- Ongoing wars in Africa are bleeding billions from poor economies as investors flee the region.
- Sudan army is spending about $1.5 million per day fighting the Rapid Support Forces.
- IMF says Ethiopia’s GDP contracted from 9 percent in 2019 to 6.1 percent in 2020 as Tigray war intensified.
Wars in Africa are costing an arm and a leg, and throwing an awful wrench on poor economies that are hardly providing the bare minimum to their citizens. Take for instance the latest ongoing war in Sudan. Sudan Tribune notes that it is costing roughly $1.5 million every day for the Sudanese army to fight the Rapid Support Forces (RSF).
For Sudan, a country whose poverty rate rose from 64.6 percent in 2021 to 66.1 percent last year, $1.5 million is a huge sum of money to be wasted on senseless fighting.
Wars in Africa yielding economic crisis
Sudan is one of the most impoverished countries on the planet. As of 2022, the African Development Bank data shows Sudan’s unemployment remained high at 20.6 percent.
But, the nation’s blazing history of civil unrest and economic trouble is draining the country’s fragile economy. The country’s GDP is projected to grow two per cent in 2023 and 3.8 per cent in 2024, but on account of reduced political instability.
The ongoing fighting between the Sudanese Armed Forces (SAF) and the Rapid Support Forces has left nearly 900 people dead. An estimated 6,000 are injured. A further 500,000 people have fled Sudan to neighboring countries, while over 1.4 million have been internally displaced.
According to Voice of America (VOA), restructuring the military was part of an effort to restore the country to civilian rule and end the political crisis sparked by a 2021 military coup. Repeated cease-fire agreements have failed to end the conflict.
As the war rages, authorities in Sudan are grappling with another welfare crisis–pillaging. The World Food Program notes that nearly 17,000 tonnes of food worth between $13 million and $14 million has been stolen.
Fears Sudan oil output could slow amid war
The fighting has raised fear that the country’s oil output could be hampered. Worse still, crude exports from neighbouring South Sudan could be affected, too. Currently, Sudan produces about 60,000 barrels per day, which is 100,000 barrels per day less than South Sudan. However, Africa’s youngest nation, South Sudan, depends on a pipeline through Khartoum city to export crude.
The war is worsening an already fragile economy. AfDB data shows Sudan GDP grew 0.7 percent in 2022 after contracting 1.9 percent in 2021. The economic malaise was attributable to political instabilities and spillover effects of Russia-Ukraine war.
Overall, Sudan’s stability is essential as a strategic location with underdeveloped mineral reserves. With a 45.7 million population as of 2022 and occupying 1.88 million square kilometres, Sudan borders seven nations. These are: Libya, Egypt, Chad, the Central Africa Republic, South Sudan, Ethiopia and Eritrea. With a war in Sudan, these neighbours economies live on edge fearing spillovers.
Dr Claire Amuhaya, a lecturer at Rudn University in Moscow and adjunct lecturer at Riara University in Nairobi, notes that: “Sudan also plays a key role in preventing infiltration of terror merchants, or illegal weapons, which may be hiding in troubled Libya. It connects important transportation routes for aviation, oil and other stuff. It needs to be in stable hands to sustain this flow.”
Wars in Africa costing regional economies
Regional economies are counting losses as volumes of coffee, tea and spices exports to Khartoum stand to decrease.
“Sudan is one of the biggest importers of our coffee, and we should be worried. Whereas we do not know yet the impact of this war on our trade so far, we know war certainly affects trade, disrupting supply chains, and we urge the international community to ensure that this war doesn’t escalate,” Stephen Asiimwe, Executive Director of the Private Sector Foundation Uganda, was quoted by The East African.
Khartoum is the second-largest importer of Ugandan coffee after the European Union. Kampala also exports significant volumes of tea and food to the people of Sudan.
On June 8th, Uganda’s Ministry of Trade said it was considering alternative markets, with coffee and tea top agenda.
Read also: Abiy’s Tigray conflict a burden to Ethiopia’s economy
The conflict in Ethiopia’s Tigray instigated several economic consequences even as lives got lost. The International Monetary Fund (IMF) noted that the war saw GDP contract from 9 percent in 2019 to 6.1 percent in 2020. In 2021, GDP improved marginally to 6.2 percent.
Millions of dollars in business revenue were lost in a war that lasted between 3 November 2020 to 3 November 2022.
According to a report by a London-based VPN firm, Top10VPN, which analyzes privacy, security, and freedom, Ethiopian businesses lost $145.8 million due to an internet blackout in Tigray last year. It affected over one million internet users.
Ethiopia sees highest inflation in decades
“In 2020, the country lost $100 million to internet outage, which rose to $164.5 million in 2021, affecting 21.3 million users. There was no internet connection for a total of 8760 hours (365 days) in 2022, crippling digital payment systems, businesses, and efforts by human rights groups to use social media to document reported crimes against humanity and ethnic cleansing in Tigray, home to over 5 million people before the war,” states Africa.Com report.
In June 2022, AP reported Ethiopia was experiencing the highest inflation in a decade. High inflation print was due to forex curbs and surging debt amid massive spending on Tigray war.
“Parliament early this year (2022) reportedly approved an additional $1.7 billion budget for defence,” AP said.
With dwindling domestic resources, authorities in Ethiopia rallied the country’s diaspora to finance their motherland’s reconstruction and aid.
Quite often, war has consequences. For Ethiopia’s violation of human rights in Tigray, the nation of 120 million people was suspended from the Africa Growth and Opportunity Act. This body blow cost Ethiopia duty-free access to the US market. What’s more, thousands of workers lost jobs as apparel makers PVH Corp, which represents Tommy Hilfiger brand, closed shop.
Unfortunately, the ghosts of resource-induced conflicts is also holding Mozambique’s economic growth with a vice-like grip. Authorities in Mozambique have to act fast to stop killings, displacement of people and destruction.
Mozambique’s Cabo Delgado epicenter of insurgence
Cabo Delgado is Mozambique’s northern province with massive economic potential—particularly natural gas reserves of over 100 trillion cubic feet is the epicentre of the insurgence.
Already, attackes led by Islamic insurgents have forced a $20 billion gas project by TotalEnergies to stop. The Confederation of Economic Associations of Mozambique (CTA) reported in April 2021 that over 1,000 businesses shut their doors. Consequently, about 200,000 jobs were lost since the conflict gripped the country.
Further, the CTA projects project implications, arguing: “the stoppage of the project had caused $148 million in losses to local businesses involved in supply chains related to LNG exploration.”
At the moment, policymakers in Mozambique estimates $300 million will be used for reconstructing destroyed infrastructure.
Read also: Tough measures for war-tone DRC as it seeks $200M IMF funding
Costly implications of war in DRC
Globally, mineral-rich Democratic Republic of the Congo (DRC) is known for all the wrong reasons. The vast country has been unfortunate, rolling from crisis to another over the decades, and leaving a huge economic toll. Millions of lives have been lost while vast extraction industry remains artisanal, denying DRC forex.
A 2007 report by Oxfam noted that DRC decade-long civil wars cost 29 percent or $11 billion of the nation’s GDP. Fifteen years later, the economic bloodletting continues. A falling local currency, salary arrears payments and war spending are shoving prices higher—a nightmare for locals.
Latest data shows that since January 2023, the Congolese franc has suffered a 15 percent depreciation against the US dollar. In the period under focus, the government has been spending big fighting the M23 rebel group in eastern DRC.
“We used to buy this for 500 francs ($0.25). It’s become 3,000 francs. What are we going to do?” Bibiche Musabili, a mother, told African news.
Africa nations still falling into traps of civil war
On a comparative basis, the central bank data indicated 2,000 Congolese francs usually trade for $1. The exchange rate has risen to more than 2,320 francs per greenback.
According to the World Bank, about two-thirds of the DRC’s population of 100 million people live on less than $2.10 a day.
On a broader scale, Africa’s internal struggle with political powerplays and military dominance over democratic processes is still rampant. With decades of peace negotiations and stability brokering, Africa is still falling into the trap of civil wars, denying herself massive progress.
Regional built instruments such as East African Community, Southern African Development Community (SADC) and the African Union ought to restructure their strategies to keep Africa’s economic progress afloat.
