Russia-Ukraine crisis presents challenges for Rwanda, EAC but there’s a silver lining
Wednesday, July 06, 2022

According to the Food and Agriculture Organisation of the United Nations (FAO), in 2021, Russian and Ukrainian wheat exports accounted for 30 per cent of the global market with sunflower oil exports at 55 per cent. Russia and Ukraine are also significant exporters of maize, barley and rapeseed oil, with Russia and Belarus being leading exporters of fertiliser but both currently under economic sanctions.

In the East African Community (EAC), Rwanda, Tanzania and the Democratic Republic of Congo (DRC) source more than 50 per cent of their wheat from Russia and Ukraine, with 11 other African countries in a similar position.  

The short-to-medium term global impact is likely to result in price increases anywhere between 8 per cent to 22 per cent in wheat, maize, other coarse grains and oilseeds which FAO estimate could lead to the undernourishment of over 13 million people worldwide. Rwandan Finance Minister Uzziel Ndagijimana has said these price increases were already causing rising inflation and slowing economic growth in Rwanda.  

This scenario poses both a threat and an opportunity for the region. The threats are obvious, but the opportunities are for countries to act quickly to enhance food security and open up export opportunities for critical crops and related finished products both regionally and internationally.

The challenge for Rwanda is that the country has always sought to buy critical staple crops such as maize when its own stock is running out. Rwanda has similar maize growing seasons to countries such as Tanzania, Uganda and Zambia where it typically imports from and, therefore, prices tend to be much higher when Rwanda’s own stocks are diminishing.

With additional pressure on the global supply of grains and oilseeds and with higher internal logistics costs within Africa due to the increase in fuel prices, as Russia is also a major exporter of petroleum products, this may become economically unviable, particularly if more developed economies are able to offer higher prices for these crops.

The first solution for Rwanda would be to build grain storage silos to buy grains and oilseeds from neighbouring countries when they harvest so Rwanda can acquire these crops at more affordable prices. The country’s agricultural storage currently relies on warehousing, which makes it difficult and expensive to manage aflatoxins and pests, although there are ways to make this more efficient.

The most important solution for Rwanda would be to become self-sufficient in grains and oilseeds as there is no guarantee of a consistent supply from countries like Tanzania, Uganda and Zambia as, if these countries encounter critical food security issues, they may simply ban exports. Food security issues eventually tend to become national security issues as the potential for civil unrest is enhanced.

Due to limited availability of land and a challenging topography for many crops, the key for Rwanda is to improve yields on land already being used for these critical crops. The maize yield per hectare in Rwanda is 1.6 tonnes. If we compare this with South Africa at 5.7 tonnes per hectare, the United States at 8.6 tonnes per hectare, with a global average of 3.4 tonnes per hectare, it is not difficult to see where the major problem lies.

Improving farmer yields in Rwanda and the region at large requires a number of things – better access to knowledge and information, guaranteed access to markets, easier and more affordable access to finance and inputs and a move away from a hybrid between subsistence and small-scale commercial farming to one of pure small-scale commercial farming. Getting the Rwanda Defence Force (RDF), who are already involved in agricultural related activities, to operate commercial farms to double up as show farms offering storage facilities for small-scale farmers to supply their crops, access inputs and acquire knowledge on how to improve their farming techniques could be an interesting idea.

Another key component would be moving farmers to a mono-cropping or near mono-cropping system so they can achieve better economies of scale, but also so they can become specialists and experts in their chosen crop.

From a small-scale farmer’s perspective, this presents the potential for crop failure and a loss of livelihood, so there is a need for adequate agricultural insurance and proper education about this insurance. As a worst-case scenario solution, the encouragement of traditional community-based support systems with a community producing a variety of crops, but the challenge here is if a whole location experiences the same climate or pest related shock.

Once all of this can be achieved, not only will small-scale farmers earn more money and, therefore, be incentivised to stay where they are, thereby slowing down urban migration and the myriad of challenges that poses, but farmers will even be able to sell crops at more competitive prices than they are able to sell at currently thereby easing the burden on consumers and opening up greater export potential.

One of the main issues that Rwanda needs to consider from an agricultural perspective is the cost of logistics in Africa as it is typically cheaper to ship something from Mombasa port in Kenya to China, than it is from Mombasa to Kigali (or vice versa).  

Regionally, the cost of logistics can be brought down in the long term by investment in rail, with the East African Railway Masterplan underway with a railway line to link the Mombasa and Dar es Salaam, Tanzania ports to Uganda, Rwanda and Burundi, with later plans to include eastern DR Congo, Ethiopia and South Sudan.  

Secondarily, moves to improve inland maritime logistics on critical East African lakes such as Lakes Victoria, Tanganyika and Malawi would be welcome, which would drastically reduce the cost of inland African logistics.

Until this can happen, a landlocked country like Rwanda needs to focus on exports to close neighbours or for international export, such as higher value perishable fruits, vegetables and flowers that require airfreight, as logistically, it would be difficult to see how Rwanda could be competitive with countries with their own sea ports like Kenya or Tanzania for agricultural products that make more sense to send via sea-freight.  

All in all, the Russia-Ukraine conflict presents an immediate threat to Rwanda and East Africa, but it also presents an opportunity for Rwanda and the region to get its agricultural house in order, improve food security, as well as regional logistics, trade policies and opening up export routes.

East Africa can take advantage of its proximity to Europe and the threat they also face from the Russia-Ukraine conflict as well as its availability of arable land and climates that are typically favourable for agriculture. This can be used to secure much needed external funding to help finance the agricultural, agro-processing, infrastructure and logistics sectors.

While East Africa must be wary of the threats that the Russia-Ukraine conflict brings, it must embrace the opportunity to become food secure and a global food basket.

The writer is the Managing Director of East African Solutions, a UK and Rwanda based consulting firm helping to develop new projects in East Africa and opening up supply chains both within the region and for global export.  

eastafricansolutions.com

The views expressed in this article are of the writer.