Since the Russian invasion of Ukraine in February 2022, the international commodities market has experienced major supply disruptions leading to a historic increase in the prices of several commodities. In Africa, rising market prices come on top of many other structural pressures, including widespread internal violence and repeated weather shocks. How are these price shocks affecting local African economies? Should we expect more violence? This note confronts the state of the conflict academic literature to recent empirical data and international organizations reports. It addresses several shortcomings and advocates for a systematic review of all the relevant scientific knowledge on the way income shocks affect the risk of conflict.
Domestic markets responses and…
According to World Bank forecasts for 2022, we might observe 10 to 30 percent increases of the international prices of coarse grains, beverages (i.e., coffee, cocoa, and tea), oils, meals, and other foods. The World Bank also expects a 69 percent rise in the price of fertilizer, and a 42 percent surge in the price of Brent crude oil. Prices may fall back from 2023 onwards due to an increase in world supply, but commodity prices are expected to stay at historically high levels, at least through the end of 2024 (see figure below).
Source: World Bank
Previous spikes in world commodity prices have been reflected differently in local African markets depending on exchange rate movements, trade policies, transportation costs, and domestic market structure. Following the current prices surges, the Food and Agriculture Organization of the United Nations (FAO) already observes abnormally high domestic prices of basic food commodities in at least seven African countries: Burkina Faso, Ethiopia, Mali, Somalia, South Sudan, Sudan, and Uganda. Many reasons are cited: increase of demand (due to Ramadan period, large numbers of internally displaced people, and pressure on other grains to offset rising wheat prices), below-average harvests (due to high demand, adverse climatic events, shortages of improved seeds, and higher electricity prices), and lower cross‑border trade flows (due to conflicts close to borders, ECOWAS’s economic sanctions on Mali, and rising oil prices affecting transportation costs).
Notes: *Battles and violence against civilians. The red line approximately marks the Russian invasion of Ukraine (February 24, 2022). Data available for May 2022 ends on the 27th. Source: ACLED.
· … Food riots
Many fear that this context will lead to food insecurity and related episodes of food riots. Indeed, during the 2007/2008 world food price hike, dozens of countries experienced violent episodes related to food security issues. As the graph above shows, riots in Africa are decreasing since the invasion of Ukraine and there has been 18 percent less riots in May than in March 2022. Although food riots are difficult to identify, this suggests that food riots are not, for the moment, a phenomenon at the scale of the whole African continent. Differences at the state level may partially explain this. On many occasions, food riots have served to bring food insecurity to the attention of politicians so that action can be taken. Hence, the likelihood of a food riot does not only depend on local food prices; policymakers’ capacity/ willingness to intervene locally (both real and perceived) could affect the choice of individuals to participate. Put differently, more democratic regimes may face higher risks of food riots than autocratic ones or failed states.
· … Armed conflicts
At first glance, the increase in the price of agricultural products may seem beneficial to African farmers since they earn more money by selling the same product. Following this logic, conflicts may decrease because high wages in the productive sector can reduce economic incentives to join a rebel group. ACLED data for February to May 2022 appear to be consistent with this mechanism. Indeed, the figure above shows that violent events (i.e., conflicts, remote violence, protests, riots, and strategic developments) and conflicts have decreased since Ukraine’s invasion. There has been approximately 24 percent less conflicts and violent events in March relative to May 2022. However, other economic mechanisms should be examined before assuming that higher agricultural prices benefit farmers. Currently, various African states are experiencing widespread upward pressure on domestic prices (i.e., inflation) due to weak currencies in West African coastal countries and Southern African countries (notably, Zambia and Zimbabwe). Since farmers (as any poor household) spend a large part of their income on food, a rise in domestic food prices could increase poverty in the short run (price effect) and reduce it in the long run (income effect). Therefore, testing how local incomes affect conflict participation requires more data on local poverty levels (which is difficult to obtain, especially in conflict-affected areas) and information on the temporal and spatial extent of the shock to local economies.
· … Climate change
The size of future harvests (on which food security depends) could vary with exposure to conflict and climate change. Climate change is a key challenge for agricultural production and food security in Africa. It aggravates water stress, modify ecosystems, and exposes African farmers to changing precipitation patterns, rising temperatures, and more extreme weather. Farmers’ exposure to climate change is aggravated by low adaptive capacity and the interaction of ‘multiple stresses’ occurring at various levels. Academics generally agree that climate change is associated with a higher risk of internal conflicts. However, there are conflicting research results on the explaining mechanisms. For example, early work on climate/conflict identified population pressure on scarce renewable resources as a key explanatory channel, but recent work has found no empirical evidence of such a phenomenon. To this day, the Intergovernmental Panel on Climate Change (IPCC) has “low confidence” in the current state of knowledge about the link between climate change and conflict. This academic debate is a clear example of how ideologies can interfere with research, ultimately complicating the development of appropriate policy responses. To reduce this research gap, improved methods and research are needed.
Armed groups may benefit financially from higher “conflict minerals” prices
For the year 2022, the World Bank forecasts a 16 percent increase of mineral prices relative to 2021. Price increases are expected for at least two minerals regularly involved in conflict financing: tin (27 percent) and gold (4 percent). Other “conflict minerals” include tantalum and tungsten, but many other minerals fund violence locally.
Empirical evidence suggests that minerals extraction can spread conflict across space and time by increasing the rebellion’s financial feasibility. Following the price increase of minerals, armed groups may ease their financial constraints by selling these resources on the black market (with tacit or active support from various sectors of society). Mineral prices may ease in 2023, but they will probably remain at historically high levels. If conflict minerals prices stay high, armed groups may fight over artisanal mines and industrial sector’s expansion may trigger social unrest. Moreover, the destabilization of other sectors of the economy could reduce labor costs for rebel groups.
At least ten African countries are affected by conflict minerals: Sudan, Central African Republic, Uganda, Republic of Congo, Angola, Tanzania, Rwanda, Burundi, Democratic Republic of Congo, and Zambia. Given the above mechanisms, we might expect greater political instability in these countries. Figure above suggests otherwise. On average, countries affected by conflict minerals did not experience more conflicts or riots following Ukraine’s invasion. On the contrary, they experienced approximately 18 percent less riots and violent events in May than in March 2022. However, the decline observed at an aggregated level may not reflect local and disparate realities in these countries. In resource dependent countries, higher mineral and hydrocarbon prices can locally increase coercion and military operations to regain territories from rebel groups. In the North Kivu region of the DRC, violence has tripled last week relative to the past month, with fights and exchanges of territorial control between military forces (FARDC) and March 23 Movement (M23) rebels. It may also be too early to see the full effects of rising mineral prices on local violence. Conflict actors (including incumbent governments that sell future resource exploitation rights to private businessmen or neighboring governments) may benefit financially from higher mineral prices. However, they may wait before engaging in fighting, especially if they use hoarding strategies (i.e., selling resources later at a higher price). Finally, transparency and traceability initiatives in the mining industry promoted by international policymakers may reduce the size of the illicit mineral market.
Conclusion : it depends
« The only informed and correct conventional summary of the research record on nearly any important economic phenomenon or policy question is: “it depends.” », T.D. Stanley, Hristos Doucouliagos
As for any sudden international shock, analyzing the local effects of the invasion of Ukraine raises several basic yet essential challenges. First, we lack a counterfactual, namely that what would have happened in the absence of the shock is highly speculative. Besides, there are many unknows on the extent of African countries level of resilience to external shocks. In empirical analysis, these unknowns are rampant at the infra-national scale due to lacking household-based data in conflict-affected areas, and the intricacy of quantifying social, political, and historical conditions. For example, past episodes of conflict may generate latent and lasting grievances against the state, and wars in neighboring countries may entail mistrustful relations between states that are detrimental to regional trade agreements.
The global price shock of 2022 has different outcomes at different scales (i.e., local, national, or regional), sometimes acting in opposite directions (i.e., in a positive or in a detrimental way). In other words, one can very well identify benefits or losses for the same shock depending on the scale of analysis chosen. For example, countries dependent on oil revenues like Nigeria or Liberia have benefited from fresh money from the rising price of hydrocarbon, but the gain for the population depends on many factors, including rebel groups’ activity, monetary policies, prior implementation of redistributive policies, or the degree of corruption in the economy. Besides, some questions are still outstanding. Above all, it is impossible to predict the duration of this shock. Additional sanctions on Russia and a prolonged war in Ukraine could lead to even higher and more volatile prices. Also, repercussions on Russian sources of minerals could affect Russian mining industries and surrounding areas in Africa. Yet, the extent of Russia’s presence in Africa and the implementation of transparency initiatives are difficult to assess. Finally, the medium- and long-term consequences of previous shocks, such as the instability in the Sahel region or the Covid-19 pandemic, may not yet be visible.
Hidden mechanisms and heterogeneities leave room for subjectivity and exaggerations in interpretation. Academic research is not immune to these issues, especially given the pressure put on scholars to publish articles in peer-reviewed academic journals. To understand how international prices surge/volatility and climate change influence the risk of local conflict in Africa, it is crucial to understand how poverty leads, or does not lead, to more episodes of violence. For this, an unbiased systematic review and statistical analysis of all relevant scientific knowledge is needed, namely a meta-regression analysis.
By Camille Laville (principal author) and Pierre Mandon