The combined aftershocks of the most dangerous European conflict since 1945, climate change, and a global pandemic now in its third year could prove catastrophic for the world’s most vulnerable countries.
With a global pandemic that is still far from over, failure to increase global vaccination rates and protect the whole world from the virus means new variants could still drag us back to the worst days of the pandemic.
Escalating food and fuel prices and increasingly fragile supply chains present a real and present danger to the lives of millions. And it could usher in a devastating new era of debt and dependency.
All of this risks pushing millions of people into extreme poverty, destabilizing parts of the African continent, and leading to new geo-political alliances.
A(nother) humanitarian crisis
As of 21 June, 5,261,278 refugees have fled Ukraine. The European Union’s humanitarian commissioner, Janez Lenarčič, said eighteen million people will be affected in humanitarian terms.
Russia’s invasion of Ukraine will impact other humanitarian crises as well. The World Food Programme gets half of the wheat it distributes in humanitarian crises from Ukraine. It now may need to find other suppliers, as well as help feed the 3 million Ukrainians in need of food assistance because of the war.
Even before the war put the supply of key food at risk, 44 million people around the world were on the brink of famine, and an additional 232 million are just one step behind.
Rocketing food prices mean more people going hungry and more instability
Countries will face much higher costs for food, specifically wheat and other grains.
Surging import costs will push more countries to the economic brink
For countries that export crude oil, rising oil prices are clearly paying a dividend.
At current prices, if export volumes stay steady, large crude oil exporters like Nigeria, Angola or Libya would see additional revenues. This isn’t 100% upside. In Nigeria for example, fuel subsidy payments rose to over half a billion dollars in February alone, that’s almost a third of the total health budget in 2022.
But for other countries the picture is much more concerning.
Rises on basic goods like wheat, maize or vegetable oil will hit the poor the hardest as they represent a bigger part of their spending.
So as always, poorer countries will bear the brunt of this: the impact of higher wheat prices will be 0.5% of GDP in low-income countries and 0.6% in lower-middle-income countries. And if that doesn’t seem like a big number, think about what GDP represents: most rich countries don’t spend that much of their GDP on aid.
Countries were already experiencing unprecedented need and constrained finances. Just as countries are focusing on pandemic recovery, debt costs, hunger and poverty are already increasing. Steeper bills for basic commodities will make the situation even worse.
On 25 June 2022 880.4 million people around the world did not have enough food. Since Russia’s invasion of Ukraine began, an additional +54.1 million people million people are experiencing hunger in 47 out of 92 countries with data from WFP.
Soaring costs of living could push millions into poverty
Russia is one of the largest producers of crude oil in the world. With the crisis driving oil prices to their highest levels since 2014, oil importing countries will see hikes in the cost of living and inflation. This will hasten interest rate hikes.
Countries like Nigeria that are net importers of petroleum products, while exporters of unrefined oil, will see their import bill (and subsidy payments) increase. This will worsen its fiscal woes. And rising fuel prices are also likely to further stoke rising inflation rates.
The war is also driving higher coal costs, as concerns about supply grow. Coal prices are at the highest level since 2005.
The rising price of fuel will see not just rising prices but threats to energy supply. South Africa’s public electricity supplier, Eskom, has warned the company can only afford to pay so much for fuel.
Nigeria, Kenya, Ghana, Rwanda, and Egypt are heavily dependent on imports. They will therefore be among the most affected by rising consumer prices. This will make it harder to recover from the aftershocks of COVID-19.
Political and financial aid could decrease
Times of domestic crisis have often seen countries turn inward. We’ve seen this all too clearly during the pandemic, when high-income countries responded to new variants by hoarding vaccines and putting up travel bans.
Right now, the economic picture in Europe and many advanced economies is challenging, and the cost of living is likely to increase.
The war could also put pressure on aid in two ways.
First, Ukraine itself is eligible for official development assistance and received US$1.1 billion in 2019. Aid to the country will undoubtedly increase in the coming years.
Second, donors can count “in-country refugee costs” as part of their aid spending. In 2016, at the height of the Syrian crisis, in-country refugee costs doubled to $16 billion. Now, some European countries hosting refugees from Ukraine may count refugee costs toward their total aid spending, meaning less aid will actually be distributed globally. These costs could amount to US$30 billion a year; equivalent to total bilateral aid to Africa in 2020.
Another debt crisis?
The invasion of Ukraine makes tackling the growing crisis of debt in many countries both more urgent and more challenging.
Russia is now highly likely to default on its debts. That in itself may not affect global financial stability or have a direct impact on existing African sovereign debt.
But for many African countries, additional revenues will disappear into higher costs for other goods, including food. Financial markets will likely tighten up and become more risk averse, at least in the short term. That means the cost of borrowing will rise for many African countries and other emerging and developing economies.
The pandemic has made the debt crisis worse. Over 20 countries in Africa are at high risk of or in debt distress. African countries’ total debt has ballooned to US$625 billion and debt service continues to rise. It was almost US$70 billion for African countries alone in 2021.
As African debt goes up, countries have less to spend on fighting the pandemic, paying healthcare workers and teachers, and investing in infrastructure.
Inflation and high food prices can contribute to unrest. This was seen during the Arab Spring in 2010 and 2011. And Africa is already seeing a worrying uptick in coups and unrest. There have been coups in Burkina Faso, Chad, Guinea, Sudan, and Mali, as well as failed coup attempts in the Central African Republic (CAR) and Guinea-Bissau.
If increased costs of living lead to more uprisings, governments have limited fiscal space to respond economically and may quell unrest through a military response.
In early March, a UN General Assembly Resolution condemning Russia’s actions in Ukraine passed with 141 countries voting in favour. But nearly half of the 35 countries that abstained from the vote were African, including CAR, Congo, Mali, Madagascar, Mozambique, Senegal, South Africa, Sudan, South Sudan, Uganda, and Zimbabwe. A further eight were absent from the vote.
While a vote of “abstain” rather than support for Russia’s behavior could be a growing sign of discontent, it shows that many African countries don’t want to take sides and are hedging their bets. The supply of weapons and military support may be one reason influencing the decisions of African countries at the United Nations. The Wagner Group — a shadowy mercenary group that’s been labeled “the private army of Putin” — is active in several African countries and is expanding the country’s influence in the region.
Another reason may be that, in the wake of COVID-19 and vaccine hoarding, they no longer see Europe and the US as reliable partners.
COVID and conflict converge
Russia’s aggression is converging with the ongoing COVID-19 pandemic, making the path to recovery even more fragile. Especially as millions of people remain unvaccinated, especially in Africa.
As of 25 June 2022, only 18.4% of Africa’s population is fully vaccinated. Low-income countries, most of which are in Africa, are far off track from meeting the World Health Organisation’s goal of vaccinating 70% of the population by September. Many of the countries with the highest risk of variants emerging are in Africa — due to a combination of low vaccination rates and high levels of immunocompromising conditions.
Geopolitics could now also impact the supply of vaccines to low- and lower-middle income countries. Lithuania cancelled a donation of vaccinations to Bangladesh, following Bangladesh’s abstention from the UN resolution condemning Russian actions.
But the broader challenge lies in political space and attention. Many G20 countries are loosening COVID-19 restrictions, while continuing to underfund the global response. Since the war started, the US Congress chose not to fund its international COVID response and did not fulfil a promise on the sharing of IMF Special Drawing Rights. Turning away from COVID-19 and the threat it poses to peoples’ lives and livelihoods is short-sighted and self-defeating.
What needs to happen next?
African countries are grappling with multiple crises. COVID-19 caused economic and social disruptions, and the unequal vaccine rollout is prolonging the pandemic. Russia’s invasion creates another level of uncertainty, as nations face the crisis in Europe, the pandemic, and the threat of climate change.
G20 governments should ensure that their response addresses the knock-on impacts of the pandemic, climate change, and the Ukraine crisis by:
- Resisting export bans on wheat, maize, and other staples, which would only drive prices higher.
- Ensuring that in-country refugee costs are additional to existing aid spending for low- and middle-income countries.
- Rapidly fulfilling their commitment to recycle US$100 billion IMF Special Drawing Rights to support low- and middle-income countries with their response to the COVID-19 pandemic.
- Rapidly addressing vaccine inequities by fully funding the Access to COVID Tools Accelerator and supporting a proposal to waive intellectual property on COVID-19 related medicines at the World Trade Organisation.
How can I learn more and stay informed?
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