Russia-Ukraine War: NESG Wants Measures to Improve Food Security

* Hunger, inflation, manpower loss loom in Africa, warns ex-envoy

Dike Onwuamaeze in Lagos and Victor Ogunje

The Nigerian Economic Summit Group (NESG) has called on the federal government to take urgent steps towards improving food security in Nigeria and removing constraints on the production and supply of agricultural products to the market.

The NESG said this would enable the country to mitigate the negative impact of the Russian war on Ukraine on the food supply in the country.

The NESG made the call in a report titled “Implications of Russia-Ukraine War: Risks and Opportunities for Nigeria,” obtained yesterday, in which it stated that, “the tensions have triggered global supply chain disruptions, largely affecting countries exposed to trade with the warring nations.”

The report further stated that the war in Eastern Europe would affect Nigeria through financial, commodity prices, technology transfer, foreign policy, and migration channels.

It said: “Uncertainties will make investors seek safe-havens, and this could prompt capital outflows from emerging markets, including Nigeria while constraints to supply due to the geopolitical tension have pushed up global commodity prices. This will generally fuel global inflation. Moreover, Nigeria has close economic ties with Russia. The crisis will hinder further procurement of expertise and equipment from Russia.” 

The NESG recommended specific action points that would help Nigeria to mitigate the impact of the crisis on its economy, which included removal of the constraints to agricultural productivity to improve food security, supporting value chain development to ensure that primary products are processed locally rather than exported in their raw state and implementing the Petroleum Industry Act (PIA) in a holistic manner to attract huge investments into Nigeria’s oil and gas sector.

It also recommended that Nigeria should leverage the benefits of the African Continental Free Trade Area agreement (AfCFTA), ensure effective border control, and remove capital controls in order to encourage the inflow of stable investments, such as Foreign Direct Investment (FDI).

The report referred to the National Bureau of Statistics (NBS), which stated that Russia was among Nigeria’s top 10 import trading partners in the third quarter of 2021, accounting for about 4.0 per cent of Nigeria’s total merchandise imports in the quarter.

“This suggests that the persistence of the crisis would reduce the volume of trade between both countries. Similarly, Ukraine being part of Nigeria’s top 10 import locations in the fourth quarter of 2021 suggests that the war between Russia and Ukraine could induce supply chain disruptions and negatively affect import supplies, such as wheat, to Nigeria until both countries reach a truce.

“While Nigeria could explore other sources for wheat purchase, the crisis will have a short-term negative impact on Nigeria through the trade channel.

“In addition, Nigeria is a major importer of wheat from Russia, and the product is the third most widely consumed grain in the country. The hike in the price of wheat will come with rising costs of inputs to flour millers and the producers of value-added products, such as bread.

“Coupled with increasing insecurity, the rise in imported food inflation will keep the overall food inflation and headline inflation elevated,” the NESG said.

It stated further that, “on the demand side, countries that depend on the importation of refined fuel products, such as Nigeria, will experience a hike in import bills as the rally in crude oil prices persists.

“This will deteriorate Nigeria’s trade balance which stood at a deficit of N1.9 trillion in 2021. Considering the fact that the Nigerian government maintains the existing fuel subsidy regime, higher crude oil prices will mean a huge fiscal burden imposed on the nation’s treasury by rising subsidy costs. The World Bank projected that subsidy payments in Nigeria will hit N4 trillion in 2022.”

On the technology transfers channel, the NESG noted that over the years, Russia had been a major location for technology transfers to Nigeria: notably, the Ajaokuta Steel Rolling Mill.

It added that while the Nigerian government was working hard to leverage the technology transfer from Russia to rehabilitate the Ajaokuta Complex alongside other similar industrial facilities, the Russia/Ukraine crisis would constitute a setback for re-integrating Russia into Nigeria’s industrial development path.

“Nigeria’s close ally with Russia will also be challenged for fear of being sanctioned at a time when the latter is facing multiple sanctions from the West,” NESG said.

Meanwhile, Former Nigerian Ambassador to Ukraine, Mr. Frank Isoh, has advised the United Nations and world’s super powers to prevent the Russia/Ukraine war from lingering, saying such would bring hunger, inflation and loss of manpower to Africa continent.

The ex-envoy stated that fear of terrible backlashes had begun to manifest in Africa with the way many students seeking medical education in Ukraine have had their dreams truncated by the war.

The ex-Ambassador posited that the continent  largely dependent on wheat from Ukraine would soon start experiencing upsurge in the price of bread, with that of oil already soaring, thereby increasing government’s spending on subsidy.

Isoh spoke at the Afe Babalola University, Ado Ekiti(ABUAD), yesterday, during a bi-annual Diplomatic Dialogue Titled: “Russian Invasion of Ukraine and the Emerging Global Dynamics: Implementations for Africa and the world,” organised by the Department of International Relations and Diplomacy.

Isoh said he expressed the concern owing to emerging indications that there are no countries and organisations to mediate in the crisis due to mistrust the Russia has for United States of America, United Nations and the Vatican, who could have propelled a trouble-shooting measures.

The diplomatic expert, however, said the only way to rein in Putin was to impose heavy sanctions on Russia to instigate the people against his government when the economy becomes harder and unbearable.

In the alternative, Isoh mulled outright  reorganisation of  Ukraine to make it a federating state from the current  unitary structure, as a way of fortifying the country and make it more cohesive in decision making.

Espousing his views on the implications of the war, Isoh said:

“There will be hunger in Africa if the war lingers, and increasing fiscal deficit because the price of oil will go up and the country will borrow money to pay for subsidy thereby giving unscrupulous people to shortchange the system.

“This will certainly have its ripple effects on the prices of goods. The food prices, particularly wheat of which both Russia and Ukraine are substantial exporters will increase.  Nigeria imports a good proportion of her wheat from Russia. The war will have effect on prices of wheat based products in the long run.

“For Nigeria there is likely to be an increase in fiscal deficit as a result of mounting subsidy payment on petrol. To meet these mounting subsidy payments on petrol. To meet these amounting subsidy payments the country may result to more borrowings and more debts.

“Another significant impact particularly on Africa is in the area of education. Ukraine is a magnet for African and third world students seeking medical education. Those students have already had their education disrupted for an uncertain length of time.

“Records showed that a total of 5,200 Nigerian students and about 3,000 citizens living in that country  have had their educational pursuits and means of economic survival truncated”.