African countries will be able to jointly procure basic commodities, whose supply has been affected by the Ukraine crisis, following the launch of the African Trade Exchange (ATEX), a platform created to avert the effects of the war in eastern Europe on Africa.
They will be able to purchase the commodities at favourable prices.
The platform has been developed by the African Export-Import Bank (Afreximbank) and African Development Bank (AfDB), in collaboration with the African Continental Free Trade Area (AfCFTA) Secretariat and the United Nations Economic Commission for Africa (UNECA).
It seeks to help the already fiscally strained African economies deal with the supply shortages caused by the Ukraine war, UNECA said in a statement on Wednesday.
“The Russia-Ukraine crisis has increased the strain on critical supply chains in commodity markets, with current and expected price increases in agricultural products and inputs such as cereals and fertilisers,” the statement read.
“The larger implications are the downstream effects of potential supply chain constraints that can raise prices, increase vulnerability and food insecurity, building unsustainable pressure on already stretched fiscal environments.”
The Ukraine crisis has caused shortages of wheat, maize, and other grains, as well as fertilisers in several African countries, mostly net food importers that get over 80 percent of their wheat and maize from Russia and Ukraine.
This has seen prices of food commodities and oil skyrocket and currencies steeply depreciate in African countries.
In Kenya, prices increased by 6.47 percent in April alone, while the shilling has fallen to a record low of Ksh117 per US dollar.
Uganda registered a 1.4 percent inflation rate in April and its currency has been fluctuating against the US dollar. In Tanzania, prices rose by 3.8 percent, while in Rwanda they increased by 3.5 percent in April alone.
According to UNECA, ATEX will ensure supply chain resilience in Africa, by enabling “trade of the main agricultural commodities and inputs imported by the continent from Russia and Ukraine,” improving price stability of these basic commodities.
“The platform will facilitate pooled procurement by African buyers of these commodities from African suppliers where possible and from outside the continent where necessary, thereby contributing to the creation of new, continental supply chains which insulate Africans from the volatility which has characterised recent years,” UNECA said.
Prior to the launch of the platform, AfDB had announced a $1.5 billion Africa Emergency Food Production Plan that was meant to speedily help African countries produce about 38 million tonnes of food, including wheat, maize, rice, and soybeans, to mitigate the effects of the Ukraine war on food prices.
UNECA said both interventions are crucial to helping Africa improve food security and negotiate for competitive prices in the international market.