Russian-Ukraine Conflict:

Missed Opportunity for Africa

- ’Dayo Adebayo

In as much as wars are abhorrent to the sane, there is a common saying that every crisis presents its
own opportunities. The Russian-Ukraine war has gone on for more than six months and not only did
majority of countries on the African continent found it difficult to make a definite standpoint on the
war, they are on the backseat as regards the economic opportunities at their doorsteps. The
implication of any war will leave some as winners and others as losers. This classification does not
necessarily imply victory or defeat on the battleground alone, but encompasses consequential
outcomes that can either benefit or harm others who are not physically involved in the war.
Since Russia and Ukraine are major producers and exporters of what many countries are dependent
on for economic survival, the ongoing war is bound to query questions bordering on redistribution of
markets and market positions, rising and supply crisis, and Western sanctions against Russia. As it
appears, the six-month long conflict has left many countries in despair, particulary on the high cost of
food and a shortage of it. On the other hand, some countries are basking in flourishing times on the
same conflict.
It is truism that preparedness meet opportunity. Anyone who fails to prepare will get sidelined when
an opportunity knocks. For the African continent that is blessed with hundreds of natural resources
and massive expanse of arable lands, one wonders how these areas of strength and advantage
shouldn’t be a blessing rather than a frenzy in the course of the military incursion in Eastern Europe.

Agricultural Products
Russia and Ukraine are rich in the production of barley, corn and wheat; with a global export
accounting for 19%, 4% and 14%, respectively. As for sunflower oil, both countries account for 63% in
global export capacity. Invariably, without taking into account its own population, Ukraine alone
feeds 400 million people across the world. The Middle East and North Africa are the biggest
importers of agricultural products from Russia and Ukraine. Between 2018 and 2020, before the
Covid-19 pandemic, the dependency on wheat imports from the two countries by the African
continent stood at a staggering worth of US$5.1 billion despite the latter having arable lands to plant,
produce, feed itself and provide for others.
When the invasion of Ukraine by Russia started in February 2022, the consequence of not seizing the
opportunity that had lurked around for years unattended to dawned on the continent. A country like
Kenya had its wheat imports heavily dependent on the two countries: Russia (67%) and Ukraine
(22%), while the remaining 11% was from the rest of the world. As the conflict rages on, sanctions
and restrictions were placed on Russia, while Ukraine was inhibited by the invasion to export its
grains until recently. Consequently, these factors led to global supply shortage in food and feed price
hike, causing more despair for already poor dependent nations.
Although major food exporting countries like Argentina, Australia, Brazil, Canada, the USA and
members of the EU are positioned to take advantage of the global supply shortage, they cannot
compensate for the bulk of exports that come from the two primary suppliers involved in the conflict.
For instance, countries like Argentina, Canada and the US have internal mechanisms in place to limit
the export of grain stocks so as to have enough to cater for homegrown population. For these
reasons, there is the need for alternative sources of supply and many countries may be forced to
accept rising prices.
What better opportunity for some African countries to emancipate themselves from financial slavery.
Agriculture ought to be one of Africa’s greatest strength, just as technology is Japan’s major cashcow,
and oil and gas make many EU countries dependent on Russia. Unfortunately, this is not so.
Governments in Africa are lethargic in implementing policies that can turn arable lands on the
continent to treasures of wealth. The continent is blessed with rich biodiversity - fertile land,
abundant water resources and potential agriculture labour. These potentials only need to be
adequately harnessed and preserved in the effort to boosting agricultural yields. For instance, land is
so fertile in a countries like Nigeria and South Africa that the World Bank says fertilizer consumption
rate per hectare of arable land in the two countries stand at 20kg and 73kg respectively, compared
with 393kg in China.
Technology has also shown that there are plant samples which can be used to develop safe and
better crop varieties that are adaptive to warmer and hotter climates. There is no doubt on the
availability of this technology, but the lack of political will and vision paved ways to insufficient
funding - largely as a result of venal scale of priorities, and this has led to Africa’s food security to be
in a precarious situation. Therefore, there is no room to contemplate competing for global market
positioning in the wake of the conflict in the Black Sea region.
The African Development Bank Group (AfDB), having seen the missed opportunity and the inherent
risk of food security on the continent, has embarked on short, mid-term and long agricultural projects
in partnership with many local and international countries, agencies and organizations toward a self-
sufficient Africa rather than be reliant on Food Aid. Although this effort is a bit too late for any
impactful benefit from the ongoing Russian-Ukraine conflict, this is the first step in the right direction
to avert the next crisis.
In all of this, however, a visionary Nigerian businessman, Aliko Dangote, saw an opportunity and
seized it. Just a month after the invasion of Ukraine by Russia, Africa’s richest man and President of
the Dangote Group launched a 3-million-tonne fertilizer plant in the Lekki Free Trade Zone of Lagos,
Nigeria. The project, which cost US$2.5 billion, has both the African and foreign markets as its target,
following the skyrocketed prices of natural gas due to the Russian-Ukraine conflict. Natural gas is key
in the making of urea.
Russia is the world’s leading exporter of fertilizer and many countries, like Brazil, are dependent on it.
At a time when the ongoing war has disrupted shipping and attracted severe sanctions, global supply
shortage was inevitable and Brazil needed an alternative market to source its fertilizer imports. Thus,
a ready market like Dangote was there to trade with. At the launch, Aliko Dangote said shipments
from the 3-million-tonne-of-urea-per-year-capacity plant will go to Brazil, India, Mexico, the US and
sub-Saharan Africa. Notore (NOTORE.LG) and Singapore-owned Indorama Eleme Petrochemicals Ltd
are two other Nigerian-based urea fertilizer companies that are beneficiaries of market positioning as
a result of the Russian invasion.

Gold and Other Prescious Metals

In times of economic crisis, gold appears to be the safe-haven for all. Just as sanctions begin to roll
out on Russia for its invasion, gold began to experience price jumps as countries sought the precious
metal to cushion against uncertainties and rising inflation. When situation like this occurs, the usual
thing is for governments to stockpile the acquisition of gold as a countermeasure. Therefore, it opens
opportunities for countries with large reserves to strengthen their currencies and economy all
together.
Africa is the third largest continent with gold reserves; thus, the expectation is that as unfortunate as
war is, the fortunes of custodians of gold reserves on the continent will turn around for the better. As
of June, 2022, according to data provided by Trading Economics, Algeria leads the pack with 174
million metric tons, followed by South Africa (125), Egypt (125), Libya (117), and Morocco (22.12).
The other 5 countries to make the top 10 on the continent with the largest gold reserves are: Nigeria
(21.37), Mauritius (12.44), Ghana (8.74), Tunisia (6.84) and Mozambique (0.67). Despite this
abundance of gold wealth on the continent, it does not translate to prosperity for many of these
countries, even before the Russian-Ukranian war started.
The wave of corruption and exploitation associated with the mining and export of gold in some of
these countries reflect why it is not accountable for in their GDPs. If this natural resource was not
either optimized for profit because of ‘local troubles’ usually caused by non-state actors, they are
plundered by international companies in cohort with indigenous social elites of the society in the
absence of deliberate government framework and policies to cater for the sector. However, South
Africa was among the few countries that benefited from the rising price of gold after the Russian
invasion as it was evident on the stregthening of the rand. The African country is also enjoying good
returns on its market positioning for palladium.
Palladium is a rare and lustrous silvery-white metal that is vital for use in automobiles, electronics,
jewelry, dental filings and in fuel cells to generate power. Russia is the biggest producer of palladium,
followed by South Africa. Although current price has been on a downward trajectory owing to some
economic outlooks in China and the EU, the demand for this versatile metal grew and climbed to a 7-
month peak on 1st of March following the international sanctions placed on Russia. Nothwithstanding
the current drop in price, investors are still bullish on the priced metal.
Other precious metals South Africa is largely benefiting from due to the ongoing conflict in faraway
East Europe are platinum and rhodium. In terms of global production, the country produced 75% of
the former and 90% of the latter. Knowing their preparedeness for market positioning as a result of
the war, South African President Cyril Ramaphosa admitted that his country will take advantage of
the situation in Russia and Ukraine as the global demand for these precious metals grow. Even to
coal, where the country lacks the needed infrastructure to optimize production for exportation,
South Africa still seems the destination for high-quality coal as a viable option for European coal
plants. At a recent forum this year, South African mining analyst Peter Major said the international
restrictions and sanctions on Russia give the country three times the money they usually get from a
ton of coal.
While South Africa capitalizes on these opportunities to boost its economy and strenthen its
currency, same cannot be said of many other African countries blessed with natural resources that
there are global demands for. A typical example is the most populous black nation - Nigeria, which
has a large deposits of coal, gold and steel. The latter has not ever seen the light of day courtesy of
the moribund Ajaokuta Steel project, which has remained non-functional for decades. Consequently
for the country, the economy is on continuous decline and the Naira is reaching bottom lows
everyday against the dollar.

Oil and Gas

Russia’s annual supply of gas to the EU stands between 150-190 billion cubic metres. Before now,
Russia’s global supply of natural gas was 17%, while that of oil was 12%. Although the EU gets 40% of
its gas and 27% of its oil from Russia, it is determined to cut off imports of these commodities
eventually as the former Soviet Union continues its invasion of Ukraine. A shortage of supplies may
lead to recession in the EU, which will extend to the rest of the world, hence the need for alternative
sources of supplies.
There are large producers of oil outside Europe that can accommodate the needs of the EU when
they eventually block imports from Russia. Saudi Arabia, the UAE and a few African countries should
be able to fill in the gap if increase in production was decided. As substitutes of Russian supply
replacement, these countries relish the price rise per barrel and the ones meeting capacity have
greatly capitalized on the opportunity presented. Even Russia still makes $1 billion daily in profit
exporting its oil and gas despite economic restrictions.
In 2021, Africa has crude oil reserves of 125.3 billion barrels but only manages to supply 10% of the
world’s oil production. Countries with the most reserves in the order of hierarchy include: Libya,
Nigeria, Algeria, Angola, Sudan, Egypt, Congo-Brazzaville, Uganda, Gabon, Chad, etc. However, oil
reserves do not translate to production. As at 2021, Nigeria leads oil production on the continent
with 1.3 million barrels per day (bpd), followed by Libya with 1.21 million bpd and Angola with 1.11
bpd. These production quantities are way too low when compared to what the top 3 oil countries
poduced; the United States bpd stands at 18.85 million, Saudi Arabia at 10.83 million and Russia at
10.77 million.
Thanks to Covid-19, the price of oil suffered immesurably throughout last year but the Russian
invasion of Ukraine in February 2022 skyrocketed oil prices. Consequently, it was boom time for oil-
producing countries who had little to show for their oil wealth in the previous year. As oil prices soar
and Russia continues to get battered with sanctions from the West, the logical thing expected from
African oil-exporting countries was to boost their production and milk the opportunity. Rather
unfortunately, there were no immediate gains for these countries as the majority of them suffered
production decline in 2022. For instance, Nigeria’s production capacity of 1.3 million bpd in 2021
reduced to 1.02 million bpd in 2022 and worst off, it couldn’t meet its OPEC production output. The
African giant also lost its number one spot in Africa to Angola sometimes in May this year. The many
factors that plagued production decline in Africa this year include political instability, inconsistent and
policy summersault, theft and corruption, insecurity, and absence of visionary leaders. As far as these
listed facors are concerned, resolving the last will resolve everything.
While alternatives for Russian oil supply can be considerably replaced in the short term for the EU,
the same cannot be said for gas. Following the Russian invasion, Germany halted the approval of
Russia-owned Nord Stream 2 - a gas pipeline project in the tune of $11 billion, which connects from
western Siberia to Germany for energy distribution across the EU. In probable retaliation for this and
EU sanctions, there is subtle panic that Moscow could as well halt the supplies of gas. Outside Russia,
Algeria and Norway have been major suppliers to Europe but they are without the capacity to cover
the output from the East European nation. As the EU ally, the United States and Australia offered to
help with gas supplies, while Qatar was consulted as a possible replacement for Russia. The truth,
however, is that the collaboration of these nations won’t also be enough to supplant Russia’s gas
supplies to Europe. Hence, the EU can’t afford to turn its back to Africa as possible long term
replacement.
While a few leading African countries have been proposing to fill the gap for the EU, and the latter is
opened to business communications with them, there is little to expect in the short term when gas
price is on the high. Despite the large gas reserves in Africa, there is no infrastructure on ground to
facilitate the needed suppy to the European market. Except for the Maghreb-Europe Gas Pipeline in
Algeria that links the North African country directly to Europe, there has been no adequate attraction
of investment for gas infrastructure projects across the continent.Therefore, before the Russian-
Ukraine crisis started, only the North African region has an established gas market in Europe.
A country like Angola with known gas reserves of 382 billion cubic metres can solely meet the annual
demand of 150-190 billion cubic metres that is sold to Europe from Russia but without adequate
infrastructure in place for production and supply, there is no room for optimal performance. In fact,
the little the country manages to produce has been on the decline in the last five years. Mozambique
is another good example with a deep natural gas reserve of 2.8 trillion cubic metres but with little or
nothing to show for it. A $50 billion project to facilitate exploration in the gas-rich north of the
country has been in comatose largely do to insecurity in the region. Tanzanian is another country that
suddenly got jolted to the potentials of having its estimated 1.6 billion cubic metres natural gas
reserves explored and exported to Europe. The country’s president is now looking at how to partner
with European energy companies towards reducing the EU’s dependency on Russian gas, without any
immediate gains.
The continent’s largest producer of LNG is Nigeria but like its compatriots in Africa, it has failed to live
up to expectation. The giant of Africa has been paying lip service to the 614km Trans-Saharan Gas
Pipeline (TSGP) meant to supply gas to Europe through Algeria; a project which was first mooted in
the 1970s. Some twenty years ago, Nigeria’s Nigerian National Petroleum Corporation (NNPC) and
Algeria’s Sonatrach signed a MoU to prepare for the project but it took another three years to sign a
contract with a company known as Penspen Limited. The funny thing was that the purpose of this
contract was not for the start of contruction, it was rather for a feasibility study of the project to
determine its technical and economic feasibility.
When the feasibility study was completed in 2006, it took another three years to sign a tripartite
draft MoU and a joint venture agreement involving three governments, namely: Nigeria, Algeria and
Niger. The gas pipeline, which was expected to cost US$10 billion and begin operational activities in
2015 was to transport 30 billion cubic meters annually at a gas gathering cost of US$3 billion. While
both Nigeria and Algeria would hold 90% of shares through their national energy companies, Niger
would hold 10%. By 2019,the project was merely still a prospect.
In the face of opportunities presented by the Russian invasion of Ukraine, and realizing they have
missed a golden chance (Nigeria, in particular), these countries gathered again on 28 July 2022 in
Algiers to sign another MoU, this time tagged for the implementation of the TSGP project. The energy
ministers of the three countries co-signed the agreement. It would be quite unfair to regard this
recent action as a fire brigade approach for a project that was mooted some half a century ago and
took two decades of ‘preparation.’ H|owever, the present is just a reflection of where we have been
coming from; a continent so rich and blessed, yet so poor and beggarly.

Gainers Vs. Pretenders

Despite declining supply of its gas export to Europe, Algeria is one country that continues to benefit
from the Russian-Ukraine conflict because of its Maghreb-Europe Gas Pipeline. With the pipeline
capacity enhancements in sight, the country is expected to increase its exports to Europe. Right now,
the pipeline is only operating at two-thirds of its capacity. Already, Italy signed a new deal with
Algeria in April for more gas supply in its effort to gradually eschew from its reliance on Moscow. In
signing the deal, the Italian prime minister said others will follow. For South Africa, the country has
leveraged on the Black Sea crisis by optimizing market positioning for its prescious metals and even,
coal. In the early stages of the Russian invasion, prices of these commodities reached new highs in
months, and the country’s currency and economy benefited a great deal from it.
Many other nations took advantage of the Russian-Ukraine conflict by market positioning. Before the
invasion, 60% of the world’s pig iron comes from both countries torn in the conflict and as a result,
the market price skyrocketed. The US and the EU were the main importers, and China, Brazil, India
and Turkey had to step in to replace the main suppliers. China is also in the lead as beneficiary in
aluminum export as Russia controls 6% of global supplies. After the US sanction against Rusal -
Russian producer of aluminium, it became difficult for the company to get its raw materials from
Australia and Ukraine, hence China became the alternative option to its supply need of alumina. Even
before the war started, Rusal could only meet 20% of its demand and 17% of the needs of European
market comes from Russia.
Indonesia is the major nickel supplier in the world, while Russia accounts for 10 to 12% of global
demand for this metal. Nonetheless, the former is actively increasing its metal production in
anticipation of Western sanctions that may afford it the opportunity to replace the latter’s supplies.
As for armaments and ammunition that have been a major trade for Russian companies, particularly
with developing and third-world countries, the US appears to be one of the big beneficiaries. Since
the start of the military incursion by Russia into Ukraine, the fortunes of American companies in the
arms and weapons business have increased. Also, military budgets of top EU countries have increased
following Russia’s ‘special war’ campaign.
There are many countries and regions that have not imposed or have the leverage to impose
sanctions on Russia for its invasion of Ukraine. Countries and regions like Turkey, the Middle East,
India, the Caucasus, the states of Central Asia and China are benefitting from this position by helping
Russia circumvent sanctions. However, the difference between the mentioned countries and regions
from others in similar position is that the former have established substantial foreign trade business
with Russia over the years that they are now taking advantage of the rising costs in the face of closed
markets in Europe and other regions for Russian companies. These countries and regions have stayed
either silient or neutral on the Russian aggression in Ukraine but they continued to exploit the
opportunities presented by the conflict despite the sabotage of sanctions imposed on Russia by
Western powers. That is a statement of sovereignty, and capitalizing on opportunities, which may
only knock but once in a lifetime.

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