The economic impact of the Middle East conflict on Africa is going to be “substantial”, according to East Africa Business Council (EABC), which is due to the high dependency of the continent on Ukrainian and Russian produce, including wheat, barley and sunflower oil.
East African countries are staring at a fresh rise in food and fuel prices due to the escalating conflict in the Middle East, which continues to disrupt the flow of goods through the Red Sea. The reason is the simple fact that Ukraine and Russia produce almost one-third of the world’s wheat and barley, and half of the world’s sunflower oil. For example, Djibouti and Somalia rely exclusively on imports to meet their domestic wheat demand, while a sizable portion of wheat demand in Kenya (86%) and Sudan (77%) is met by imports. The growing insecurity in the Red sea is forcing ships to seek alternative but longer and expensive routes away from the Suez Canal around the Cape of Good Hope.
Estimates by the International Grains Council (IGC) show that re-routing from the European Union and the Black Sea countries via the Cape of Good Hope in the southern part of Africa adds around 10 to 15 days to the travel time and around $6 to $8 per tonne to freight costs. It is estimated that 12% of global trade, including 30% of global container volume, passes through the Red Sea. For example, wheat consumption represents 67% and 38% of total cereal consumption in Djibouti and Sudan, respectively, while in Ethiopia, Kenya, and Somalia, wheat consumption accounts for less than 24% of total cereal consumption, according to the World Food Program (WFP). As the transport and logistics costs are set to soar, according to experts, the cost of imported food and energy prices in many African countries, which have already been elevated for some time, are expected to rise even further in the coming months.