The War in Ukraine and Africa’s Food Security

The Question: Good morning and happy weekend to you.

Am calling on our economic “gurus” in the house to please explain to me how the war between Russia and Ukraine is affecting prices of energy and commodities world wide.

From the news we here on TVs and what we hear offline, a lot of countries are in a serious economic crisis and all these have been attributed to the conflict going on in Ukraine.

I read somewhere that Sri Lanka are turning off street lights due to high cost of energy and some countries are rolling out austerity measures to help curtail the effect of the crisis.

I understand that Russia is a top gas exporter in the world, and as a result of its sanctions from the west, gas supply worldwide have reduced. But a country like Nigeria that has large gas reserve, how come we are also experiencing high gas price.

Its also good to add that, in the last 5 to 10 years, a lot of the Middle Eastern countries where in conflict that lasted for a long time. The Middle East as a region exports a significant amount of energy that the world needs, but during their crises, the rest of the world didn’t experience high cost of commodities and energy(I stand to be corrected) as we are experiencing now… So how come the conflict between RUSSIA and UKRAINE is affecting everyone.

Can someone help me with a more professional explanation of this issue.

My Response: I think the problem is that most of the books we read in secondary schools contained fake data. In my economics and social science subjects, I did not see Ukraine anywhere as contributing to Africa’s good security. Russia was also muted. The dominant countries were the USA, UK and the other regulars. But with this war, we are learning the real players who did not have the right media power or influence to insert statistics in books. Magically, a war in Ukraine is making Africans hungry.

Saudi Arabia has never had a war that disrupted oil supplies. The Middle East countries are marginal with Saudi Arabia and Russia running at full capacity. What is happening now is that a big producer (Russia) is off and that is significant. With most of Europe not buying from Russia and many others afraid to send money to Russia due to sanctions, supply becomes limited even when demand is increasing, post-pandemic. Recent data has that Russia is burning $10m worth of gas/day due to inability to export most! When supply is low and demand is high, price increases. In a global village, it affects everyone.

Yet, the biggest issue is perception. When the world thinks of scarcity, bad things happen. The other day, lawyers in Nigeria went on a rampage because they thought the registration materials were not enough for a conference. If people have the spirit of scarcity, it can affect the market. There could be a lot of oil but with Russia involved, many model that this thing is not enough and everyone panics.

Register for Tekedia Mini-MBA (Jun 3 - Sep 2, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.