By Toyin Falola
On February 24, 2022, after weeks of diplomatic talks, Russia decided on what many thought unlikely. Even as the intelligence community in the West sounded alarms about the occurrence of an invasion, there were doubts that it would happen. Putin wanted the attention. He needed NATO to stay far beyond his borders. The world needed to know that Russia, by virtue of its nuclear power status, could press its demands in the manner of the collapsed Soviet Republic. These were expert opinions, but if there is one thing that Russia has proven by this war, it is that drastic actions, ones that escape the borders of predictability, will play a heavy role in crafting a new world order. And, as always, Africa will be an integral party.
Most of the works on the impacts of the Russia-Ukraine conflict on Africa focus on the economic and political aspects. There is little reference to the historical logs that will dictate future relations nor the nuances in the economic and political sectors. Therefore, this work will attempt an in-depth analysis of the impacts of the conflict on Africa, focusing on existing dynamics in these countries themselves. It will explore the economic interactions of Africa with Europe, how they might be affected, and the hypocrisy in the West’s treatment of the war.
Economic Impacts of the War in Ukraine on Africa: A Country-by-country Analysis
To understand the economic impacts of the war, it is important to note the scale of trade relations between African nations and the warring parties. Thus, this section will examine countries whose ties are critical to maintaining internal stability. It also includes the opportunities for certain African countries in the conflict.
Egypt
Egypt’s relationship with Ukraine and Russia settles deep into the core of its economy. Its ties with Russia intersect with its foreign policy objectives, especially in relation to the West. For Russia, the North African country is an integral part of its anti-west policy. Relations go as far back as the 1950s, during which Russia supported Egypt on economic and military fronts. A notable instance is the Russian engagement with Egypt on the construction of the Aswan High Dam in 1964. Then, Soviet leader, Nikita Khrushchev, had joined his Egyptian counterpart in throwing granite rocks into the Nile. This symbolized the benefits of a relationship that spanned several years until the expulsion of Soviet officials in the 1970s. And till the end of the Republic, interactions were at a low ebb between both parties. The reawakening of the Egypt-Russia relationship came about in the twenty-first century when Russia began to re-establish old friendships. Leaders on both sides have been welcoming to each other, with a bold understanding of their individual gains. For Egypt, it is a courtship of two enemies (US and Russia) and a play to befriend both. However, Russia seeks to exert influence on politics in the Middle East and North Africa. They have been united on matters such as the conflict in Syria and Libya, maneuvering the latter’s dynamics to suit their needs.
However, what is most interesting is the actual level of commitment that has been made. Russia and Egypt recently signed a comprehensive partnership agreement, touching security and trade relations. The pact is scheduled to last ten years, with automatic renewals lasting five. To the chagrin of the United States, Egypt has also instituted arms purchases totaling billions of dollars from Russia. It smoothens its military ties with joint drills as well. Notable investments in the relationship are the construction of a nuclear power plant in El Dabaa, Egypt, and the creation of a Russian Industrial Zone in the Suez Canal Economic Zone. Construction expenses for the power plant run as high as $25 billion, 85 percent of which will be funded by a Russian loan. The Industrial Zone will also expand the presence of Russian companies in Egypt and provide an estimated 35,000 jobs for the Egyptian populace. In terms of trade, Egypt provides an excellent market for Russia’s agricultural products. Tourism is another domain in which Russia proves an essential partner. Tourists from Russia and Ukraine constituted a high percentage of visitors to Egypt’s historic sites in the early 2010s. Jointly, they were almost a third of the 12 million tourists who traveled to Egypt in those years.
The importance of tourism cannot be underplayed. Research indicates that one out of every ten members of Egypt’s workforce is employed in the tourism sector. And in peak years, tourism revenue soared as high as $13 billion. With the sector making up 12 percent of Egypt’s GDP, the country is keen on retaining partners like Russia. But a situation that twists the knife in the Egyptian economy is the bomb explosion on a plane filled with Russian passengers in 2015. It sent tourism into a tumble as Russia suspended flights to the country and only just recommenced operations in 2021. This, alongside the outbreak of the COVID-19 pandemic, severely reduced the inflow of tourists.
Employees in the sector faced a decline in their incomes, with hospitality service operators struggling to keep up with the rising business costs. Assessments by the media also showed growing disillusionment among workers as many expressed worry about their employment prospects. But as the virus waned and the government intervened in reviving the sector, hopes of an awakening were ignited. Russia lifted its ban on flights; Egypt was implementing measures to contain the virus, especially in the hospitality and aviation sectors, and places like the Red Sea resorts in Sharm el-Sheikh and Hurghada held new promise for their visitors.
True to form, Russian tourists began to flock in again. In the first few weeks of 2022, more than 100,000 Russians visited Egypt. And in each month of 2021, data showed that Russian tourists numbering up to 500,000 visited Egypt. For Egyptians, the invasion could not have occurred at a more inconvenient time. Even as it seems that they are finally getting a reprieve, sanctions on Russia and travel bans may create debilitating impacts for the struggling sector. Although the Egyptian government appears to be working with Turkey (another country with high tourism inflow) on an alternative transit route for its Russian customers, it is unlikely to witness the same flux. The devaluation of the Russian ruble threatens the purchasing power of the average Russian and will potentially influence traveling. It is also unlikely that European tourists can fill the void left by the Russians.
Besides tourism, food is a sector with serious political consequences. A hike in the price of bread by the Egyptian government in 1977 unleashed deadly riots in the country, sending the government into a flurry to remedy the situation. A similar hike led to the Arab Spring in 2011 and singularly catalyzed massive political changes in the Arab world. Bread consumption in Egypt is a nutritional culture that has existed for centuries. Aish baladi, as it is known locally, constitutes a major part of Egyptians’ cereal diet and is crucial to the 30 percent of Egyptians’ who live below the poverty line. In recognition of the centrality of bread to national stability, the Egyptian government avoided removing subsidies on the product in 2016, even as the IMF mandated similar measures in other areas. However, the availability of bread and the consequent price stability relies on wheat. Data reveals that Egypt is the world’s largest importer of wheat, with Russia and Ukraine supplying 70 percent of its total intake. Before the war, Russia had instituted a tax on exports, intensifying the situation for the Egyptian government. The country’s budget for food subsidy in 2022 is $5.5 billion, with a potential increase of over $700 million as the price of wheat rises. There is also a possibility that the subsidy will be reduced, which raises concerns about a price hike. Egyptian officials are aiming to diversify import locations to manage the situation. Grain stocks are also expected to last several months, during which the government may implement buffers.
South Africa
The relationship between South Africa and Russia has more of a diplomatic than economic leaning. Unlike countries in North Africa, it is less reliant on Russian or Ukrainian food. Data reveals that the country imports 40 per cent of its wheat, but none of it comes from the warring countries. Supply centers include Lithuania, Argentina, the USA, Poland, and Latvia. Maize production in South Africa also positions it to exploit the gap left by the Russia-Ukraine war as local supply exceeds demand. However, South African investments in the country may take a hit due to international sanctions on Russia. According to data, South Africa has an estimated R77 billion investment in Russia, compared to the latter’s R23 billion. The automotive industry within Africa’s most industrialized country will also be affected as Ukraine supplies the bulk of the wire harnesses used in vehicle manufacturing. Ukraine manufactures as much as 30 percent of the wire harnesses used in Euro[e. Russia is equally a major supplier of minerals such as nickel, palladium, and aluminum used to manufacture vehicles and electronics, necessitating a diversification of suppliers.
On the diplomatic front, the situation has become more complex. South Africa’s colonial history includes alliances between liberation movements and the Soviet Union. Today, the political elite in the country maintain their gratitude to Russia for the support it provided then. Although it is questionable if the Soviet Union’s backing was not motivated by a desire to counter Western dominance, the existence still reverberates in leadership circles. Evidence of this is seen in the country’s inability to take a unified stance on Russia’s invasion of Ukraine. Remarkably, it also abstained from a United Nations General Assembly vote to criticize the invasion and demand an immediate withdrawal. A factor that further deepens the bond between both nations is South Africa’s membership in BRICS, the Brazil, Russia, India, China, and South Africa economic bloc. Its relationship with some of the world’s major powers, particularly anti-Western countries like Russia and China, compromises its decisiveness in actions in the international community. Within BRICS, it periodically mediates on the border conflict between China and India, with Russia playing to support the side it finds most convenient at a particular time. However, analysts have identified a notable shift in South Africa’s foreign policy. In its early post-independence days, the country defined itself by its commitment to the recognition of human rights around the world. Its apartheid experience and struggles for emancipation made this an almost instinctive viewpoint for the country. However, its diplomatic responses at the international level have demonstrated the opposite.
Until recently, the country maintained an automatic abstention policy from UN resolutions that aimed to criticize other countries. It refrained from one such resolution on the Myanmar government’s human rights abuses. The country’s political landscape also precludes definitive opposition to Russia’s aggression. The South African Communist Party (SACP), the country’s local communist party, has been a historic disciple of Marxism-Leninism. It demonstrates its followership by rationalizing Russia’s decisions, even clearly expressing its support for the invasion. The situation is not very different within the ruling party, the ANC. A foundation headed by the former president, Jacob Zuma, released a statement supporting Russia and lampooning the West for its hypocrisy in the conflict.
Tunisia
Of all the affected North African countries, Tunisia faces a severe risk of instability. The Arab Spring started in the country in 2011 and has recently witnessed a reversal in gains from that revolution. Its president, Kais Saied, has abolished the parliament, rules by decree, and silences dissent with arraignments before military tribunals. Under this authoritarian atmosphere, Tunisia’s debt was 81 percent of its GDP in 2021 and is projected to rise to 84 percent in 2022 and 84.7 percent in 2023. The necessity of subsidy removal, caused by unfavorable economic outcomes, has worsened the situation, posing a threat to national security. An attempt by the Tunisian government under Habib Bourguiba to remove the subsidy on bread in the 1980s resulted in riots that left more than a hundred Tunisians dead.
Similar attempts between 2008 and 2009 were met by an onslaught of protests. The matter climaxed in 2011 when high commodity prices prompted riots that set off institutional reforms. But subsidy removals are also an economic imperative. Funds earmarked in the budget for subsidizing food stand at $746 million, projected to hit $1.2 billion. Even worse, the country relies largely on Russia and Ukraine for food imports and sustenance of its tourism sector. Tunisia imports over 50 percent of cereals for human consumption and 60 percent for animal feed. Local production is estimated at 1.5 million tons annually, less than half its import quantity of 3.5 million tons. It also depends on Russia and Ukraine for 80 percent of its grain imports and 60 percent of its wheat. It is prevented from shoring up local production by a severe drought that has lasted for three years.
The Tunisian inability to adapt fairly is rooted in the comprehensive welfare system run by its government. As a political solution to the protests in 2011, the government’s response to the employment crisis was massive recruitment into public service. The state employs more people than any other sector in the Tunisian economy, which reflects on available revenue. With the effects of the pandemic and the surge in global inflation rates, it now struggles with paying workers’ salaries. Thus, rising food and fuel prices, high transportation costs, and a decline in political freedoms may warrant negative reactions from Tunisians. And in what may be termed a bleak prediction of fortunes, analysts submit that the Central Bank of Tunisia’s inflation rate of 6.8 percent in 2022 may be moderate compared to likely increases.
Russia’s relationship with Tunisia dates back to the Soviet years. Both countries commemorated their 62nd year of diplomatic relations in 2018. They have deepened bilateral engagements, with Russia supporting Tunisia on security and economic fronts. Russia’s importance to Tunisia is evident in the tourism sector, where, between 2016 and 2017, over one million Russian tourists visited Tunisia. This came at a time a surge of terror attacks forced travelers to abandon Tunisian resorts. Moscow has aided Tunis in combating terrorism by sharing intelligence on terrorists’ movements. This cooperation assisted Tunisian forces in operations against smugglers along the Libyan border. These relations may now be affected by the war and Russia’s ban on exports to support domestic supply.
With Ukraine, the relationship is more recent. Kiev and Tunisian officials signed an economic memorandum in 1992 and created a joint intergovernmental commission on economic cooperation, commerce, science and technology in 1993. Agreements in 2016 ranged from automatic equivalency for Ukrainian diplomas in sciences apart from medicine, direct flights between the capitals of both countries, and easier visa application processes for Tunisians visiting Ukraine. The fruits manifested in higher inflows of Ukrainian tourists into Tunisia and a high population of Tunisian students studying in the country. Ukravauto, a Ukrainian car manufacturer, also opened a factory in Tunisia in 2017, and subsequent agreements have extended to the banking sector, where both liaise on monetary policy and foreign exchange regulation. In 2021, Ukraine further committed to assisting Tunisia in providing training and development to its military.
However, with current events, Russia and Ukraine’s partnership with the Maghreb state is bound to reduce. Both have implemented export bans to improve their food security and are focused on fueling their war machines. As a result, Tunisia is eyeing new horizons, particularly those that promise food. Its government has stated that it is considering Uruguay, Bulgaria, Argentina, and Romania for critical supplies. The president has also threatened to punish food speculators who contribute to the hike in prices. Furthermore, Tunisia is pressing for a $4 billion loan from the International Monetary Fund. And as is the norm with the organization’s loans, it is required to make broad policy changes that include an overhaul of its subsidy programs and a review of its public sector wage bill. However, problems lie in its implementation. President Saied’s approval ratings, which are not what they used to be, heavily depend on his ability to pacify the discontent. His government lags in salary payments, especially those of the armed forces who protect his rule. He is also considering cutting fuel subsidy, a move that risks the ire of lately paid workers. Although the European Union has promised a tranche of €450 million to support the Tunisian budget and further investments over the years, it remains to be seen how Tunisia handles this.
*To be continued*
*Prof Falola presented this as part of the Talking Points at the International Colloquium on Russia-Ukraine War and Implication For Global Security, Peace and New World Order, organized by the Centre for Black Culture and Understanding, Osogbo, Nigeria, on March 22, 2022.
