How Russia’s invasion of Ukraine will impact Africa?

Russia has more agricultural land than all other European countries combined. Ukraine has the most arable land in Europe. It 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 30% of the world’s wheat and 24% of barley. Ukraine accounts for 13% of global corn exports. Ukraine also accounts for 46% of sunflower oil exports — making it the world’s top exporter.

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 is likely to disrupt future planting.

Russia is the third largest exporter of potash (18% of world exports), a key ingredient in fertiliser, after Canada and Belarus, with reduced supply increasing prices on international markets.

The cost of wheat in early March skyrocketed to 80% higher than six months earlier. The cost of maize saw similar rises. Both prices dropped as the Black Sea opened to exports.

The domino effects are even more complex. In January, the UN’s Vegetable Oil Index was at its highest level ever recorded.

Because food prices are determined on international markets, these shifts will have indirect effects on every African country. Some African countries are net exporters of food and may see their exports increase, including South Africa’s maize exports. But the net impacts will be negative.

Ukraine and Russia also have direct trading relationships with Africa.

Exports from Russia and Ukraine to African countries total about $US14.5 billion per year.

About half of exports to Africa are directed to three countries:

Egypt ($US4.5 billion per year on average)

Morocco (worth $US1.9 billion per year on average)

and Algeria (worth $US1.5 billion per year on average)

In financial terms, primary exports to African countries are wheat (US$4.8 billion), oil (US$2.3 billion), industrial supplies (US$2.1 billion), and steel and iron (US$1.6 billion) per year.

But the underlying story lies in the strategic importance of Russia and Ukraine for some countries.

For example, they represent about 50% of Africa’s wheat imports

For Eritrea, Egypt, Benin, Sudan, Djibouti, and Tanzania they make up over 70% of wheat imports.

And they make up more than 90% of sunflower oil imports to Egypt, Tunisia, Sudan, and Algeria.

In the wake of the invasion, vegetable oil costs doubled, compared to their price before the war which had significant consequences for countries like Egypt, Kenya or South Africa. Together, we estimate they could have paid an additional $US 2.7 billion per year to import palm and sunflower oil.

Relative to the size of the population, countries like Benin, Mauritania, Togo and Kenya will be among the most impacted. For example, Benin’s vegetable oil imports’ bill per person was as much as 9 times what it spent on health in 2019.

Some major commodities have subsided to pre-war prices but they are still higher than they were during previous food crises in 2008 and 2010-11. Countries like Egypt, Algeria or Morocco spend billions in wheat and maize imports. Higher prices on food imports will cost billions and have huge economic impacts.

Egypt’s wheat and maize bill could go up by US$ 4.4 billion – assuming prices don’t continue to rise. Egypt is already seeking a bailout as soaring prices and debt put huge pressure on budgets.

Algeria may have to spend an additional US$2.8 billion – equivalent to 22 times what it will spend in debt service this year. Sudan’s bill will increase by over $630 million, as much as it will pay in debt service.