Russia- Ukraine War and its Effects
The Russia-Ukraine War began in February 2022, after Putin Vladimir, the Russian president, announced the reduction of the state armed forces of Ukraine. Due to this invasion, there was a large refugee crisis in Europe and many emigration cases. As well, many countries cut off most Russian banks from the SWIFT network, which affected the Russian economy and the world included. Thousands of companies also pulled out of Russia in response to the invasion. The citizens in both countries were fiercely caught up in the war as most of them either lost their families or were displaced from their homes. While the two countries have been affected, the whole world has faced major impacts like economic consequences of sanctions, world trade and supply chains, and unequal impact on developing countries.
The Russian economy has suffered sanction consequences following the expulsion of most banks from the Society for Worldwide Interbank Financial Telecommunications (SWIFT). According to a post by Kirschenbaum and Veron (Par. 1), despite the increasing requests to impound the reserves to finance reconstruction, the issuers of reserve currencies had already frozen their shares at the Bank of Russia. Additionally, banning the import and export of certain products have also negatively impacted the Russian economy. Hence, the trade of goods and services in Russia declines while inflation soars, which will continue as long as the dispute is not solved.
What is the effect of Russia and Ukraine war in the economy?
Disruptions from the Russia-Ukraine war have negatively impacted world trade and supply chains. OECD (Par.1) claims that there is an increasing rise in fuel, gas, and various agricultural product prices, threatening food security in some developing countries. Ukraine is the main producer of wheat, which the World Food Programme provides to over 120 countries, while Russia is among the largest gas producers. Moreover, both countries produce corn, barley, and fertilizer for agriculture. Therefore, as the war between the two countries continues, there will be low to no production, and export processes will be disrupted.
How war in Ukraine affects food supply in Africa?
Most African countries depend on food imports from developed countries like Russia and Ukraine, and due to the ongoing war, these countries are greatly affected. The conflict between both countries has affected Africa’s food security, whereby there is either no availability or the prices are high. According to Sacko & Mayaki (Par. 6), there are concerns about a worldwide shortage of fertilizer that has led to rising food prices. In addition, Russia being among the largest oil producers, the disruption of oil prices may impact the increase in fuel prices and food production. Thus, there is a need to reduce reliance on imports; African countries should use their land to grow more food, both for domestic use and export, for the rate of drought and famine to reduce.
The whole world has faced great fallouts like economic consequences of sanctions, world trade and supply chains, and unequal impact on developing countries. Both countries produce grain, fertilizer, and natural gas, and with continued disruptions, other countries that depend on them may deteriorate. Other global markets are advised to either search for other markets or start producing their goods to reduce reliance. African countries need to improve their oil and gas production so they will not be affected by the disruptions of the supply chains. However, there is hope that resumption of the Black Sea Grain Initiative will provide relief.
Kirschenbaum, Joshua & Veron, Nicolas. “Now is not the time to confiscate Russia’s central bank reserves.” Bruegel Post. 16 May 2022. https://www.bruegel.org/blog-post/now-not-time-confiscate-russias-central-bank-reserves.
OECD. “The supply of critical raw materials endangered by Russia’s war on Ukraine.” OECD Policy Responses on the Impacts of the War in Ukraine, OECD Publishing; Paris. https://www.oecd.org/ukraine-hub/policy-responses/the-supply-of-critical-raw-materials-endangered-by-russia-s-war-on-ukraine-e01ac7be/. Accessed 3 Jan 2023.
Sacko, Joseph & Mayaki, Ibrahim. “Economic development: How the Russia-Ukraine conflict impacts Africa.” African Renewal. 21 April 2022. https://www.un.org/africarenewal/magazine/may-2022/how-russia-ukraine-conflict%C2%A0impacts-africa