Eight days into Russia’s war with Ukraine, global commodity prices have soared, affecting supply chains and financial markets across the world.
The conflict is likely to affect African countries the most, including Egypt, Kenya and Nigeria. Africa’s oil importers will also feel the heat as Russia’s oil exports are disrupted by sanctions, disruptions and a potential embargo.
Yvonne Mhango, head of Africa research at Renaissance Capital, says that since Russia declared war on Ukraine, the price of Brent crude has spiked by over 80%.
The bank says increased energy prices will be felt in transport costs, and in prices of wheat and corn.
Africa’s biggest wheat consumers will be the most affected, particularly Egypt. Higher prices will hit household spending and raise the risk of social unrest.
Ghana, Nigeria and Kenya import wheat, and other countries that grow most of their own corn are likely to benefit from higher oil prices.
African oil importers will feel the pinch of the surging oil price in their current accounts. They expect current account deficits to widen as oil imports increase.
Russia makes up a small part of African trade with the world, and imports are a small part of trade with Russia.
There are outliers on the continent with Russia’s trade with Malawi, Uganda, Senegal, Niger and Congo.
Russia owns mining operations in Angola, Guinea, Zimbabwe, Sudan, Nigeria, Sudan, and other African countries, including the diamond company Alrosa and aluminium company Rusal.
Fears abound that the war will cause a flare-up in African debt, but Ghana hasn’t got much debt to repay over the next few years.
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