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The impact of the Russia-Ukraine war on developing countries

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While it is no secret that the war in Ukraine has resulted in tragic loss of life and human suffering, it has sent a wave of crisis globally creating an adverse shock to both inflation and activity, amid already elevated pressures after getting battered by the much recent pandemic.

The global economy is poised to be sent on another unpredictable course with the heightened conflict in Ukraine as it could further disrupt energy supplies, exacerbate food insecurity and push commodity prices. With higher commodity prices solidifies the threat of long lasting high inflation which increases the risks of social unrest and stagflation – which is whereby the inflation rate is high, the economic growth rate slows, and the unemployment rate remains steadily high.

Certain sectors such as the automotive, transport or chemicals are also more likely to suffer.

As unprecedented sanctions have been announced on Russia, crippling its economic activity, there will definitely be a substantial impact on the global economy and financial markets, with significant spillovers to other countries across the borders of Europe, and even greater spillovers in the developing counties.

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Countries that have very close economic links with Russia and Ukraine are at a particular risk of scarcity and supply disruptions. A derangement of the Russian energy exports as a result of this conflict could temporarily contribute to a rise in global energy and food prices.

The Russia-Ukraine conflict has triggered turmoil in the financial markets, and drastically increased uncertainty about the recovery of the global economy. Now, there is a further danger: Financial investors who had been betting on speculative asset markets have begun to find other places to park their money, as this crisis may lead to temporary market volatility, creating uncertainties.

However, as history has demonstrated time and again, these types of crises tend to only have a significant and lasting impact on global financial markets if they have a sustained macroeconomic impact on major economies, such as that of China and the United States of America, said Dirk Hofschire of Fidelity’s Asset Allocation Research Team.

The economy of Russia is not big enough by itself to affect global markets or economic growth, even if it suffers significant economic damage as a result of the sanctions imposed on it by the US and Europe.

Because of its dependence on Russian oil and natural gas, Europe appears to be the region most exposed to the consequences of this conflict. In the short-run, it would prove impossible to replace all the Russian natural gas supply to Europe and current price levels will have a significant effect on inflation.

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Be that as it may, no region will be spared by imported inflation and global trade disruptions, particularly the developing countries which are still struggling to recover from the pandemic, leaving policymakers with less wiggle room.

“The Russia and Ukraine war has accelerated the supply disruptions that were already in place as a result of Covid-19 because many industries closed down and that reduced supply of various goods and services, therefore, prices had to increase as a mechanism to absorb such demand while supply was decreasing.

The war fuelled the already existing supply disruptions and now in vital energy products like paraffin, petrol and diesel hence the prices are to go further up,” said Lehlohonolo Mantsi, an economist at the National University of Lesotho.

“It is important to actually take a moment to take in what exactly is happening in Russia and Ukraine.

First of all, think of the world as a ‘football net’ – or any other if you may – and think of the football itself as an economic shock. When the ball (shock) hits the net (economic interconnectedness), the hit in one place causes a ripple effect throughout the entire net.

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“Some parts will be affected a little more than others and probably a lot more. With Ukraine and Russia being the largest importers of both oil and grain, we should expect most commodities to face scarcity on our shelves and storehouses.

Now, with the supply lower but the demand constant, there will be some excess supply in the grain and oil markets.

“We all can relate to this: ‘when demand exceeds supply, prices shoot’; and this is exactly what we are going to feel in our pockets.

It is my value judgement that witness the prices of maize meal, bread flour and, predominantly, oil products like petrol, diesel, petroleum jelly and kerosene (paraffin) rise persistently.

“This will likely splurge into other goods and services being more expensive because oil is in one way or another an input most businesses depend on e.g. taxi fares. So, if it prolongs indefinitely, the cost of living will be extremely high for the foreseeable future,” Mantsi said.

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Amanda Baidoo

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Insight

A wasted opportunity to reset

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The year 2024 is behind us now. It was a year in which we were told Basotho were 200 years old as a nation. The facts tell us differently. If we follow them, Basotho nation was 204 years old in 2024. Also, if we follow the facts, Basotho nation was established in Botha Bothe, not Thaba Bosiu.

None of this may matter very much but it must be known. Botha Bothe has been denied its rightful place as a place where the Basotho nation was formed.

Like an older man who is fond of younger girls, or an older woman who is fond of younger boys, we reduced our age mainly in order to suit the significance that has been accorded Thaba Bosiu at the expense of Basotho’s other mountain fortresses — for example, Mount Moorosi and Botha Bothe Mountain.

They say history is written by the victors, and the powerful. Until our current social order changes, what the powerful consider to be the truth will remain as it was given to us in 2024 — that, as a nation we were 200 years old in 2024, and that the Basotho nation emerged at their one and only fortress, Thaba Bosiu.

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This story had to remain this way because too much political and financial investment has gone into Thaba Bosiu, and we cannot afford to change stories about it.

This article is not about quibbling about how old we are as a nation, and where the Basotho nation was formed. Rather the article is about what we achieved in 2004 in our celebration of 200 years of our nationhood.

Out of lack of any interest, or out of lacking any ideas, our politicians kept mum about what they would like to see the nation achieve as part of our celebrations. So, justifiably, they can tell us to bugger off, if we ask them whether they have anything to show from the 2024 celebrations. We cannot bother them about what we achieved because they never made any promises.

In November, 2024, a friend was asked at a public seminar: What lessons have we learnt about Basotho pre-colonial political leadership during our 200th anniversary celebrations?

In response, he made one of the most brilliant statements that can be made about what happened in Lesotho during 2024. He said, in 2024 all we did was, on the one hand, to be nostalgic about the good old past where political leaders (i.e. chiefs) respected their followers, communities shared what they had, and, within communities, human security was guaranteed everyone.

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On the other hand, we continued to treat one another the way we always do: we continued to employ socio-economic systems—and to practise policies—that are responsible for socio-economic inequality in Lesotho, where many families, including children, go to bed hungry every day.

One of the things we should have done to celebrate 2024 years of our existence as a nation was to re-consider our adoption of systems and policies that leave many Basotho poor and hungry.

For having done none of this, as a nation, we remain with serious problems that need to be stated repeatedly because it seems that those in power do not get to see them in reality.

Being given just the numbers of hungry families, and being told, with satisfaction, that they are falling, will always be meaningless when you meet a hungry woman with a child on her back, and holding another by the hand—as we do in our villages—asking for food, or money to buy food.

In official statistics, she may be a single case that does not change the fact that government is succeeding in the distribution of food aid. That is not the way she may see things.

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To her, she and her children are not part of some percentage—20%, 10%, 15%, etc.—that government may not have reached. She and her children are 100%, and more. They are not 20% hungry; they are more than 100% hungry.

Neither did the killing, the rape and abuse of children and the elderly stop in 2024, nor did we take the celebration of our nationhood as an opportunity to think about how to stop all this.

We are a deeply unequal society with very unacceptable indicators of human security. Action to address the welfare of the most vulnerable sections of society—women, children, the elderly—remains terribly inadequate.

Their lot remains poverty, hunger and fear for their lives.

In our celebrations of 200 years of our nationhood, perhaps one of the things we should have done is to commit ourselves to the formulation of a socio-economic system that secures the welfare of the most vulnerable sections of society.

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Insight

Down in the Dump: Conclusion

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I closed last week by recording the dreadful news that trashy Trump had been elected called to mind WB Yeats’s poem “The Second Coming.” This is the poem whose opening lines gave Chinua Achebe the phrase “things fall apart.”

Yeats observes “Things fall apart, the centre cannot hold / Mere anarchy is loosed upon the world.”

It was written in 1919 and controversially uses Christian imagery relating to the Apocalypse and the Second Coming to reflect on the atmosphere in Europe following the slaughter of the First World War and the devastating flu epidemic that followed this.

It also reflects on the Irish War of Independence against British rule.

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In lines that I can now read as if applying to the recent American election, Yeats mourns: “The best lack all conviction, while the worst / Are full of passionate intensity.”

And then I can visualise Trump in the poem’s closing lines: “What rough beast is this, its hour come round at last, / Slouching towards Bethlehem to be born?”

Trump is certainly a rough beast and isn’t the choice of verb, slouching, just perfect? For a non-allegorical account of the threat posed by the Dump, I can’t do better than to quote (as I often do) that fine South African political journalist, Will Shoki. In his words: “Trump’s administration simply won’t care about Palestinians, about the DRC, about the Sudanese.

It will be indifferent to the plight of the downtrodden and the oppressed, who will be portrayed as weak and pathetic. And it will give carte blanche [that is, free rein] to despotism and tyranny everywhere.

Not even social media, that once revered third-space we associated with subversion and revolution in the first quarter of the 21st century can save us because Silicon Valley is in Trump’s back pocket.”

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So what follows the triumph of the Dump? We can’t just sit down and moan and bemoan. In a more recent piece of hers than the one I quoted last week, Rebecca Solnit has observed: “Authoritarians like Trump love fear, defeatism, surrender. Do not give them what they want . . . We must lay up supplies of love, care, trust, community and resolve — so we may resist the storm.”

Katt Lissard tells me that on November 7th following the confirmation of the election result, in the daytime and well into the evening in Manhattan, New York, there was a large demonstration in support of the immigrants Trump despises.

And a recent piece by Natasha Lennard gives us courage in its title “The Answer to Trump’s Victory is Radical Action.”

So, my Basotho readers, how about the peaceful bearing of some placards in front of the US Embassy in Maseru? Because the Dump doesn’t like you guys and gals one little bit.

One last morsel. I had intended to end this piece with the above call to action, but can’t resist quoting the following comment from the New York Times of November 13th on Trump’s plans to appoint his ministers.

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I’m not sure a satirical gibe was intended (the clue is in the repeated use of the word “defence”), but it made me guffaw nonetheless. “Trump will nominate Pete Hegseth, a Fox News host with no government experience, as his defence secretary. Hegseth has often defended Trump on TV.” You see, it’s all about the Dump.

  • Chris Dunton is a former Professor of English and Dean of Humanities at the National University of Lesotho.

 

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Insight

A question of personal gain

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Recently, an audio recording featuring the distressed MP for Thaba-Bosiu Constituency, Joseph Malebaleba, circulated on social media. The MP appears to have spent a sleepless night, struggling with the situation in which he and his associates from the Revolution for Prosperity (RFP) party were denied a school feeding tender valued at M250 million per annum.

In 2022, Lesotho’s political landscape underwent a significant shift with the emergence of the RFP led by some of the country’s wealthiest individuals. Among them was Samuel Ntsokoane Matekane, arguably one of the richest people in Lesotho, who took the helm as the party’s leader and ultimately, the Prime Minister of Lesotho.

The RFP’s victory in the general election raised eyebrows, and their subsequent actions have sparked concerns about the motivations behind their involvement in politics.

In an interview with an American broadcasting network just after he won the elections, Matekane made a striking statement, proclaiming that he would run Lesotho exactly as he runs his business.

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At first glance, many thought he was joking, but as time has shown, his words were far from an idle threat. In the business world, the primary goal is to maximize profits, and it appears that the RFP is adopting a similar approach to governance.

Behind the scenes, alarming developments have been unfolding. A communication from an RFP WhatsApp group revealed a disturbing request from the Minister of Communications, Nthati Moorosi, who asked if anyone in the group had a construction business and could inbox her.

This raises questions about the RFP’s focus on using government resources to benefit their own business interests.

The government has been embroiled in a series of scandals that have raised serious concerns about the ethical conduct of its officials. Recent reports have revealed shocking incidents of misuse of public funds and conflicts of interest among key government figures.

Over the past two years, the RFP has been accused of awarding government contracts to companies affiliated with their members, further solidifying concerns about their self-serving agenda. For instance, vehicles purchased for the police were allegedly sourced from suppliers connected to a Minister’s son and MP.

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The MP for Peka, Mohopoli Monokoane, was found to have hijacked fertiliser intended to support impoverished farmers, diverting crucial resources away from those in need for personal gain.

Such actions not only betray the trust of the public but also have a direct impact on the livelihoods of vulnerable communities. Monokoane appeared before the courts of law this week.

While farmers voice their concerns regarding fertiliser shortages, it seems that Bishop Teboho Ramela of St. Paul African Apostolic Church, who is also a businessman, is allegedly involved in a corrupt deal concerning a M10 million fertilizer allocation, benefiting from connections with wealthy individuals in government.

The procurement of fertiliser appears to be mired in controversy; recall that the Minister of Agriculture, Food Security and Nutrition, Thabo Mofosi, was also implicated in the M43 million tender.

The renovation of government buildings with elaborate lighting systems was contracted to a company owned by the son of an MP. The RFP’s enthusiasm for infrastructure development, specifically road construction and maintenance, is also tainted by self-interest, as they have companies capable of performing these tasks and supplying the necessary materials, such as asphalt.

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Minister Moteane finds himself in a compromising situation regarding a lucrative M100 million airport tender that was awarded to his former company. Ministers have even gone so far as to award themselves ownership of diamond mines.

Meanwhile, the nation struggles with national identification and passport shortages, which according to my analysis the RFP seems hesitant to address until they can find a way to partner with an international company that will benefit their own interests.

The people of Lesotho are left wondering if their leaders are truly committed to serving the nation or simply lining their own pockets. As the RFP’s grip on power tightens, the consequences for Lesotho’s democracy and economy hang precariously in the balance.

It is imperative that citizens remain vigilant and demand transparency and accountability from their leaders, lest the nation slide further into an era of self-serving governance.

In conclusion, the RFP’s dominance has raised serious concerns about the motives behind their involvement in politics. The apparent prioritisation of personal profit over public welfare has sparked widespread disillusionment and mistrust among the population.

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As Lesotho navigates this critical juncture, it is essential that its leaders are held accountable for their actions and that the nation’s best interests are placed above those of individuals.

Only through collective effort and a strong commitment to transparency and accountability can Lesotho ensure a brighter future for all its citizens.

Ramahooana Matlosa

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