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19th January 23
How the Russia/Ukraine conflict affects Africa
It feels as though the world has faced so many difficult issues of late, and the current Russia-Ukraine conflict is simply adding to the difficulties faced by African countries as they face the socio-economic repercussions of Covid-19. Africa relies heavily on food imports from both countries and we have witnessed astronomical price increases in Sunflower oil, wheat and crude oil, as well as supply chain issues. We have already talked about food insecurity in Africa in a previous article, and when coupled with the rising financial insecurity globally, this will serve to exacerbate the “Missing Middle” problems we mentioned in our article earlier this month.
The demand for cereal crops in Africa has increased hugely in recent years, and this demand has been supported by imports, rather than local production. According to the UN; ”North Africa (Algeria, Egypt, Libya, Morocco, and Tunisia), Nigeria in West Africa, Ethiopia and Sudan in East Africa, and South Africa account for 80 per cent of wheat imports. Wheat consumption in Africa is projected to reach 76.5 million tonnes by 2025, of which 48.3 million tonnes or 63.4 per cent is projected to be imported outside of the Continent.
The sanctions imposed on Russia by Western countries will further exacerbate commercial flows between Russia and Africa due to the closure of vital port operations in the Black Sea. Russia is one of the world’s biggest exporters of fertilizers.
Concerns are growing that a worldwide shortage of fertilizer will lead to rising food prices, with knock-on effects for agricultural production and food security.”
However, as the UN also points out, with a 60% global share of arable land, this is an opportunity for Africa to rely less on imports and serve its own domestic market by growing more food for its own population. This would lower food insecurity caused by external factors, at least, but would require buy-in from individual regions and countries.
There is a huge amount of work going on to try to increase resilience in food and nutrition security in Africa, but as we mentioned when talking about food security and the factors affecting it, there is work to be done in so many areas that are difficult to influence. Extreme weather events, political imbalance, land ownership issues and a skilled labour shortage are all examples of issues that take time to address.
However, there are many issues such as access to funding, feasibility, commercial due diligence and valuations that we can support agribusinesses with, as they explore expanding the expansion of food production for domestic (or export) purposes. With the right advisory services we can see this situation turn around significantly, and that is our goal at Agri Frontier.
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