By Tapiwa Gomo
The COVID-19 pandemic and the war in Ukraine have shaken the world, are reshaping international relations and global political power dynamics and new opportunities are emerging. For countries that are wiser, their movers and shakers are busy redesigning and realigning trade relations and by the time the world settles down to reflect on what transpired in the last two years, they will have made some economic gains.
We have seen China and India taking advantage of the economic impact of the Russian war in Ukraine and Western sanctions by strengthening their trade with Russia. That gives Russia access to two of the world’s largest economies with high consumption of raw materials and access to 37% of the world’s population in potential consumer base. Despite the sanctions, Russia continues to trade with European countries but at a rate possible under sanctions.
Until February 2022, Russia was one of the main trading partners of the European Union.
On paper, Russia seems to be gaining. By the first week of April, the Russia Ruble staged a rebound to pre-Ukraine invasion levels after plunging from the impact of sanctions.
We have seen the United States of America (US) turning to Venezuela for oil as a potential substitute for Russian imports. Venezuela is under US sanctions but the former will be happy to have US as a new trading partner.
They were talks of exploring oil trade with Iran — another unfriendly country to the US. The US and Europe are in a state of desperation and they are turning to countries they previously condemned which tells a curious story about their moral standing.
That is not all. For more than half a decade now, Saudi Arabia has been contemplating ditching the US dollar to sell its oil in other currencies. Since the beginning of the Ukraine war, these discussions have gained momentum with China aggressively offering to trade in Yuan. That threatens the US dollar’s dominance of the global petroleum market. Some 80% of oil transactions are denominated in dollars.
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To put things into perspective, Saudi Arabia is the second largest oil producing country in the world and sells a quarter of its exports to China. If oil trades in another currency, poor countries may evade Western trade conditions including their middlemen.
It is not just the oil industry that is facing global changes. The food industry is also on the verge of realignment. For example Brazil, the second leading poultry supplier in the world will have to find new sources of fertilizers to grow its stockfeed — that is if it decides to cut out Russian fertilizer in support of Western sanctions.
And again, Russia and Ukraine are among the top 10 wheat producers and top five exporters. If the war and sanctions disrupt productivity and the supply chains, the world, mainly the global north may need to turn elsewhere for wheat. Someone will need to step in.
More and more changes are likely to occur if the Ukraine war and sanctions on Russia continue.
There are several reasons change must occur. Change is opening up new economic opportunities for new players, mainly the wise ones. Change is needed to neutralise Europe and US’s dominance on the global economy and politics.
Change is needed because the current global power structure has outlived its time — there is need for a new global dispensation.
Change will open up space for poor countries, if they are alive to it, to explore their potential without being superintended by the West.
As these changes are unfolding, where does Africa stand? Is the continent and its regional bodies alive to the changes and opportunities arising from the current events?
It is known that part of the reasons countries in Africa have failed to rise is largely their relationship with the West which does not favour them. But that knowledge alone in the absence of wisdom and action is like water in the sand. We need our own movers and shakers to be more proactive.
It is up to our people and their leaders to take advantage of these opportunities to alter trading partnerships, relations, dynamics in their favour and look at what we can possibly supply should there be a global supply rupture.
It is one thing to look at where one fell, but it is wiser to look at where one slipped and avoid the same old mistakes. The world owes us nothing.
Why can we not feed part of the world’s population? The continent has 65% of the world’s remaining uncultivated arable land, a wealth of fresh water and the best solar resource on planet earth — about 300 days of sunshine each year. Over 60% of Africa’s working population is already engaged in agriculture and the soil across most of the continent is rich and fertile. Then what is missing? A mindset. A strategic plan. A radical leadership that can invest in acquiring and building technology to help people become more productive. What is stopping us? The colonial excuse is long expired. It is a poor mindset that is keeping our people poor. Obsession with elections and politics too cost us time, focus and resources.
Ever wondered how African minerals, oil and gas boost major industries such as engineering, technology, chemicals, telecommunications, defence, aviation and energy across major economies. They contribute significantly to nearly US $85 trillion worth of global economy.
Yet the entire continent is just about 1,5% of the global economy. The answer is simple. Stop selling raw materials and start producing. Stop being stupid and wise up.
- Tapiwa Gomo is a development consultant based in Pretoria, South Africa. He writes here in his personal capacity.