The Russian-Ukrainian War: An Opportunity to Strengthen the African Continental Free Trade Area (AfCFTA)

The Russian-Ukrainian War

Introduction

The world had hardly covered from the horrors of the COVID-19 pandemic when it was once again tested on February 24, 2022, by the outbreak of war between Russia and Ukraine. The consequences of this war are quite significant for humanity. On the economic level, the Russian-Ukrainian conflict has highlighted the disadvantages of globalization, understood as a process marked by the interconnection and interdependence of world economies. The inflationary shock and the food crisis resulting from the inoperative nature of import channels for certain basic necessities from Russia and Ukraine have demonstrated the fragility of the economies.

With regard to African countries, in particular, the prices of several basic food products (wheat, flour, rice, maize, bread, vegetable oil, etc.) have risen sharply. Indeed, most African countries are almost dependent on the import of agricultural products and seeds from the two belligerent countries. These imports correspond to 35 billion US dollars of imports each year (1). This appears to be an incongruity given the extent of arable land on the African continent. The low production and especially processing capacity increases the dependence of African economies on the import of these basic products.

The outbreak of the Russian-Ukrainian conflict makes it possible to question the economic resilience of African States, that is to say, their “capacity [ to] keep output close to [their] potential despite a shock ” (2). Above all, it offers the opportunity to analyze the economic and commercial potential of the AfCFTA in the process of building the resilience of African economies to external shocks. Indeed, the AfCFTA was officially launched in January 2021 with the main objective of “creating a single market for goods and services facilitated by the movement of people in order to deepen the economic integration of the African continent…” (3).

This policy note is structured around the idea that the Russian-Ukrainian conflict, in view of its socio-economic consequences on the African continent, offers an opportunity for African countries to work toward the strengthening of the AfCFTA. So that it appears as a real pole of competitiveness and inter-African trade likely to counter the shocks and uncertainties of the dynamics of world trade.

Before analyzing the AfCFTA as a pole of production and export of African products (II), it is necessary to take stock of the socio-economic consequences of the Russian-Ukrainian war on African economies (I).

1. The Socio-Economic Consequences of the Russian-Ukrainian War on African Economies

The Russian-Ukrainian conflict confirmed the extroversion and increased dependence of African economies on imports. Indeed, Russia and Ukraine are major players in the world agricultural and food trade (4). According to the United Nations Development Program (UNDP), in 2019, these countries accounted for around 40% and 29% of the world’s total fertilizer and wheat supply, respectively (5). Taken alone, Ukraine provides 6% of world grain exports, 10% of vegetable oil and oilseed exports, and 10% of world wheat exports.

The percentage is even higher for sunflower oil, which accounts for 50% of world exports. As for Russia, it supplies 5% of world imports of cereals and 24% of wheat (6). In Africa, the five largest importers of Russian and Ukrainian wheat in 2021 are Egypt (13 million tonnes), Algeria (7.7 million), Nigeria (5.5 million), Morocco (4.5 million), and Sudan (2.75 million) (7). Other countries such as Djibouti, Senegal, Cameroon, Togo, and Mauritania import around 900,000 tonnes of wheat, or more than 50% of wheat imports (8).

Wheat shortages have driven up the price of bread and other products made from wheat flour on the African continent. For example, the price of bread went from 250 FCFA to 300 FCFA in Mali (9), and in Cameroon, the 200 g loaf went from 125 FCFA to 150 FCFA. The Russian-Ukrainian conflict has also heightened tensions over vegetable oils. Indeed, Russia and Ukraine being the main producers and exporters of oilseeds, the conflict between them has led to massive orders, which have made supply lower than demand.

The main consequence is the soaring prices of oilseed products on the international scene. In Cameroon, in particular, prices have soared, going, for example, from 1,150 FCFA per liter to 1,800 FCFA on the markets (10).

At the macroeconomic level, this crisis has accentuated the deficit in the trade balances of African countries (11). It also impacted the finance laws of certain countries, which were obliged to adopt collective budgets with a view to modify during the year all the provisions made by the initial finance law. This is the case, for example, in Cameroon.

During a press briefing, the Minister of Communication declared that “the collective budget decided by the Head of State within the framework of the ordinance of June 2, 2022, increased from 120 to 480 billion FCFA, the amount of State subsidies for petroleum products.” This presidential decision made it possible to maintain the prices of hydrocarbons and mainly of fuel (12).

On the social level, the economic upheavals caused by the outbreak of the Russian-Ukrainian conflict led to movements of social demands in most countries of the African continent due to soaring prices and the high cost of living. We have, for example, witnessed popular mobilizations and denunciations against the high cost of living in Morocco and strikes by road haulers following the rise in the price of hydrocarbons (13).

The negative consequences of the Russian-Ukrainian conflict provide an opportunity for African countries to invest more vigorously in strengthening the AfCFTA in order to make it a real pole of production and protect African economies against shocks resulting from external dynamics.

2. The AfCFTA, Production Pole, and Bulwark Against Shocks Resulting from External Dynamics

The Russian-Ukrainian conflict demonstrated the need to increase production capacities and local supply chains in African countries. Admittedly, the United Nations Economic Commission for Africa (ECA) has set up an exchange platform to counter the economic consequences of the Ukrainian crisis in Africa.

This is the Africa Trade Exchange (ATEX), the purpose of which is to ensure “the common supply of bulk commodities and guarantee African countries access to scarce supplies in a transparent and equitable manner” (14). While this initiative aims to reduce the risk of shortages of food and agricultural products, it does not solve the risks of inflation, which remain largely dependent on the international market. In addition, this digital commerce platform certainly favors group orders but certainly does not take into account the specificities linked to the demand of certain African economies. In other words, not all African countries have the same priorities in terms of importing agricultural products.

Thus, instead of setting up these one-off initiatives, the AfCFTA presents itself as the framework par excellence for strengthening African economies. Thus, African countries and the African Union (AU) would benefit from investing in it to promote the advent of a competitive and resilient single African market in the face of external shocks.

The shortages and inflation of food and energy products have aroused African enthusiasm around the production of flour and other local products, of which the AfCFTA must be the center of impetus par excellence. Local solutions are all the more urgent in that they make it possible to repel the inclinations that the specter of hunger could engender in African societies.

However, before ensuring the movement of goods, it is essential to guarantee their production upstream. In this perspective, two trajectories are possible. Firstly, the AU can assess the potential of African States capable of serving as a major production pole within the AfCFTA and, secondly, support the actions of governments and producers according to their geographical specificities. and environmental.

With regard to the first idea, it appears, for example, that in Africa there are major wheat-producing countries that could meet African demand if production were increased. Indeed, in a world ranking on the production of this commodity, Egypt, Ethiopia, Algeria, Morocco, and South Africa appear respectively in 17th, 24th, 32nd, 38th, and 41st place with productions between 9,658,000 tonnes in 2020 to 2,109,100 tonnes (15). These are large quantities that can supply African States whose wheat production is very low, such as Malawi (697 tonnes) and Cameroon (437 tonnes) (16). However, these production quantities deserve to be increased.

With regard to the second idea, African States must favor agro-industry to the detriment of subsistence agriculture. Cameroon, for example, suffers the costs of inflation on certain products such as maize, wheat, sorghum, whereas these foodstuffs constitute the main foodstuffs of its population.

In 2020, the country produced 2.3 million tonnes of corn and derivatives for needs estimated at 2.8 million tonnes (17). This deficit was made up by imports estimated at 150 billion FCFA (18). These funds invested for importation can be redirected toward supporting and increasing local maize production. Thus, Cameroon would enter the AfCFTA with a maize production potential offered to a large and diversified African market. Moreover, Cameroon, Côte d’Ivoire, Madagascar, Nigeria, CAR, Ghana, Tanzania and Mozambique could increase the production of tubers used to make local flours.

These countries are indeed leaders in the production of taro, macabo, cassava, and yam (19). The Russian-Ukrainian crisis revealed that it was possible to make bread from tuber flour (cassava, yam, etc.). But the price of the finished product remains very high for the middle classes.

Beyond production and marketing, it is important to accelerate the construction of mobility infrastructure, free movement and the dismantling of tariff barriers which are advantages offered by the AfCFTA. These initiatives will boost trade between countries and reduce the cost of consumer products. This will contribute to reducing poverty on the continent, increasing the purchasing power of populations, strengthening the potential of private enterprises, and accelerating the economic growth of African States (20).

Conclusion

The Russian-Ukrainian crisis offers African countries, through the AfCFTA, the opportunity to build an internal model for the production and distribution of food and agricultural products. Such a dynamic will contribute to freeing African economies from economic and social shocks linked to international dynamics.

In this perspective, it is essential to accelerate the implementation of the AfCFTA in order to make it a real engine of production and trade between African countries.

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Steve TAMETONG is the Deputy Director of Democracy and Governance Division at the Nkafu Policy Institute of the Denis & Lenora Foundation. He holds a Ph.D. in Public Law from Dschang University. He also holds a Ph.D. in Governance and Regional Integration from the Institute of Governance, Humanities and Social Sciences of the Pan-African University (African Union).

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Aboudi Vanessa is a Research Associate in the Democracy and Governance Division of the Nkafu Policy Institute. She holds a Master's degree in Political Science from the University of Yaoundé II and is particularly interested in governance and gender issues. She is the author and co-author of several articles published in national and international journals.

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