Africa’s economy and the new global order

The Ukraine crisis

Russia’s “special military operation” that was approved by the State Duma and Federation Council, and directly aims at “demilitarising and denazifying” the neighbouring former Soviet republic of Ukraine has shattered the global economy. The Ukraine crisis and its adverse impact and consequences are squarely blamed on Russia. Beyond that, some experts believe that Russia and China are ambitiously creating a ‘new world order’ to halt the unipolar system and hegemony of the United States.

In the meantime, Russia has come under a raft of draconian sanctions imposed by the United States and Canada, European Union, Japan, Australia, New Zealand and a host of other countries. The sanction-imposing countries are equally under the harsh conditions, as many Asian, African and Latin American countries are unbearably suffering from the global escalating prices. Wide-spread social discontent is also deepening against governments that supported war-mongering Russia.

According to the United Nations Food and Agriculture Organisation, nearly half of Africa’s 54 countries rely on Russia and Ukraine for wheat imports. Russia is a major supplier of fertiliser to, at least, 11 countries. Reuters news agency reported that Africa is suffering from disruptions in food supply and soaring prices of basic goods; and risks “disastrous consequences” if the situation endures, African Union Chairman Macky Sall said during a conversation with philanthropist Mo Ibrahim at the Ibrahim Governance Forum, far ahead of him travelling to Russia.

In early June, Senegalese President and African Union Chairman Macky Sall and the African Union Commission’s Moussa Faki Mahamat went to the south-western Russian city of Sochi for a top-level meeting with President Vladimir Putin – purposely to discuss measures which could alleviate the escalating problems related to the food and agricultural inputs, and to find some strategic solutions within the context of Russia-African relations.

During the discussions, Macky Sall explicitly complained: “Anti-Russia sanctions have made this situation worse and now we do not have access to grain from Russia, primarily to wheat. And, most importantly, we do not have access to fertiliser. The situation was bad and now it has become worse, creating a threat to food security in Africa”.

Sall further explained: “It is also possible to look at Asia, the Middle East and Latin America – we see that the world is closely following the developments, but the countries that are so far away from the hotbed of conflict are still experiencing its worst consequences”.

Russia, these years, plays a lot on driving home Soviet-era sympathy to win the hearts of African leaders. Its traditional links are prioritised mainly on Soviet-era African allies, and its foreign policy is highly state-centred. Worse, it has poor public outreach policies and thus there are still negative perceptions and attitudes among the African public toward Russia.

“We are at a new stage of development and attach great importance to our relations with African countries,” Putin noted. According to him, the development of relations between Russia and Africa has shown positive results. Russia has always been on Africa’s side, has always supported Africa in its fight against colonialism. Though never a colonial power in Africa, Moscow was a crucial player on the continent in the Soviet era, backing independence movements and training a generation of African leaders.

Admittedly, Russia’s ties with Africa unexpectedly declined with collapse of the Soviet Union in 1991 and China has emerged as a key foreign power, investing in many sectors on the continent. While Russia’s economic footprints and in developing the needed infrastructures are still practically invisible, the fact still remains that the United States, European Union and a number of Gulf States are also investing significantly in Africa.

Putin’s meeting with Macky Sall and the participation of Moussa Faki Mahamat was very significant within the context of Russia-African relations. This high-level meeting shows Russia’s interaction has entered a new stage of development with the African Union, including expanding political dialogue and possibly bolstering more practical economic cooperation as well as re-identifying cultural exchanges with African countries.

In an article published by the French Press Agency (AFP), it says talks between the AU leadership and Russian president illustrate the importance of enhancing bilateral relations. While African leaders are attempting to build international solidarity aimed at achieving genuine peace and global security, it is also important to initiate a new reform drive to transform agriculture and industry throughout Africa.

With the changing global situation, there is absolutely a need for reviewing policies. In terms of foreign policy, Africans have to understand that the ‘new global order’ as globe-trotted by Russia and China has limitations. Experts say Russia is highly limited by its own global economic footprints despite its ambitions to lead the world, and here it can only seek alliance with and swim in the glory of China that has spent years expanding and practically setting its economic policies around the world.

Despite criticism, China with an estimated 1.5 billion population is considered an economic power. It has collaborative strategic diplomacy with external countries that has made it attain superpower status over the United States. The United States’ influence seems to be fading away; China has indeed taken up both the challenges and unique opportunities to strengthen its position, especially its trade and investment, and is consistently building economic muscle.

There is now a three dimensional crisis: food, energy and finance. With the economic consequences of the Russia-Ukraine crisis, it is another signal for African leaders to rethink designing import substitution policies. Beyond all that, it seems Africans have no other way to reverse their addiction to food imports that take a significant part of their budgets, despite the huge amount of arable land available. Food deficits are occurring with the potential for causing famine, especially in the Sahel and Horn of Africa regions.

In previous months, especially March and April, a number of reports published by the International Monetary Fund (IMF), World Bank (WB) and many international organisations and academic institutions showed that sub-Saharan economies are likely to be impacted by tightening global conditions and reduced foreign financial flows into the region. The analysis noted the high fuel and food prices will translate into higher inflation across African countries. Most of the reports, however, warned that the broad impoverished population will further be badly hurt and be vulnerable to the unexpected changing conditions.

Some pointed directly to the increased likelihood of civil strife as a result of food and energy-fuelled inflation, particularly in this current environment of heightened political instability. “As African countries face continued uncertainty, supply disruptions and soaring food and fertiliser prices, trade policy can potentially play a key role by ensuring the free flow of food across borders throughout the region. Amid limited fiscal space, policymakers must look to innovative solutions such as reducing or waiving import duties on staple foods temporarily to provide relief for their citizens,” said Albert Zeufack, World Bank Chief Economist for the Africa.

On the other hand, Africa countries are indeed struggling with recovery efforts after two years of COVID-19 that locked them behind borders. One notable fact is that recovery remains uneven, incomplete and is happening at varied rates of speed across the region. For example, the United States, Germans and French have broader plans, not arms and weapons, on food security for Africa.

Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), has urged African countries not to close down trade while calling for deeper investment especially in agriculture: “The message the world needs to hear is, keep trade open. Africans can help Africans by urgently investing in more food production on the continent. We are looking for ways to invest with you in resilience to shocks, especially climate shocks”.

Under the article headline ‘Harness Africa’s Agric potential to feed the World’ published in April, Dr. Akinwumi Adesina – President of the African Development Bank (AfDB) Group, charged Africa countries to harness their agricultural potential and become the global food buffer. His argument was based on the basic fact that the continent occupies about 20 percent of Earth’s total land area, and 65 percent of uncultivated arable land; unlocking its potential would make it a solution to the global food crisis.

Dr. Adesina, who is also a former Minister of Agriculture and Rural Development for Nigeria said: “Africa must become a solution to global food crises by unlocking the full potential of its agriculture sector. What Africa does in agriculture will determine the future of food in the world, because Africa has 65 percent of all arable land in the world that is not yet cultivated”.

The AfDB president has urged African countries to ensure quality standards of food produce and export to other countries. The Feed Africa strategy for Agricultural Transformation in Africa (2016 to 2025) was initiated to make Africa a net food exporter and move the continent to the top of export-orientated global value chains where it has comparative advantage. This is aimed at contributing to eliminating extreme poverty in Africa, and ending hunger and malnutrition in Africa by 2025.

Dr. Adesina has several times attempted explaining the simple fact that a drive for the structural transformation of agriculture is absolutely necessary as there is no dignity in Africa begging other countries for food. “Africa does not need bowls in hand, Africa needs seeds in the ground and mechanical harvesters to harvest bountiful food produced locally. Africa must feed itself with pride. There is no dignity in begging for food.”

The Bank’s efforts have brought home US$1.5billion for the African Emergency Food Production Facility. During the Bank’s presentation on its financial statement on the sidelines of the annual meeting, it indicated that the facility is a bold response to revolutionise food production and mitigate a looming food crisis due to the Russia-Ukraine war.

It’s now imperative for African leaders to search for sustainable investments in agriculture, and for building industry with their foreign partners. Essentially, investing in agriculture and adding new technologies to help farmers increase their productivity, even in climate change, is what should be in the African leaders’ begging-bowls – but it is more decent to fairly negotiate for funding support rather than begging potential external partners.

The AfDB has encouraged consistently building on higher productivity rather than aid-dependency. It has been advocating for expanding social protection programmes, strengthening economic resilience and responsiveness to shocks of the Russia-Ukraine crisis, labour market programmes, protecting urban informal workers and helping the population invest in their health and education. The African Development Bank Group is Africa’s premier development finance institution.

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