Botswana has been identified as one of vulnerable countries that will suffer from rising food prices and diminishing supplies as a result of the Russian/Ukraine conflict.
The conflict has, to this end, caused global supply chain disruptions expected to hit the developing countries the hardest.
The warning was issued by credit-rating agency, Standard & Poor’s (S&P) – a leading index provider and data source of independent credit ratings in its new report. The report says some countries, among them Botswana, will be severely hit by the impact of the global food crisis with potential effects in their sovereign credit ratings.
According to the S&P report, Botswana is among the largest importers of six key commodities from Russia and Ukraine being; wheat, corn, barley, rape or colza, sunflower seed and vegetable oil.
The warning by the rating agency comes hardly a few weeks after the International Monetary Fund (IMF) also sounded the alarm that the Ukraine conflict could lead to food insecurity in Botswana and other nations in the continent.
According to the IMF report, in Botswana, Lesotho, Mauritius and Cape Verde, imported wheat, rice and corn, (maize), account for more than 40 percent of calorie intake.
Concerns raised by the IMF were also backed by S&P Global Ratings this week as it warned that Botswana and other five African countries are among the 21 most vulnerable economies across the world to the current food shock. This could affect their credit ratings.
According to the S&P report, Botswana is among the largest importers of six key commodities from Russia and Ukraine being, wheat, corn, barley, rape or colza, sunflower seed and vegetable oil.
The S&P’s ranking (in terms of vulnerability) shows that Botswana is third from the bottom above Jamaica and Peru respectively. According to the rankings, Morocco and Mozambique are second and third respectively in S&P’s ranking as the two countries import a considerable amount of wheat and fertiliser from both Russia and Ukraine.
Other African countries identified as vulnerable include Egypt, Senegal and Cape Verde. The report also shows that other vulnerable nations are Jordan, Fiji, Uzbekistan, Senegal, Vietnam, Bosnia Herzegovina, Nicaragua, Georgia, El Salvador, Bulgaria, Azerbaijan, Armenia, Tajikistan and Lebanon.
“We believe the shock to food supply will last through 2024 and beyond, with negative implications for emerging market countries, affecting GDP growth, fiscal performance, and social stability,” the report says.
It says the potential impact of such developments “on sovereign credit ratings will depend upon, among other things, the extent and severity of the food shock, the ability of governments to minimize the social and economic costs, and international efforts to help the affected countries.” “Although many of the sovereigns most exposed to this risk already have very low credit ratings, the negative economic or political fallout of the food shock could contribute to rating downgrades,” S& Ratings said.
The report notes that Ukraine and Russia are agricultural heavyweights, and the outbreak of war between the two has sent importers scrambling to find alternative sources. The countries (both or individually) rank among the top three global exporters of wheat, maize, rapeseed, sunflower seeds, and sunflower oil.
“Together, they account for 12% of all food calories traded. Russia and Belarus were the first and sixth largest exporters of fertilizers globally in 2020. Prices of ammonia, a by-product of gas production, have soared since the invasion of Ukraine,” the report says.
