Why is the Russian economy or the Ukrainian economy doing better than African economies? : Razak Kojo Opoku writes

Russia-Ukraine conflict

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Certainly, there is no doubt that Russia’s invasion of Ukraine has economic consequences for the rest of the world, especially African countries which are largely import-driven economies.

But it is equally important for African leaders to be proactive, pragmatic and find the right economic recovery solutions for their respective countries rather than always placing the blame largely on the Russian-Ukrainian war and, to some extent, the pandemic. of COVID-19.

Many countries are doing relatively well amid the COVID-19 pandemic and the Russian-Ukrainian war.

Since January 2021, the United States of America has invested more than $9.8 billion in security assistance to Ukraine aimed at protecting the country’s territorial integrity and sovereignty from aggression from the Russia.

In February 2022, the UK gave around £220 million in humanitarian aid to Ukraine to help save lives.

In June 2022, the British Prime Minister announced an additional £1 billion in military support to Ukraine to enable Ukraine to maintain its resistance to Russian invasion.

The £1 billion package was announced at the NATO Leaders’ Summit on Thursday June 30, 2022.

So far, in total, the UK has committed £2.3 billion in military assistance to Ukraine.

The European Union has agreed to provide lethal weapons through its European Peace Facility (EPF). “This is the first time in history that the European Union has approved the supply of lethal weapons to a third country”.

As of today, 6 September 2022, the European Union has committed €2.5 billion to Ukraine.

At the Summit of Heads of State and Government in Madrid on June 30, 2022, NATO allies agreed on a new program of assistance to Ukraine aimed at providing long-term and sustainable support against the Russian aggression.

In March 2022, the Executive Board of the International Monetary Fund (IMF) approved a disbursement of $1.4 billion under the Rapid Financing Instrument (RFI) to help meet the urgent financing needs of the world. Ukraine as well as to mitigate the economic impact resulting from the country’s war with Russia.

It is important to clarify that before the Russian-Ukrainian war, the IMF already had a financial program with Ukraine from which Ukraine received 700 million dollars from the IMF.

On August 8, 2022, the World Bank Group announced additional financing of $4.5 billion mobilized for Ukraine under the Public Expenditure for Administrative Capacity Endurance in Ukraine (PEACE) project. This facility aims to help Ukraine meet the needs created by the ongoing war with Russia.

To date, the World Bank Group has mobilized nearly $13 billion in emergency financing to help mitigate the widespread human and economic impacts of the Russian-Ukrainian war. More than $6.3 billion of this financing had been disbursed by the end of July 31, 2022.

However, it is very surprising that despite the war between Russia and Ukraine, these two countries are doing relatively better than most African countries.

Ukraine’s inflation rate in July 2022 was 22.2%, much better than some African countries.

Ukraine’s inflation rate has accelerated in part due to the decision of the country’s Central Bank to DEVALUE the local currency (hryvnia) against the US dollar to shore up the country’s beleaguered economy. war.

Ukraine’s consumer inflation of 22.2% in July 2022 was also due to disruptions in the supply of vegetables and fruits from the Russian-occupied south and the reinstatement of duties on imported goods.

In July 2022, Russia’s inflation rate was 15.1% much better than some African countries.

The Russian ruble, the local currency of Russia despite the sanctions, has become so strong against the US dollar and the euro. The Russian local currency, the ruble, is currently one of the best performing currencies in the world.

What are we not doing right as African countries to position our economies to be immune to external factors or exogenous shocks?

What measures can we put in place to protect African economies from significant global influence and exogenous shocks?

Can African countries survive without the help of the IMF and the World Bank?

The Russian-Ukrainian war may not end anytime soon, so what prudent measures are African leaders putting in place to ensure that instead of blaming the Russian-Ukrainian war, we are able to successfully lead our respective countries with strong resistance to exogenous shocks?

What measures are we putting in place to ensure that we do not return to the IMF regardless of exogenous shocks?

In July 2022, Turkey, the United Nations (UN), Russia and Ukraine signed an agreement in Istanbul to resume CEREAL EXPORTS from three Ukrainian Black Sea ports, which were halted after the start of the Russian-Ukrainian war in February 2022. A joint coordination center with Ukrainian, Russian and Turkish officials and the United Nations has been set up in Istanbul to oversee the shipments.

Since this arrangement, more than 90 ships have transported more than 2 million tons of agricultural products from Ukraine, attracting millions of dollars for the Ukrainian economy.

Russia has earned an estimated $84.5 billion (85 billion euros) in revenue from its fossil fuel exports (gas, oil and coal) to the EU since the start of the war in Ukraine in February 2022.

Since February, the European Union has provided Russia with 54% of its 158 billion euros (about $157.3 billion) in fossil fuel revenues, more than double the amount provided by China and about 8 times more than the amount provided by Turkey.

Recently, China overtook Germany to become the top BUYER of Russian fossil fuels.

Even though Ukraine’s grain exports fell by 46% due to the Russian invasion, Ukraine earned $22.2 billion from the export of grains and oilseeds for the campaign marketing 2021/2022, according to the state news agency Ukrinform.

African leaders must wake up to the economic reality affecting their citizens on the continent and stop the blame games.

How long will African leaders continue to accuse Russia and Ukraine of being the cause and effect of our economic woes?

Citizens want local solutions, not exogenous blame games.

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Christi C. Elwood