Just over a week into Russia’s invasion of Ukraine, the fallout of the war and unprecedented sanctions on Moscow are shaking global supply chains and financial markets, with the impact already being felt in Africa.
With Russia a major producer of commodities including oil and wheat, sanctions and supply chain disruption are causing commodity prices to soar. That in turn boosts inflation, with spiralling crude oil and cereals prices expected to be felt by consumers in Africa and beyond.
Since Russia declared war on Ukraine, the price of Brent crude has spiked to $112/bl, signalling an over 80% price jump in 12 months. While some exporters such as Nigeria and Angola will see their current accounts positions improve alongside the oil price increase, importers such as Kenya face mounting bills.
The impact on Africa’s food security will also be serious. With Russia and Ukraine accounting for around 30% of global wheat exports, and Ukraine accounting for 15% of corn exports, major African crop importers such as Egypt can expect to see food prices increase.
While economic disruption sometimes creates isolated winners, it is clear that most of this is bad news for a continent only just beginning to get to grips with the economic fallout of Covid-19.
With the war just a week old, there are already ominous signs that its economic impact will be felt well beyond the combat zone.