Russia-Ukraine war leaves economic toll on Africa

Three years after the Russia-Ukraine war began, the global economy is still facing uncertainty and economic repercussions. The ongoing economic turmoil is particularly concerning for nations in Africa, which have limited financial buffers to withstand external shocks. CNBC Africa recently spoke with Phyllis Papadavid, Senior Research Fellow at ODI Global, to discuss the impact of the war on African economies and the challenges they are currently facing. Phyllis Papadavid highlighted the persistent nature of commodity price shocks and their effect on African economies. Inflation rates remain elevated, with components such as food, fuel, and fertilizer prices causing significant economic strain. Policy measures implemented to address these issues have not been entirely successful, leading to negative wealth effects and reduced disposable incomes in some countries. Additionally, exchange rate depreciations have further compounded these challenges, creating a double blow on the economies. Looking ahead, the outlook for African economies appears modest and somber. While digital advancements offer opportunities for productivity growth, persistent inflationary pressures and high borrowing costs pose significant risks. The ongoing war, coupled with fluctuations in U.S. asset prices, could further destabilize the economic climate in the region. In light of these challenges, Phyllis Papadavid emphasized the importance of policies that promote resilience and economic diversification. Building up reserve buffers, enhancing economic resilience, and investing in social safety nets are crucial for mitigating the impact of external shocks on African economies. Economic transformation and diversification are particularly essential for commodity-dependent countries to reduce their vulnerability to price fluctuations. The gender-specific impacts of the economic fallout were also discussed, with women and low-income households bearing a substantial burden from the price shocks. Female-dominated sectors are especially vulnerable to economic disruptions, exacerbating gender disparities in the region. As Africa navigates through this economic crisis, the focus remains on building resilience and driving sustainable growth. While each shock presents unique challenges, Phyllis Papadavid emphasized the need to address inflation, borrowing costs, and promote structural transformation for long-term economic sustainability. In conclusion, the economic toll of the Russia-Ukraine war on African economies underscores the importance of proactive policies and measures to safeguard against external shocks. As the continent continues to grapple with these challenges, a concerted effort towards resilience building and sustainable growth is essential for navigating through these uncertain times.