THE IMPACTS OF THE RUSSIAN UKRAINE WAR TO THE KENYAN ECONOMY

With the ravages of the Coronavirus barely behind us, the world is now faced with a great crisis that seems to dwarf all others since the second world war – the Russia-Ukraine conflict.

It is a dispute that none of the countries in the world cannot afford to turn a blind eye to nor stand at a distance and just watch as the war ensues. As a global village as we so often pride ourselves on today, a war occurring more than 3000 miles far away in Europe would still have its effects touch lives in villages and towns here at home. As such, Kenya needs to not only add its diplomatic voice over this reckless and precarious move Moscow has taken, but also brace for tough times ahead economically.

The two nations in conflict – Russia and Ukraine – bear significant contributions in the world economy that is already affected by the war. They both carry a huge percentage of wheat production in the world, with Russia contributing 10% while Ukraine is 4%. Kenya finds itself in this geopolitical conundrum that adversely affects the global agricultural market since we import a great deal of wheat from the two countries.

The latest available numbers indicate that the wheat importation stood at Ksh.11 billion and Ksh.5 billion from Russia and Ukraine respectively in 2019. The conflict directly puts a strain in this supply chain rendering the price of wheat take an upward trend. Considering how vital bread is in Kenyan households, we cannot start to imagine how that pressure could go in affecting the pocket of the ordinary Kenyan, against the backdrop of other anticipated economic shocks yet to be felt from the war.

As a matter of fact, wheat remains the third most consumed food commodity in Kenya. The anticipated price hike will only add to the misery of the locals after we experienced price increase of 800g loaf of bread by Ksh. 30 in the last five months and Ksh. 40 price increase for a 2Kg packet of wheat flour in the past half year.  

Being an election year in Kenya, we are already prone to face strain as many funds from public coffers somehow find their way for usage on the campaign trail. It leaves little funds flowing into local citizens’ pockets for expenditure, much less to pump into savings and investments. Already, we saw a decline of the stock market at the NSE last Thursday as investors lost near Ksh.100 billion in a day from price dives drawn from the invasion. This kind of decline will, as anticipated, keep off foreign investors who account for 58% of trading at the bourse and lead many investors to safe assets such as bonds. 

As such, Kenyans will do well to brace for tougher economic times ahead. Investing in capital-intensive projects now may be precarious without a critical understanding of the impact the war abroad has here at home. A humanitarian crisis looms the more from the war, adding to the misery the world already faces today on the same front. Prudent spending and seeking alternative income streams would save many from fall into an imminent bottomless pit of misery should the Russia-Ukraine crisis persists on the long haul.