The Russia – Ukraine Conflict and its Impact on the Infrastructure and Built Environment Industry in Africa
Russia launched a full assault on Ukraine, its southwest neighbour, on February 24, 2022, marking a significant escalation in the ongoing Russian-Ukrainian conflict. Both countries are major producers of crucial energy and industrial commodities such as oil, gas, aluminium, palladium, and nickel. They also produce food-related commodities such as wheat and corn; the war will have a consequent ripple effect on the global markets and supply chain, especially in Africa. The imminent food crisis resulting from the war is the topic du jour. However, there are other sectors to consider; one of them is the Built Environment.
By Dr Muhammad Gambo*
Urbanisation and the state of the Built Environment in Africa
According to the Organization for Economic Co-operation and Development (OECD), Africa is one of the world’s least urbanised regions; however, urbanisation is expected to grow exponentially in the coming years. The OECD also predicts that Africa’s population will double between now and 2050, with urban areas absorbing two-thirds of this increase.
The rapid urbanisation in Africa, if well managed, can be the essential motor of economic development, rapidly lifting societies out of mass poverty. Rapid urbanisation, however, should be kept in perspective. Africa faces serious infrastructure gaps, and the inadequate and poor state of existing infrastructure continues to hinder economic growth in the region.
Within the Built Environment, over 55% of the population on the continent lives in slums. The African Development Bank estimates that the continent’s infrastructure financing needs will be as much as $170 billion a year by 2025, with an estimated gap of around $100 billion a year.
The Impact of the Russia – Ukraine War on Africa
The conflict has had clear effects on Africa, primarily due to the two countries’ role in supplying vital essential commodities that support the infrastructural and socio-economic sectors of the region.
The economic disruption caused by the ongoing conflict, in terms of sanctions and physical upheaval of trade routes, has resulted in a steep rise in commodity prices, this is in addition to the existing post-COVID inflation.
In the Built Environment, the conflict has exacerbated and exposed the dangers of overreliance on importing building materials. Prices of building materials have increased, a burden that the homeowners will ultimately share
Russia is considered the fourth-largest steel exporter globally, serving over 150 countries and territories. The price of steel in Kenya, for instance, has significantly shot up over the past few months. The prices of steel bars and nails have risen by between 80 per cent to 90 per cent and 13 per cent to 43 per cent, respectively, in the past few months in the country.
Additionally, the conflict has resulted in a shortage of coal, which is a crucial source of energy in cement production through clinker manufacturing.
It would be a safe wager that the situation is similar in most African countries, making the argument for affordable housing even more difficult. Considering the more significant socio-economic context, soaring food and energy prices could be a potential trigger for additional instability in the continent. According to a study by Mo Ibrahim Foundation, Russia and Ukraine account for 40.4 per cent of Africa’s wheat imports and 39 African countries import wheat from Russia to feed their population.
Coupled with the adverse impact of COVID-19 on food and energy prices, which has already increased inequality, poverty and marginalisation, these price increases can trigger new domestic unrest and instability. Instability threatens the conducive environment that spurs social and economic development.
Opportunities for Africa Emanating from the Russia – Ukraine Conflict
On the other hand, the conflict can serve as an opportunity for African countries to step up and fill in the commodities and supply chain gap created by the conflict and the pandemic.
For instance, African countries with vast gas reserves such as Algeria, Nigeria and Egypt, can leverage on the existing market gap to expand energy access on the African continent and also secure the European Union’s energy supply whilst transitioning to a low-carbon economy.
However, this can only be achieved by ramping up their production and improving the related infrastructure.
Additionally, financing is also needed to achieve this ambition, which could be hampered by the recent pledge at COP26 to stop funding overseas gas projects. This commitment does not consider the dire situation of energy access in Africa, where an estimated 600 million people lack access to energy.
In the end, the conflict serves as an opportunity for Africa to restrategise and put in place appropriate measures to enhance industrialisation, regional integration and food security in the region.
African countries need to leverage on the recent progress in the Africa Continental Free Trade Agreement (AfCFTA) and the New Urban Agenda, which will create new market opportunities for the region.
The AfCFTA will create the world’s largest free trade area by the number of countries involved. The AfCFTA will connect 1.3 billion people in 55 countries with a total GDP of US$3.4 trillion. According to the World Bank, the AfCFTA could improve Africa’s revenue by $450 billion and its exports by $560 billion, mainly in manufacturing. The imprint of a successful AfCTA will directly affect the Built Environment, as it will dramatically reduce the dependence on the import of building materials and significantly increase capacity and know-how.
Winston Churchill once quipped ‘Never let a good crisis go to waste and while there is great human suffering, the ongoing Russia – Ukraine conflict can be an opportunity for Africa. Many posit that the world will be remade after the conflict. Now is the time to create measures to enhance the region’s industrial capacity, consequently resulting in improved regional integration and shared economic prosperity on the continent.
*Dr Muhammad Gambo is an African Built-Environment, Development and housing policy expert who currently heads the Centre for Excellence for Shelter Afrique, a Pan-African DFI.
