”In the abundance of water, a fool is thirsty.” – Bob Marley, Rat Race, Rastaman Vibration album
According to the OECD, Russia and Ukraine account for 30% of global wheat exports, more than a quarter of world fertilizer exports, and almost 15% of maize exports.
As a result of this large share, since the start of the invasion on 24 February, wheat prices have almost doubled, while fertilizer prices have risen by more than three-quarters, and maize by more than 40%.
The Economist Intelligence Unit (EIU) elaborates that Russia’s invasion of Ukraine affects the global economy in three ways: financial sanctions, commodities prices, and supply-chain disruptions.
All these adversely affect global inflation and growth. Although the impact of the financial sanctions is far-reaching, our interest is on commodity prices and supply-chain disruptions whose ripple effects will reverberate even here in Africa.
Commodities prices are forecasted to jump due to three factors: anxiety on availability which will push demand; the destruction of physical infrastructure, which will militate against supply and sanctions, which even without imposing an outright embargo on Russia, prices for oil, gas, base metals, and grains will skyrocket.
Increased oil prices will drive freight and transport costs, and the knock-on effect will hit your wallet.
For supply chain disruptions, two factors will be in play. First, the financial sanctions will force companies to struggle for financial channels to trade with Russia, and again, destruction of transport infrastructure – e.g., ports in Ukraine – will compound existing supply-chain bottlenecks.
These will result in difficulties affecting land-based routes, restrictions, and cancellation of sea freight routes from Ukraine.
Although the brunt of the economic impact of the conflict will be felt most in Ukraine and Russia, European countries that are most exposed to trade with these two will also take hits, and naturally, Europe will need to find new suppliers elsewhere.
The question is: where exactly?
As you know, President Lazarus Chakwera, a globetrotter of note, was in the USA to drum up support for Least Developed Countries (LDCs).
While there in his not-so-flattering capacity as LDCs Chairperson, he challenged the United Nations (UN) system to support the resilience of Least Developed Countries (LDCs) from shocks of climate change, debt load, Covid, and even the Russia-Ukraine war in Eastern Europe.
Chakwera noted that poor countries were brought together under the banner of LDCs to enable them to move together towards graduation.
“But, for the Doha Programme of Action to succeed in achieving this goal, it needs implementation, implementation, implementation. The actions we take over the next 10 years, and robust monitoring mechanisms at global and regional levels are foundational and critical.
“I, therefore, stand here on behalf of all LDCs to pledge our total commitment to the full implementation of the Programme of Action and call on our development partners to respond in kind,” he said.
Great stuff, some would say. I, however, beg to differ because:
- given the competitive advantages we have but fail to harness and,
- given that for over fifty years, we have been unable to beg our way to prosperity;
by now, we should have figured out that:
- begging is not a passport to prosperity and,
- that to prosper, we need to harness the God-given resources, subsidize the production and NOT consumption, and
- work towards becoming a net exporter instead of the perennial net importer we are.
Some might argue that we are already on this track, and again, I will beg to differ.
Look here, early last year, we struck a deal with South Sudan to supply commodities such as maize, maize flour, beans, and rice worth US$127 million. This was increased to US$295. In year one of that deal, we have only supplied approximately 10 percent of the goods required. A paltry 10 percent! As if the whole of Malawi is some small, poorly managed animal farm and not a country.
As to why? The Ministry of Trade Principal Secretary Francis Zhuwao’s excuses were absolute gobbledygook.
“We have exported much less largely on account of our lack of production capacity but, mindful of the fact that we have now signed the agreement, we will make sure that we put systems that will capacitate our small and medium enterprises so that they add value to goods,” he said, saying a lot but saying nothing.
Do you know what I think of this claptrap? This is an insult to our intelligence, and I will explain why.
IF Malawi was well-led, meaning if we were being led by people who know a thing or two, the global crisis resulting from the Russia-Ukraine war should have been a blessing in disguise.
Look at what Europe is and will be missing until things normalize.
Like us, Ukraine’s top exports are agricultural. Unlike us, however, Ukraine invested in its agricultural sector. Because they thus “sowed,” cereals, animal and vegetable oils, and seed oils were nearly 35% of Ukraine’s exports in 2020 at a value of $17 billion collectively.
We should have stepped in to fill the gap had we been serious.
Russia’s sanctions and its inability to engage at maximum capacity on the global market would have been the icing on the cake because although Russia is most known for oil exports, it also deals in several commodities.
Trading Economics lists wheat, lumber, plywood, rough wood, newsprint paper, spirits (Vodka, etc.), cotton fabric as some commodities that Russia sells on the international market.
Which of these can we fail to produce?
In fact, we already produce most of these. Only that just like the Sudan embarrassment of negotiating for $295 million only to deliver 10 percent, our production is a joke.
Our leaders from 1994 to date have all fallen victim to the quick-buck syndrome. Rather than think long-term; first, till the soil; then plants the seeds; after that, safeguard the seedlings from pests, parasites, and weeds and water them if necessary; they all quickly queue at the door of whosoever is the “Sattar” of the day. Once addicted to kickbacks, all the promises they made to invest in agriculture – the mainstay of our economy – take the back seat.
Their new god, never mind their hitherto religious backgrounds, becomes corruption and their “major one”, whosoever is dishing the most enormous bribes in town, a throne currently occupied by you know who.
To conclude, although the loss of life and the destruction of property in Ukraine is lamentable, this was the time for Malawi to make hay.
Just as we were once this region’s breadbasket, we should have now been gunning to break onto the lucrative but challenging European market.
Sadly, with leaders who are easily seduced with the quick buck, we are Chairing LDCs and begging while the world is laughing at us, saying only fools thirst in the abundance of water!
Our worst enemy is policies, thinking, and priorities that are topsy turvy. With such mediocrity, who needs Putin?