Impacts of the Russian-Ukrainian conflict on the Senegalese economy.

Cheikh Mbacké Sène, expert in economic intelligence

The new war in Ukraine has caused oil and gas prices to soar. Wheat, copper and gold remain among the other commodities most exposed to potential fluctuations in this situation. What economic impacts will the Russian-Ukrainian conflict have on Senegal, which has maintained diplomatic, economic and trade relations with Russia since 1962 and Ukraine since 1992?

The world economy has a reality: when a major power or region sneezes, trade catches a cold. The breakup of the Russian-Ukrainian will inevitably have an impact on the world economy in general and in Africa in particular. The two states in conflict have either direct economic relations with most African countries, or with other powers which, in turn, maintain strong trade relations with them. Directly or indirectly, the consequences will be felt in the various commercial exchanges, even if the dimension of the impact will depend on the duration of the conflict and the sanctions which could result from it against Moscow. And this, taking into account the fact that the other powers can only take "soft" sanctions with regard to the military power, the importance and the place of Russia (new ally of China) on the chessboard. global economy.

The rise in the price of a barrel of oil to more than 100 dollars, a first since 2014, announces the color of the upcoming surge in the costs of imports and other finished products. This can slow down the progress of trade between Russia and Africa, which has been running at more than $20 billion since 2018. We will have to be measured on the prospects for imports from this region of the world, recalling that Senegal (as far as he is concerned) figures prominently in the top 10 African partner countries of Russia alongside South Africa, Algeria, Egypt, Kenya, Ivory Coast, Morocco , Nigeria, Sudan and Tunisia. It is important to remember that Moscow provides 11.5% of the world's supply and is the second largest exporter as well as the third largest producer of crude oil. Some 2.3 million barrels of Russian crude oil leave for Europe every day.

Senegal's exports and imports of crude and finished petroleum products are shown. Senegal, whose imports of crude petroleum oils were up by +17.8% and its finished petroleum products by +28.8%, will have to suffer from the fluctuation of the barrel, both on commercial products and at the level of the pump. Unless the state revises the compensation. Petroleum products are thus one of the main products exported from Senegal with 8.9% of the country's exports in 2018 against 8.4% in 2017. Senegalese exports of petroleum products, which are now around 9% (growing since 2017 ) could also have impacts and experience a stabilization if not even a decline, if we know that their evolution remains dependent on world oil prices.

This can also affect the processing volume of the Société Africaine de Raffinage (SAR), which enables the supply of countries in the sub-region (Mali, Burkina Faso, Togo, Mauritania and Liberia), both level of the costs of the products than those of transport, since the supply is done by ships and aircraft. The impossibility of protecting the free movement of goods to Ukraine will have an economic impact on trade between Kiev and Dakar, the volumes of which are unsuspected. Indeed, between January and October 2021 alone, the volume of trade is estimated at 101.58 million USD with a positive balance for Ukraine of 97.78 million USD. Over the same period, exports from Ukraine to Senegal increased to 99.68 million USD. The main items of Ukrainian exports concern cast iron, iron and steel (84.5%), fats, animal or vegetable oils (10.0%) and cereals (1.7%).

Senegalese exports to Ukraine are valued at 1.9 million USD and consist mainly of fish and shellfish (55.3%), ores, slag and ash (38.4%). The conflict will have direct and indirect economic consequences, beyond energy issues. Beyond the direct impacts inherent in bilateral cooperation between Senegal and Ukraine or even Senegal and Russia, we could expect an increase in several products. The oil boom is likely affecting other rising prices in other sectors of the economy, which may lead to slower growth in demand and therefore lower production.

This situation comes at a time when the world economy is recovering, following the Covid years, installing uncertainty on the markets, but at the ssi in investment projects (FDI and national). The inflation that may result from international oil and gas prices will probably cause central banks to react, most likely to raise interest rates and move towards monetary tightening. But all this will depend on the duration of the conflict.