We recently held a discussion on our podcast where we noted that Russia war impacts Africa trade significantly. Why is this? First, there is globalisation. This means that in the world right now, we rely on each other a lot for business. For example, a car manufacturing plant in South Africa would need certain inputs from another country. One such input might be the software need in the car which may need to be imported.
Now, assume that the country exporting the software decided not to export it to South Africa. The business of the car manufacturer would be affected significantly. Therefore, we find ourselves in a situation where for business and trade we are interconnected globally. But, for politics and other sovereign purposes, we are independent. This is how we find ourselves in the current situation with the Russia war.
How exactly does the Russia war impact Africa trade? Reliance on imports from Russia is one of the main ways. One big item is fuel. You might have noticed that fuel prices have become steep since the war broke out. In Kenya, for instance, the price of petrol at the pump recently shot up by 20 Kenya Shillings. In other countries, the increase might be higher. With the trade sanctions on Russia, there is little oil being exported around the world. So, a person sitting in Accra, Ghana is caught up in the effects of the war unknowingly.
What is the solution?
In the podcast we consider if we should do away with globalisation. What would this mean? It would mean that each country becomes inward looking and develops its own products. Of course, if you have no oil or other raw materials you cannot be self-reliant. This also goes for a lot of things that a country cannot produce.
Further, we observe that countries passing self-protectionist measures may not be preferable. What does this mean? This means a country develops and protects its industries from outside trade. Or, a country protects its workers from immigrants etc. These options are not ideal.