Russia-Ukraine conflict and its impact on Africa

Transcript:Russia-Ukraine conflict and its impact on Africa:
Russia-Ukraine conflict and its impact on Africa July 18th, 2022 Minet Thought leadership Minet is a trusted pan-African advisor that meets the uncertainties of tomorrow by delivering risk and human capital solutions today. As the largest Aon Global Network Correspondent, Minet has access to a network of over 50,000 colleagues in 120 countries as well as to proprietary data, research and analytics which enable us to manage and secure the risks of tomorrow and provide clients with an unrivaled advantage. For more information, please visit www.minet.com Weakened by a pandemic that lasted more than two years, we are once again faced with catastrophic risk. The Russia-Ukraine war is a second, full-scale crash test for the world at large. Despite the geographical distance, Russia's invasion of Ukraine is casting a long and dark shadow across Africa., as there are important ties between Russia, Ukraine, and Africa. Although some African countries may benefit from a shift in global markets away from Russia due to the crisis, the short-term potential impacts on economic livelihoods are worrying and the implications for pan-African solidarity become increasingly uncertain. BENEFITS FOR NATURAL RESOURCE EXPORTERS A few countries experience long-term growth opportunities from the crisis. More specifically, Africa's natural gas could reduce Europe's dependence on Russian energy. For example, Tanzania and Senegal sense a growing interest in the country's gas reserves, in support of Europe's energy diversification. Nigeria, already a supplier of liquified natural gas (LNG) to several European countries, is furthermore embarking with Niger and Algeria on the Trans-Saharan Gas Pipeline to increase exports of natural gas to European markets. Besides natural gas, further sanctions on Russia might benefit other natural resource exporters in the region. For instance, South Africa, the world's second-biggest producer of palladium—a critical input into automobiles and electronics, could see growing demand as a result of international sanctions placed on Russia. Similarly, as a major exporter of gold, the South African rand has been strengthening as a result of rising global prices for this precious metal. HOUSEHOLD VULNERABILITY FROM FUEL, FERTILIZER, AND FOOD IMPACTS Despite these opportunities, the war could pose challenges for African households, the agricultural sector, and food security. The rising price of oil on global markets directly impacts transport costs. Rising energy costs furthermore affect the production of fertilizer, which is often a necessary input for a productive agricultural sector. The costs of urea and phosphate—two major components of, fertilizer—had