Category: Business

CONSTANTA, ROMANIA — With Ukraine’s seaports blockaded or captured by Russian forces, neighboring Romania’s Black Sea port of Constanta has emerged as a main conduit for the war-torn country’s grain exports amid a growing world food crisis.

It’s Romania’s biggest port, home to Europe’s fastest-loading grain terminal, and has processed nearly a million tons of grain from Ukraine — one of the world’s biggest exporters of wheat and corn — since the Feb. 24 invasion.

But port operators say that maintaining, let alone increasing, the volume they handle could soon be impossible without concerted European Union support and investment.

“If we want to keep helping Ukrainian farmers, we need help to increase our handling capacities,” said Dan Dolghin, director of cereal operations at the Black Sea port’s main Comvex operator.

“No single operator can invest in infrastructure that will become redundant once the war ends,” he added.

Comvex can process up to 72,000 metric tons of cereals per day. That and Constanta’s proximity by land to Ukraine, and by sea to the Suez Canal, make it the best current route for Ukrainian agricultural exports. Other alternatives include road and rail shipments across Ukraine’s western border into Poland and its Baltic Sea ports.

Just days into the Russian invasion, Comvex invested in a new unloading facility, anticipating that the neighboring country would have to reroute its agricultural exports.

This enabled the port over the past four months to ship close to a million tons of Ukrainian grain, most of it arriving by barge down the Danube River. But with 20 times that amount still blocked in Ukraine and the summer harvest season fast approaching in Romania itself and other countries that use Constanta for their exports, Dolghin said it’s likely the pace of Ukrainian grain shipping through his port will slow.

“As the summer harvest in Romania gathers momentum, all port operators will turn to Romanian cereals,” he warned.

Ukraine’s deputy agricultural minister, Markian Dmytrasevych, is also worried.

In an address to the European Parliament earlier this month, Dmytrasevych said that when Constanta operators turn to European grain suppliers in the summer “it will further complicate the export of Ukrainian products.”

Romanian and other EU officials have also voiced concern, lining up in recent weeks to pledge support.

On a recent visit to Kyiv with the leaders of France, Germany and Italy, Romanian president Klaus Iohannis said his country was seeking possible ways of overcoming the “weaponization of grain exports by Russia.”

“As a relevant part of the solution to the food insecurity generated by Russia, Romania is actively involved in facilitating the transit of Ukraine exports and in serving as a hub for grain,” to reach traditional markets in the Middle East, North Africa and parts of Asia, he said.

The solutions discussed in Kyiv, Iohannis said, included speeding up Danube barge shipments, increasing the speed of their unloading at Romanian ports, new border crossings for trucks with Ukrainian grain and reopening a decommissioned railway linking Romania with Ukraine and Moldova.

A Romanian analyst said finding alternative routes for Ukraine’s grain exports goes beyond private logistics companies or any single country, echoing Iohannis’s call in Kyiv for an international “coalition of the willing” to tackle the problem.

“The situation in Ukraine will not be solved soon; the conflict may end tomorrow but tensions will last. … That is why new transport routes must be considered and consolidated,” said George Vulcanescu.

He said that in that sense there are just three financially viable routes for Ukrainian exports — via Romania, Poland or the Baltic states.

However, he added, “port operators need financial support from Romanian authorities, but the funding should come from the European Union.”

Vulcanescu said a combination of fast and “minimal, not maximal” investment is needed.

“Big investment cannot be done quickly — we need to look for fast solutions for expanding the (existing) storage and handling capacities of Romanian ports,” he added. “If we want to help Ukraine now, we need to look for smaller investment to improve the infrastructure we already have.”

Comvex’s Dolghin said the operator wants to help as much as possible, but added: “We hope to see concrete action, not only statements in support of the port operators.”

Source: Voice of America

The Board of Directors of the African Development Bank has approved two grants of $9.25 million to implement the Africa Disaster Risk Financing Programme (ADRiFi) in Malawi. The move will boost the country’s resilience against climate-related shocks and food insecurity.

The funding will support the government of Malawi to develop climate risk management solutions and pay its sovereign risk premium for the transfer of drought risks under the Africa Disaster Risk Financing Programme.

The initiative, a partnership between the African Development Bank and African Risk Capacity Group (ARC), enhances preparedness and strengthens countries’ financial resilience against climate hazards by supporting participation in ARC’s sovereign risk pool. ADRiFi’s presence in Malawi will help shield the country’s smallholder farming communities — including women and children — from the worst impacts of drought.

The first grant, worth $4.9 million, will come from the African Development Fund. The ADRiFi Multi-Donor Trust Fund will provide financing for the second grant valued at $4.35 million. The grants will support the first of two phases of the program, covering the 2022-2023 period. The government of Malawi and ARC will also contribute funding toward total costs of $10.13 million for Phase 1 of the programme.

“Africa is the world’s region most vulnerable to climate change-related weather extremes like flooding, droughts and tropical cyclones,” said Dr. Beth Dunford, the Bank’s Vice President for Agriculture, Human and Social Development. “We welcome Malawi into the Africa Disaster Risk Financing Programme, which boosts participating countries’ ability to respond rapidly to the aftermath of climate-related disasters, arrange finance before shocks and better serve their most vulnerable populations impacted by the effects of climate shocks.”

Agriculture contributes about 30% of Malawi’s GDP and employs about 64% of its workforce. The nation’s agriculture sector is primarily dependent on rainfall. However, rainfall patterns have grown more erratic and harder to predict due to climate variability, and climate-induced shocks are predicted to become more frequent and severe, especially in southern Africa. This has increased the vulnerability of rural dwellers, including farmers, and the overall economy, to weather-related shocks.

ADRiFi will safeguard investments and development gains in Malawi related to five Bank agricultural projects, including to rebuild infrastructure damaged when disaster strikes. Grant funds will also go to build the capacity of national agencies that manage disaster risk.

Rollout of the disaster risk initiative aligns with the country’s 2019-2024 Disaster Risk Financing Strategy, which identifies insurance as a tool to address the risks of climate disasters. It also advances Malawi’s Vision 2063, which aims to promote a transformative agriculture sector that is smart and resilient to climate change.

Malawi is the ninth country to join the ADRiFi programme. The other participants are Gambia, Mauritania, Niger, Sudan, Madagascar, Mozambique, Zambia and Zimbabwe. Under the initiative, Madagascar, Mauritania and Niger have already received insurance payouts with a combined value of $17 million. The funds have been used for recovery efforts following drought and tropical cyclones.

The Africa Disaster Risk Financing Programme enhances African countries’ ability to evaluate climate-related risks and costs, respond to climate-related disasters and review adaptation measures. The initiative also provides initial financing for countries in need of support.

ARC is a specialized agency of the African Union that helps African governments improve capacity to better plan, prepare, and respond to extreme weather events and natural disasters.

The Bank manages the ADRiFi Multi-Donor Trust Fund with contributions from the United Kingdom and Switzerland. The fund, together with the African Development Fund, makes resources available to support the payment of premiums by African countries to protect their exposed vulnerable populations, increase the number of participants in the risk pool and make the African Risk Capacity an effective pan-African initiative.

Source: African Development Bank

Malawi wants renewed access to the International Monetary Fund’s Extended Credit Facility, or ECF, after a two-year halt.

In 2020, the IMF canceled a planned $70 million in loans to Malawi after it came to light that former president Peter Mutharika gave the lender false information about how ECF funds were being used.

The investigations into the matter last year led to the arrest of the former governor of Reserve Bank of Malawi, Dalitso Kabambe, and former finance minister Joseph Mwanamveka.

In a statement released Monday, at the end of a weeklong mission in Malawi aimed at discussing terms of the resumption of the ECF, the IMF said Malawi should first meet certain conditions.

Among those, the IMF asked Malawi to address what it called the country’s unsustainable public debt and to produce a report on allegations the country was giving false information between 2018 and 2020 about the administration of ECF funds.

Sosten Gwengwe, Malawi’s finance minister, told a news conference Monday the government has engaged a debt adviser to help the country address its problem.

“For us to be able to do that, we needed technical expertise,” he said. “And the advice from the Fund was that we get a qualified debt adviser, and that’s why we recruited the Global Sovereign Advisory of France. They have been in the country since last week and they also hope to put together the debt strategy for us in the next one week, maximum, two weeks.”

Gwengwe said a report on alleged falsification of documents on ECF funds is also in its final stages.

“The interim report is out but the substantive report should be coming out mid this month,” he said. “Once these two documents are on the table, then we will re-engage again for a staff level agreement which must be taken to their board, mid-July.”

Economic experts say the ECF is now the only program that can help bail Malawi out of its dire economic straits.

“I am squarely behind the government on this one that we need the ECF,” said Betchani Tchereni, a lecturer in economics at Malawi University of Business and Applied Science. “There might be issues that we have, we are trying to do our best. Yes, we have got some bad apples within the system that may be not helping us well, but the bottom line is that we need those resources. However, way they are going to make those resources available to us as Malawians.”

The IMF says it will make its final decision on the resumption of the ECF to Malawi at its board meeting scheduled for July.

Source: Voice of America

From airlines in Nigeria to shoppers in Malawi, Africans are feeling the impact of the Ukraine crisis in wrenching increases in the price of fuel, grain and fertiliser.

Global oil prices scaled decade-long highs of more than $100 a barrel shortly after Russia invaded Ukraine on February 24, inflicting a hefty blow to many businesses south of the Sahara.

Both Ukraine and Russia are also major suppliers of wheat and other cereals to Africa, while Russia is a key producer of fertiliser.

The impact of the war and the West’s sanctions against the Kremlin are already starting to translate into higher prices for farm inputs and imported grain, AFP bureaus in Africa report.

For Lagos baker Julius Adewale, the crisis is a perfect storm.

Nigeria’s fragile power grid had recently been supplying just a few hours of electricity per day, forcing Adewale to turn to diesel-fueled generators for power — the cost of which has now soared.

“There is no light since yesterday and we’ve been running on gen since yesterday,” Adewale said this week, as workers stacked piles of loaves in his bakery.

“(The) cost of production has increased immensely.”

Nigeria is Africa’s largest oil producer and biggest economy, but it has little refining capacity.

The government subsidises the cost of petrol, but diesel and aviation fuel are sold at market price.

Several local airlines warned this month they were forced to cancel flights due to aviation fuel scarcities.

Diesel used to sell in Nigeria at around 300 naira (0.72 cents) a litre but now goes for 730 ($1.75) a litre.

“I don’t know how we are going to cope because 70 per cent of industries are running on diesel,” Lanre Popoola, a regional chairman of Manufacturers Association of Nigeria (MAN), told local media.

“Other businesses are also running limited hours on diesel as they cannot afford to use generators all day.”

– Hardship ahead –

If the crisis is sustained, said Eurasia Group analyst Amaka Anku, African countries which are big importers of fuel and grain will rank among the losers, although exporters of those commodities may be among the winners.

There are also countries that are heavily indebted, such as Ghana, which will struggle with higher borrowing costs as investor risk appetite lowers, she said.

Gas producers like Tanzania and Nigeria and future producers like Senegal, which is still developing its reserves, may benefit from Europe’s future moves to end its dependence on Russian energy, said Danielle Resnick at the Brookings Institution think tank.

But, she said, the immediate challenge was hardship for African families, millions of which are already struggling to get by.

“War in Ukraine means hunger in Africa,” International Monetary Fund (IMF) Managing Director Kristalina Georgieva said on Sunday.

High prices will for instance aggravate food insecurity in conflict-torn Ethiopia, where nearly 20 million people are in need of food aid.

Rising prices for food are also fueling fears of more hunger and turmoil in the troubled northeast of the Democratic Republic of Congo, residents said, in an area already struggling with geographic remoteness and decades of violence.

– Inflation already here –

In many parts of Africa, the inflationary machine has already lurched into higher gear, AFP bureaus report.

In Kenya, a two kilogramme (4.4-pound) bag of wheat flour now sells for 150-172 Kenyan shillings (US$1.3 to US$1.5), compared to less than 140 shillings in February.

Sub-Saharan Africa’s No. 3 economy usually gets a fifth of its imported wheat from Russia and another 10 percent comes from Ukraine, according to government figures.

As for fertiliser, a 50-kilo bag that cost 4,000 shillings last year now changes hands for 6,500 shillings ($57) — a figure that is likely to increase as the planting season starts this month.

In the Ugandan capital Kampala, Ukraine’s crisis has already caused a surge in prices of soap, sugar, salt, cooking oil and fuel.

“Most of the essential commodities are produced locally but some ingredients are imported and their prices are being dictated by the shocks on international markets,” Junior Finance Minister David Bahati told AFP.

Cooking oil has risen from 7,000 shillings per litre ($1.94) in February to 8,500 shillings ($2.4) and a kilo of rice from 3,800 to 5,500 shillings, according to Kampala retail shops.

“My family of four people spend an average of 5,000 shillings to cater for food and other necessities but this is no longer enough… I now spend more than 10,000 shillings,” Ritah Kabaku, 41, a shop assistant in Kampala, told AFP.

– ‘Victims of war’ –

Wary of Ukraine-fueled inflation, Mauritius’ central bank has raised its key interest rate to two percent — its first hike since 2011.

“It is unfortunate that as the sky cleared after Covid 19, more clouds appeared,” Prime Minister Pravind Kumar Jugnauth said in a televised speech.

In Somalia’s capital Mogadishu, prices for fuel, cooking oil, construction materials and electricity have shot up.

“A week ago, the 20-litre jerrycan of cooking oil was $25, today it’s about $50. A litre of gasoline was $0.64 and today it runs about $1.80 — it’s crazy,” said Mohamed Osman, a trader.

In southern Africa, bread and cooking oil prices in Malawi have shot up by an average 50 percent.

“This war doesn’t concern us and it is not right that we should be paying such a high price,” Fatsani Phiri, an auditor who was buying bread in the capital Lilongwe.

“We cannot always be victims every time there is a war somewhere in the world.”

Source: Seychelles News Agency

Highlights

• Retail prices of maize increased by 13 percent since last month.

• No ADMARC purchases were reported in any of the markets monitored by IFPRI.

• ADMARC sales were reported in 8 out of the 26 markets monitored by IFPRI.

• Retail prices in Malawi were lower than elsewhere in eastern Africa.

Source: World Food Programme

Highlights

• During this round of data collection, the Survival Minimum Expenditure Basket (SMEB) increased in rural areas, while expenditure in urban areas remained unchanged. The household SMEBs increased by an average of 12.6 percent in the rural Northern Region; 4.8 percent in the Central Region; and 1.8 percent in the rural Southern Region. The rising SMEBs observed during this round are mostly due to increases in the prices of maize, cooking oil, fish, and soap in all regions.

• The price of maize increased by 8.9 percent to MK 206 per kg in this round (early April) from MK 189 per kg in the previous round (late March). Maize grain prices unexpectedly increased during this period mostly because producers and traders adjusted their prices upwards in anticipation of poor production and high prices this year. The Government also revised upwards to MK 220 per kg the Minimum Farmgate Price for maize, which will likely elevate maize prices further in the coming weeks.

• The price of beans eased by 1.7 percent to MK 1,325 per kg, down from MK 1,348 per kg in the last round. Although the price of beans has been less predictable in the last three months, the dip in the price of beans in the current round was likely due to the increased supply of fresh beans from this year’s harvest, which began in late February.

• The price of cowpeas remained stable between the last two rounds, hovering at MK 793 per kg, while the price of pigeon peas marginally increased by 0.4 percent to MK 777 per kg compared to last round.

Source: World Food Programme