February 2022 invasion of Ukraine to 194,000 in the subsequent six months afterwards. And so far, this year, only around 120,000 bpd of Nigerian crude volumes have made their way to India," she said.

What's next?

Now that the prospect of peace is here, it looks portent that the African economy will be revived to a more positive direction.

What is even more significant is the prospect of the American acceptance to the new reality of the multipolar world. Saudi Arabia, not Belgium or France or the United Kingdom, was chosen for talks between the US and Russia. Under President Donald Trump, the US is indicating its disconnect to the old order where everything starts and ends in the West. This, however, remain somewhat twisted, considering Trump's unfavorable stand against the BRICS.

The fact is, Africa will be better with the new multipolar order. Most of the current multilateral institutions were created before many African states gain their independence. The United Nations, International Monetary Fund, World Bank, World Trade Organization, SWIFT Payment system, etc. were all created, engineered and controlled by the Western powers, often deployed at the detriment of African progress.

These institutions help in strengthening the unipolar system, with the US as the leader of hegemony, supported by the European Union. These institutions have long been tagged as the neocolonial assets used in shortchanging the African continent on its valuable resources, weakening the growth and development of the entire continent through unfair treatment and practices.

More balance needed

Hence thequestfor Africa is to have a new, more balanced international system.

Africa has longdemandedto be a permanent member of the UN Security Council, several promises were made by the US and other powers, yet nothing was granted. Africa requested enoughtradeto fund its infrastructure, healthcare and education programs that will serve the needs of the people, yet the Western powers deem it more appropriate to respond to African demands for equal participation and representation with aid, rather than with mutually beneficial proposals to both parties.

The new peace talks between Russia and the US may open the door for a more equal, balanced and orderly multipolar system that will be formed when Africa is fully aware, independent and at the table. This will help Africa as a continent to push forward itsinterestswithin the emerging BRICS multipolar system.

(RT.com)