The war in Ukraine and the African renaissance

Henry Chihwayi | Monday August 8, 2022 16:10

Instead of making further excuses for African leaders’ failures to provide their economies and electorates with basic commodities, the conflict in the Ukraine must provide the African continent’s leadership with scope and urgency to find each other and pursue the African agenda for the benefit of Africans.

Sir Winston Churchill once remarked: “never let a good crisis go to waste”. If African leaders don’t take full advantage of the situation in the Ukraine, the African continent will be taken advantage of and any African renaissance on the agenda will be reset back another quarter of a century. And should the conflict in Ukraine finish now, there will be massive investment in rebuilding infrastructure destroyed by the conflict such that not much attention will be paid to African cries for assistance, so the call for Africa to wake up is NOW!

The region under the conflict is recognised for grain exports, especially wheat as well the export of energy to Western Europe, who import 40-45% of their gas and petroleum consumption from Russia. This fact has hindered the effect of the sanctions on Russia as Western Europe has to secure alternative sources of energy before fully implementing the sanctions.

World grain exports 2020 to 2022

Russia topped the table of grain producers in the world between 2020 and 2022, demonstrating the level of its control in the world. The major exporters of grain (wheat and other staple grains) in the years before the Ukraine conflict of February, 2022 were Russia, Ukraine, the United States, European Union, Canada and Australia.

Russia is the largest single exporter of wheat in the world, with exports of 33 million metric tonnes (MMT) in 2021 or 16.4% of world exports and expected to reach 39 MMT or 19% in 2022/23. But this might be severely curtailed and reduced due to sanctions and the war in Ukraine as supply chains are disrupted by war, and farming operations are also under jeopardy as the war will inevitably disrupt agricultural operations in the region or mercantile shipping in the Black Sea region. Ukraine’s production of 21 MMT or 10.3% is already under threat from the war effort which has mobilised and diverted focus of the able-bodied men and women including farmers from normal activities towards the war efforts. Also the conflict rules deem the grain neither accessible nor exportable.

But why are we discussing world trade in grains? The elucidation will manifest shortly.

Fertilizer Exports

According to STATICA.COM in 2021, the major exporters of fertilisers were Canada, Russia, Belarus, China, Germany Israel, Jordan and Chile. The disruptions in the supply chain of fertilizers due to the war in Ukraine will affect Russian and Belarus exports thus further undermining food security in the world.

Fragile African economies will tend to suffer heavier the scourge of poor harvests or else have to pay more for the essential fertiliser inputs required for the agrarian performance. But this is yet another area of industrialisation potential in the quest for food self-sufficiency.

World energy trade

The 10 largest exporters of petroleum for the trading year 2021 were Saudi Arabia, Russia, Canada, Iraq, UAE, the United States, Norway, Kuwait, Nigeria and Brazil.

Russia was the second largest exporter of petroleum and gas in the world in 2020 and 2021, with 8.3% of world exports. Saudi Arabia has double that volume. Russia exports $82 Billion worth of petroleum, and some reports say it provides circa 40% of Western Europe’s gas and petroleum consumption. This compromised greatly the European Union call for sanctions against Russia, as their dependency on Russian fuel and gas meant the sanctions would paralyse their own industries and supply chains.

In fact the sanctions have seen world fuel and gas prices soar melodramatically. At best the sanctions will probably take effect only after an adjustment period, giving the Western European nations ample time to obtain alternative energy sources. Serious consideration is being had to renovate and utilise old coal and nuclear fired power stations. The EU has to first secure new alternative sources of energy and grains before applying and enforcing sanctions on Russia.

The impact of the sanctions against Russia would be:

• To diversify from Russian sources, thus opening alternative markets of energy and food producers

• To move towards reliance on nuclear and coal powered thermal power stations. These sources will depart from clean energy sources as it causes environmental degradation, ozone depletion and global warming. The re-adjustment will take away some obvious gains in Sustainable Development Goals (SDGs) which have already been realised e.g. use of clean energy will be reversed

• To crowd out small players as prices soar due to restrictions in supply chains

• Curtailment of exports from Russia and Ukraine creates opportunities for Africa. Africa can be intensifying food production because they have the land and can farm commercially on the vast landmasses and suitable climate. It needs commensurate investment in infrastructure for optimal production

The African Marketplace

The African market can take up to $3.4 trillion per year in imports. Unfortunately these imports are from Europe and other continents. There is not enough inter-Africa trade or intra-Africa trade in this massive import bill; less than five percent of imports represent intra-African trade.

Following the invasion, France swiftly secured future petroleum supplies from Angola while Italy has strengthened oil trade relations with Libya. The author highlights these trade relations between African nations and Europe to underscore the lost opportunities for an African renaissance.

The case (or curse?) for the African Renaissance

So the question is: Is Africa failing to take advantage of a crisis? The author discusses this under the dictum that we should never fail to take advantage of a crisis!

The current discourse is not about the pros and cons of the war or validity of the sanctions. It is about the opportunities that are inherently opened up by the conflict in Russia and the market shocks thus created.

The curtailment of exports from Russia and Ukraine creates opportunities for Africa to be exporting, or at least as a first step, to undertake supplying Africa’s needs profitably, and reducing imports from other continents. The irony is that Africa’s minerals are extracted and exported with minimum value addition on the domestic market, which means opportunities for employment creation are lost since Africa’s minerals and other extractive resources are exported at minimal degree of processing depth. Without a reasonable degree of processing depth done on the raw products, the value generated will be at lowest possible. The returns will also be commensurately minimal in value.

But that is where the tragedy of Africa lies; does Africa even have the grain to export? When the conflict started in Ukraine in February, 2022, representatives of the African Union went to Moscow to plead with Russia to cease fire as it would threaten Africans who are so dependent on food hand-outs, and low cost commodity markets. The African message was clear: the war in Ukraine, some 8,000 km away from Gaborone, threatens to destabilise Africa’s food self-sufficiency, making Africa more reliant on food hand-outs. This impoverished position of the African plight highlights the urgent need for Africa to focus on not merely food self-sufficiency, but to promote robust export markets for those agricultural commodities that they can produce in excess. The key is import substitution. This was followed successfully by the Rhodesian regime when the UK placed them under sanctions for the Unilateral Declaration of Independence in 1965. Rhodesia became a shining success then and the model is there for all to copy.

Meanwhile Africa has not covered itself in glory, whereas it should be promoting agricultural production where with abundant land and cheap labour, it has a comparative advantage, and can focus on export markets as well as supporting the downstream processing it seeks.

Investing in agricultural technology would boost African productivity considerably and lead to realisation of scale economies. Africa has vast tracts of virgin land and a climate more favourable to most crops than those countries who lead grain exports to Africa. Changing the narrative so that Africa pursues food self-sufficiency would guarantee:

• Improved earnings per capita

• Stability or quality of earnings

• Quality of life through food and income security

• Employment creation through value addition and downstream processing

• Strong backward integration with vast endowed resources being utilised effectively for the common good

Africa needs governance which is supportive of extractive industries with clear beneficiation strategies so that it desists from exporting raw materials. It should support agriculture in all its forms – horticulture, silviculture, and animal husbandry with downstream processing so that the continent can utilise its comparative advantage to the optimum.

The agricultural graduates of the African Universities and technical colleges should be policy-supported and resourced so that they are able to apply their qualifications and skills commercially to the benefit of their nations. They should run medium scale farms and investors be guaranteed by the state that they will be adequately compensated and the land tenure rights appropriately supported by national policies;

The latest policies dictates should be in sustainable agrarian reforms to ensure not only food sufficiency but also support for championing agro-industrial investments. These will support downstream farther processing value addition and employment creation and poverty alleviation. Food hand-outs are noble short-term measures but not sustainable in the Vision 2063 and SDGs.

The governments in Africa should start investing now. If investing in essential infrastructure which should be in line with environmental protection and governance dictates.

For example, in Botswana, the harnessing of the Chobe River or Zambezi water at Kasane and diverting it southwards towards the desert would be a masterstroke as it would re-green the desert through agrarian reform. This also ensures clean potable water for domestic and industrial use. The same principle could also be followed by Zambia and Zimbabwe on the millions of hectolitres of water that are lost to the Indian Ocean annually. The Pandamatenga enclave is just a miniature expose of the potential that this investment could achieve. Consider the Libyan Green Revolution which meant to harness sea water from the Mediterranean Sea to promote agriculture and convert the Libyan Desert into effective farmland.

In Zimbabwe, during every election period the governing party pledges to resume the Zambezi Water Project to channel water from the Zambezi River and have it flow 500 kilometres to Bulawayo and beyond, with irrigation and water supported activities along the way. The possibilities are immense, but clearly the political will-power is not sufficient to take the narrative-changing initiatives. The electioneering campaign points to the fact that the projects are viable, but the implementation would need better focus to be achieved.

Such massive projects have to be clearly thought out and funds sourced and secured for initial infrastructure from African as well as international sources. The tasks have to be viewed as a couple of bankable projects which would be subjected to rigorous scrutiny at inception and evaluated as to costs, benefits and environmental impact.

So why is Africa failing to take advantage of the crisis in Eastern Europe? The grain shortages caused by Russia’s invasion of Ukraine have instead exposed vulnerabilities as Africa is susceptible to severe food insecurity. Africa, especially, Sub-Saharan Africa finds itself even more vulnerable to the supply chain disruptions as a result of the Russian conflict. But, wait, were we sourcing our foods from Russia and Ukraine? No, not necessarily. But the disruptions in supply chains have seen the more affluent European and other countries grab whatever resources are likely to be scarce.

Are our leaders just taking advantage of a crisis to raise further excuses for their lethargy? The resourced nations will simply crowd out the poor nations of the south. They can even arbitrage and speculate on the prices of the foodstuffs and hence acquire the contracts for such commodities with intention to resale shortly. The spiralling food prices will undermine food security for poor nations in Africa as the staple food is priced out of their affordability range.

The African Renaissance can only be realised when Africa decides to harness the resources at its disposal, deliberately pursue improved production and have viable intra-African trade which would enable realisation of large economies of scale and the ability to uplift continental standards of living in an equitable efficient and just manner.

Without political will to lead the renaissance, the more Africa will remain a pipe-dream, never to be realised. And Africa will wake up too late to take advantage of the turmoil in the Ukraine.

*Chihwayi is a lecturer in Faculty of Commerce at BA ISAGO University. He writes in his personal capacity. The opinions expressed herein are neither those of the publishers nor the University. He can be contacted at: henry.chihwayi@baisago.ac.bw