As Russia’s invasion into Ukraine enters day five of the crisis, it has been a short turn of events without clear sight of how long it will take or how it will end. Experts are warning that the impact of the conflict is bound to reverberate across the African continent.
People in Africa have rushed to not only make the topic trend but also picked sides in this conflict. Before you take sides between Russia and Ukraine please note that this is not just a European war. Yes, the biggest impacts will be felt in Europe but the adverse effects will not stop in Europe.
Although some African countries may benefit from a shift in global markets away from Russia due to the crisis, the short-term potential impacts on economic livelihoods are worrying while the implications for pan-African solidarity and adherence to multilateralism increasingly uncertain.
A small business owner somewhere in Africa may ask oneself ” This war is in Ukraine tens of thousands of Kilometers away, how does it concern me to care?”
Here are the top 5 things to note on how this conflict will affect your business
1. Fuel Prices
Russia’s attack on Ukraine and retaliatory sanctions from the West may not augur another global recession. The two countries together account for less than 2% of the world’s gross domestic product. And many regional economies remain in solid shape, having rebounded swiftly from the pandemic recession.
Russia is the world’s third-biggest producer of petroleum and is a major exporter of natural gas. With heavy Sanctions imposed on Russia, logistics of oil and fuel products from Russia will not only be complicated but also expensive. This will make the Middle-East and Gulf Nations close to a monopoly on the major global energy sources. This will make fuel prices skyrocket until Russia’s sanctions are lifted. For your business, stocking of more products will be more costly as the manufacturing costs of every product will rise.
Economists have warned that the war in Ukraine could further push oil prices up and increase inflation in Africa. “The last time we had a windfall from oil prices related to war was in 1991, during the Gulf War,” said Abdul-Ganiyu Garba, a professor of the Department of Economics at Ahmadu Bello University Zaria.
“We know it will directly impact the price of crude oil. The revenue may increase, but since we have shifted oil investment to multinational companies, they are more likely to reap greater revenues than the country itself.”
2. Gas Prices
Russia holds the World’s biggest gas reserves both explored and unexplored. Gas products are a fundamental energy source in the manufacturing sectors on the continent and in the past decades have become a popular cooking energy choice in Kenya and much of Africa. The war in Ukraine will make the Russian government to reduce gas production capacity as a means to put the European Union and the USA under pressure to lift the sanction imposed on Russia. With gas prices over the roof, even meals for your employees and stocking products in your business will skyrocket. Sea logistics methods will become more expensive making all imports expensive.
3. Access to bank Loans
Russia has the World’s
4. Food prices
5. Expect High Taxes
