Office of the Special Adviser on Africa - AfCFTA

One Year Later: The impact of the Russian conflict with Ukraine on Africa

Rado Ratovonarivo — Wed, 15 Feb 2023 18:04:00 +0000

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Secretary-General António Guterres watches grain being loaded on the Kubrosliy ship in Odesa, Ukraine.

�山��Photo/Mark Garten

Secretary-General António Guterres watches grain being loaded on the Kubrosliy ship in Odesa, Ukraine. © �山��Photo/Mark Garten

By Bitsat Yohannes-Kassahun

While much can be said about the political and policy intricacies surrounding the conflict, the real and palpable impact on the lives of many ordinary Africans is equally unsettling.

Against a backdrop of soaring food and energy prices and the shrinking basket of global economic cooperation financing, African countries are also contending with how to position themselves within the significant shifts in international energy policies, even as they are approached by various partners who are also grappling with the energy access implications for their own citizens.

The global energy crisis

The 2022 World Economic Outlook paints a stark picture of the state of global energy, stating that it is “delivering a shock of unprecedented breadth and complexity.”

This strain comes as African economies are still trying to emerge from the impacts of the COVID-19 pandemic, for which they did not have enough resources to cushion themselves.

By mid- 2022, global energy prices soared to a three-decade high, and natural gas price costs edged over 300 Euros per megawatt-hour. These high costs for natural gas have come down significantly by February 2023, to less than $100 per megawatt-hour, owing to relatively warm winter temperatures in the northern hemisphere.

European governments largely shielded their citizens from these price shocks by spending over $640 billion on energy subsidies, regulating retail prices, and supporting businesses. African governments, on the other hand, did not have the fiscal space to protect consumers with such wide-scale, much-needed measures to counter rising energy prices.

In addition to pressures from fluctuations in exchange rates, and high commodities prices, inflation reached double digits in 40 per cent of African countries. Moreover, seven African countries are in debt distress as of January 2023, and 14 more are at high risk of debt distress, which makes them unable to implement meaningful countermeasures.

As a result, African households, who, according to the IMF, already spend over 50 per cent of their overall consumption on food and energy, felt the significant impact of the high conflict-induced global energy prices, along with their indirect effects on the cost of transportation and consumer goods.

The global energy crisis also created policy reversals, with many countries now pursuing natural gas and other fossil fuel projects to meet their energy needs.

Natural gas is also getting more traction as a “green investment”, a pivot from the pledges made at the COP26 global climate talks in Glasgow in November 2021 to curtail development financing for natural gas projects.

For African countries, this has meant a renewed interest in and fast-tracking of natural gas and liquified natural gas (LNG) projects, but mainly for export to Europe and others outside the continent.

While this may spell more investments in the energy sector on the continent, the benefit may not necessarily result in energy access for Africans themselves. Instead, this risks further perpetuating commodities-based economies, stunting the continent’s own industrialization ambitions.

Shocks to Africa’s food systems

While Africa has over 65 per cent of the world’s uncultivated land, it is a net food importer, and as such, has been severely impacted by the rise of global food prices, resulting in increased food insecurity.

According to the IMF, staple food prices in Africa “surged by an average 23.9 per cent in 2020-22—the most since the 2008 global financial crisis.”

This has devastating implications for many Africans, where food items occupy the largest share in many household consumption baskets. Food items take up about 42 per cent of African household consumption, reaching as high as 60 per cent in countries affected by conflict and insecurity. In France and the United States, food items represent 13 per cent and 6 per cent of household consumption, respectively, notes the United Nations.

According to the African Development Bank (AfDB), African countries spend over $75 billion to import over 100 million metric tons of cereals annually. In 2020, 15 African countries imported over 50 per cent of their wheat products from the Russian Federation or Ukraine. Six of these countries (Eritrea, Egypt, Benin, Sudan, Djibouti, and Tanzania) imported over 70 per cent of their wheat from the region.

The AfDB notes that the Russian invasion of Ukraine triggered a shortage of about 30 million tons of grains on the continent, along with a sharp increase in cost.

The UN's 2023 World Economic Situations and Prospects Report shows that Africa already had the highest prevalence of food insecurity globally in 2020 with 26 per cent facing severe food insecurity and 60 percent of the population affected by moderate or severe food insecurity according to the Food and Agriculture Organization (FAO).

During the ‘Dakar 2 Summit on Feeding Africa: Food Sovereignty and Resilience’ held during 25-27 January 2023, the AfDB reported that this number rose sharply in 2022, with Africans now representing one-third (about 300 million people) of the global population that is currently facing hunger and food insecurity.

Fertilizer costs

Supply chain disruptions of primary farm inputs, including fertilizer imports from Russia, Ukraine, and Belarus, further threatened Africa's food security. The World Food Programme (WFP) reported that global fertilizer prices have risen by 199 per cent since May 2020, with prices for fertilizers more than doubling in Kenya, Uganda, and Tanzania in 2022.

The WFP notes that "while this is partly a consequence of the war in Ukraine, prices of food, fuel, and fertilizers had already reached record highs by the end of 2021.” The “Black Sea Grain Initiative,” brokered by the United Nations and Türkiye and signed in July 2022, has eased some of the “fertilizer crunch” by allowing the movement of fertilizer exports from Ukraine to the rest of the world.

Looking ahead to the 2023-2024 growing season, the price and availability of fertilizers for farmers in Africa will determine how the continent will counter widespread food insecurity.

According to the World Bank, Africa's food production is already hampered due to low fertilizer usage, with "an average fertilizer application rate of 22 kilograms per hectare, compared to a world average that is seven times higher (146 kilograms per hectare)".

The Bank estimates that fertilizer exports from major African suppliers, namely Ukraine, Russia, and Belarus, which remain disrupted, will impact Africa’s food production and exacerbate food security throughout 2023.

Moreover, the World Bank notes that other fertilizer producers are banning exports of these critical inputs to protect their own farmers, leaving African farmers without many options.

Conclusion

As the world reflects on the various shocks created by the year-long conflict, Africans must grapple with the short-term inadvertent threats to their economies, food systems, and well-being. Indeed, �山��Secretary-General, Antonio Guterres, speaking at the Global Food Security Call to Action in May 2022, warned, "If we do not feed people, we feed conflict.”

With some decisive leadership, there are some strategies that can ease the burden on struggling economies:

For example, re-allocating the $100 billion IMF Special Drawing Rights to support African countries and restructuring both private and public debt would give these countries the fiscal space to weather the crisis.
There is also a ray of hope in countering the long-term impacts of the conflict. The most strategic one is the political will of African governments to refocus on agriculture. At the Dakar 2 Summit, many African Heads of State and Government were keen to bolster public spending on agriculture to build a self-sufficient and resilient African food system. In his opening remarks at the summit, President Macky Sall of Senegal remarked, “From the farm to the plate, we need full food sovereignty, and we must increase land under cultivation and market access to enhance cross-border trade.”
Indeed, implementing the African Continental Free Trade Area (AfCFTA), which promises efficient cross-border trade, would allow the seamless movement of the approximately 30 million metric tonsof fertilizer that Africa produces each year. This production is twice the amount of fertilizer that the continent currently consumes.
Similarly, the AfDB plans to invest $ 10 billion "to make Africa the world's breadbasket." Such an investment can go a long way in replicating technological solutions, such as Ethiopia's use of heat-resistant crops to boost its wheat surpluses. The country plans to be a wheat exporter to other African countries in 2023.
On the energy side, accelerating sustainable, reliable, and affordable energy access, be it for industrial development, employment for the continent’s youth, or ensuring its food security, everything invariably lies in Africa having a balanced energy mix.

The series of interlocking challenges these past few years have made one issue very clear. Africans must have a unified stance to avoid yet another cycle of commodities-based exploitation of the continent’s energy resources, and work to ensure Africa's universal energy access.

The author is a programme management officer and cluster lead on energy and climate with the Office of the Special Adviser on Africa at the United Nations

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Towards effective intellectual property ecosystems for sustainable development

Rado Ratovonarivo — Wed, 30 Nov 2022 19:00:00 +0000

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A young boy takes a selfie under solar powered light

By Kei Tagawa

The COVID-19 pandemic has highlighted the importance of effective intellectual property (IP) systems for sustainable development in Africa. Despite various efforts made by African countries over the years to develop effective IP ecosystems, most countries still face a number of challenges which undermine the effectiveness of IP in promoting various aspects of socioeconomic development, including public health, agriculture and industrialization. Many IP systems in Africa, including creation, protection, maintenance, commercialization and enforcement of IP, are still weak, with limited institutional and human resources capacities and not adequately financed. The pandemic also revealed challenges of IP systems at the international level, such as WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS), including their rigidity that makes it difficult for developing countries to rapidly and effectively address their public health emergencies, in particular, pandemics.

As Africa prepares to recover better together from the COVID-19 pandemic, it is an opportune moment for its policymakers to reexamine where each country stands regarding IP ecosystems and how to improve them. This will help African countries to enhance their economies to be competitive in a global economy that has rapidly been transformed into a knowledge-based economy with the fast advancement of the Fourth Industrial Revolution. For instance, in advanced countries, an efficient system of intellectual property rights (IPRs) ranks among the most crucial policymaking issue to consider, given IP’s capacity to encourage creativity and innovation throughout the economy. How about in Africa? Is establishing efficient IP ecosystems a priority of African countries in promoting sustainable development?

COVID-19 has underlined the importance of IPR
The COVID-19 pandemic has underlined the importance of adequate IPR ecosystems, which provide significant incentives to pharmaceutical companies to invest hundreds of millions of dollars in developing COVID-19 vaccines quickly. Since the discovery and publication of the coronavirus’s genome in January 2020, scientists have raced to develop relevant health products to prevent, diagnose and treat COVID-19, including vaccines, on an unprecedented timescale. To date, there are 12 vaccines approved for full use, and more than 120 clinical trials are underway, setting the stage for some of the fastest vaccine development in recent history. It was also reported that two of the most successful COVID-19 vaccines, namely Pfizer, BioNTech and Moderna, are making combined profits of $65,000 every minute.

On the other hand, the pandemic also revealed the adverse effects of rigid and complex IPR systems in promoting public health in developing countries, including Africa. IPs, notably patents, are often accused of hindering the generic production of vaccines since patent protections allow pharmaceutical companies robust control over the drugs/vaccines they develop. This is evident by lengthy and heated global discussions on an IP waiver for health products, especially COVID-19 vaccines, at WTO. The debates finally resulted in an agreement of WTO member states to a limited relaxing of patent protections on the COVID-19 vaccines. IPRs are also widely deliberated on the continent since the negotiation is taking place under the phase II of African Continental Free Trade Areas (AfCFTA) on investment, IPRs and competition. This AfCFTA negotiation provides a prospect for African policymakers to promote the coherence of IP instruments at the regional level, where multiple IP policy frameworks and systems exist in parallel.

IP ecosystems in Africa
Generally speaking, IP ecosystems in Africa have not been optimal in leveraging IP to effectively advance socioeconomic development toward achieving the SDGs. For instance, one indicator of innovation is the number of patent registrations filed in countries, and Africa is lagging far behind. In 2020, Africa accounted for only 0.5% of the world’s patent applications, compared to 66.6% for Asia, 19.3% for North America and 10.9% for Europe. Furthermore, the number of applications from residents constituted only 20.7 %. This demonstrates that most of the applications were submitted by nonresidents indicating that Africa’s local innovations were either limited or not fully protected by the patent systems.

Several factors may contribute to the reasons for African residents' low level of patent protection. These factors include, among others, relatively weak science and technology capacity, inadequate research facilities and funding, inadequate intellectual property awareness, the high cost of processing patent applications and the complexity of maintenance of patents, the cost of enforcement of rights in case of infringement and subsequent patent litigations.

Research has also shown various other shortcomings of IP ecosystems: many African patent offices are not fit for purpose due to limited resources. They have limited safeguards and quality control mechanisms, as many African patent offices do not conduct substantive examinations. Many African countries also have limited infrastructure to ensure that the information in patent applications is collated and made electronically available to the public, including researchers and technology-oriented industries. Furthermore, the gap also exists in relevant national IP legislation. For instance, the Covid-19 pandemic revealed that WTO’s existing Trade-Related Aspects of Intellectual Property Rights (TRIPS) safeguards on public health, which intends to benefit the Least Development Countries – many of them are in Africa – have not been fully implemented or used in most African countries.

No "One Size Fits All"
Lessons learned from fighting the COVID-19 pandemic and negotiating IPRs under AfCFTA provide a golden opportunity for policymakers and legislators to reexamine IP systems in Africa to make them “fit for purpose.” All in all, IPRs are private rights, and territorial in nature – meaning national laws regulate the conditions for IPRs acquisition, maintenance and enforcement along with international engagements.

Are administrative procedures and costs to acquire protections of IP adequate? Do court systems facilitate enforcement of IPRs in case of infringement? Is the private sector, including small and medium enterprises, researchers and entrepreneurs, fully aware of national IP systems? Are IPRs legislations adequate and up to date? Does the national IP office have sufficient capacity to process IP applications and publish necessary information on inventions to the public? These questions will help policymakers and legislators to revisit their IP ecosystems and identify an entry point to improve them if needed.

It is essential to underline how IP laws, policies and practices are designed and used in different countries to determine the effectiveness of the IP system for development purposes. Therefore, taking into account each country’s context and uniqueness is essential. In other words, there is no “One Size Fits All.” The uniqueness includes existing national IP frameworks and international engagements, industrial composition and national strategic industries, market sizes, R&D environment and advancement of industrialization, among others.

This national review exercise will undoubtedly help negotiate IPRs under the phase II of AfCFTA, which will, in turn, promote coherent regional IP ecosystems that advance the establishment of regional value chains to accelerate sustainable development. The time has come for Africa to advance with IP.

The author is a Programme Management Officer in the policy analysis and coordination team of the Office of the Special Adviser on Africa at the United Nations.

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