Implications of the Russia-Ukraine Conflict on Africa’s Extractive Sectors, Energy Transition and Economic Outlook
13 July 2022 • 7:00AM EAT
Learn more about the resource governance implications of the Russia-Ukraine conflict in NRGI's collection.
In Africa, policymakers may have underestimated the magnitude of Russia's invasion of Ukraine and its implications beyond Kyiv and Moscow.
Just months after the war began, global oil and gas prices have nearly doubled, and the cost of living in Africa has skyrocketed, with inflation rates reaching double digits in many countries across the continent. The African Development Bank's Africa Economic Outlook 2022 projects real GDP will grow by 4.1 percent in 2022, lower than the nearly 7 percent growth in 2021. The deceleration in growth highlights the severity of the impact of the Russia-Ukraine conflict on Africa's economy. The economic outlook appears gloomy, especially, in this context where countries and the continent at large were just recovering from the devastating consequences of the coronavirus pandemic.
Reports on the economic outlook in Europe, Africa's major trading partner, also indicate that it is headed for recession. According to the World Bank, the war has contributed to mounting concerns of a sharp global economic slowdown, rising inflation and debt, and an increase in poverty rates. The economic impact has reverberated through multiple channels, including commodity and financial markets, trade and migration relations, and adverse impact on confidence. The conflict could spawn economic aftershocks for years to come.
Globally, the war has reshaped perspectives on the extractive sector, particularly on energy security and energy transition, and reignited a renewed appetite to invest in oil, gas and coal as Europe tries to wean itself from Russia’s oil and gas. Implications on Africa’s extractive sector, energy transition, and economic outlook are not yet widely understood. With the increasing rise in costs of living, fuel prices and supply chain disruptions for petroleum products across the continent — how can Africa reorganize itself out of this quagmire?
Speakers in this event aimed to address the following questions:
Photo by donvictorio for Shutterstock
In Africa, policymakers may have underestimated the magnitude of Russia's invasion of Ukraine and its implications beyond Kyiv and Moscow.
Just months after the war began, global oil and gas prices have nearly doubled, and the cost of living in Africa has skyrocketed, with inflation rates reaching double digits in many countries across the continent. The African Development Bank's Africa Economic Outlook 2022 projects real GDP will grow by 4.1 percent in 2022, lower than the nearly 7 percent growth in 2021. The deceleration in growth highlights the severity of the impact of the Russia-Ukraine conflict on Africa's economy. The economic outlook appears gloomy, especially, in this context where countries and the continent at large were just recovering from the devastating consequences of the coronavirus pandemic.
Reports on the economic outlook in Europe, Africa's major trading partner, also indicate that it is headed for recession. According to the World Bank, the war has contributed to mounting concerns of a sharp global economic slowdown, rising inflation and debt, and an increase in poverty rates. The economic impact has reverberated through multiple channels, including commodity and financial markets, trade and migration relations, and adverse impact on confidence. The conflict could spawn economic aftershocks for years to come.
Globally, the war has reshaped perspectives on the extractive sector, particularly on energy security and energy transition, and reignited a renewed appetite to invest in oil, gas and coal as Europe tries to wean itself from Russia’s oil and gas. Implications on Africa’s extractive sector, energy transition, and economic outlook are not yet widely understood. With the increasing rise in costs of living, fuel prices and supply chain disruptions for petroleum products across the continent — how can Africa reorganize itself out of this quagmire?
Speakers in this event aimed to address the following questions:
- What are the causes or triggers and course of this war and how can Africa respond or navigate the effects, building resilience without significantly affecting its own strategic human security interests?
- Can Europe survive without Russia’s oil and gas? How deep is the energy gap?
- Is it true that this is an opportunity for Africa’s oil and gas producers or it is a mirage, which may soon disappear?
- Are there key lessons that Africa should pick from Russia’s invasion of Ukraine to reshape its natural resources narrative, and could it be too early to write off any of the extractive resources in Africa?
- What is the future of energy transition and reaching the net-zero targets? How can Africa use increased interest in its gas to improve its own energy access while accelerating its energy transition?
- NJ Ayuk, African Energy Chamber
- Dr. Anita Kiamba, University of Nairobi
- Fred Kabanda, African Development Bank
- Moses Kulaba, NRGI (moderator)
- Silas Olan'g, NRGI.
Photo by donvictorio for Shutterstock