Africa-Press – Eswatini. This new month (March) could prove disastrous for businesses, individuals and even government.
Rising crude oil prices amidst escalating fears created by the conflict between Ukraine and Russia could drive the country’s fuel prices up for the first time this year. A litre of diesel and petrol currently costs E17 and E17.15, in that order. Brent crude oil, which has an influence on fuel prices, is said to have advanced 4.3 per cent to USS$102.14 per barrel yesterday morning. As if that is not enough, the Rand is also weakening. Under the Common Monetary Area comprising Eswatini, Lesotho, Namibia and South Africa; the country’s currency, Lilangeni, is pegged to the Rand.
Developments
While government, through the Ministry of Natural Resources and Energy Communications Officer, Sikelela Khoza, insists on issuing a statement if there will be developments, indicators point to an increase in the next few coming days. The effect of the increase in oil prices is already felt in other countries, especially neighbouring South Africa. The latter from tomorrow will see a hike in fuel prices as per an announcement by Minister of Mineral Resources and Energy Gwede Mantashe this past Saturday. As of March 2 (tomorrow) the price of petrol in South Africa (both 93 and 95 ULP and LRP) will increase by E1.46/litre. As a result, each litre will cost up to E21.60. The rise in oil prices, on the other hand, comes at a time when the Rand/Lilangeni has fallen into a four-week low after the Ukraine developments. Business Report of South Africa shared that the currency weakened in early trade yesterday, as risk appetite faltered after Western nations announced fresh sanctions to punish Russia for its invasion of Ukraine.
At 6:06am yesterday, the Rand traded at R15.33 against the Dollar, 1.29 per cent weaker than its close on Friday. Around midday yesterday, both the Lilangeni and the Rand were trading at E15.44 against the US Dollar. A weakening Lilangeni is a blow to government regarding the payment of external public debt, which is usually paid in foreign currency. Preliminary figures show that external public debt stood at a revised E11.4 billion from E10.8 billion which, was previously recorded in December 2021. External public debt therefore remained constant in the period under review. The upward revision comes from drawdowns made on project loans which drawdowns were not available in December 2021. Meanwhile, Business Report further reported that the Russia-Ukraine crisis was threatening food security in South Africa. The country is a net importer of goods that include some food items from South Africa. About 70 per cent of the country’s imports are from the neighbouring country. AGRI SA, which is a South African agricultural industry association, has warned that Russia’s ongoing full-scale invasion of Ukraine not only puts pressure on global oil prices, but also threatens to destabilise trade relations and jeopardise food security. Russia and Ukraine are said to be meaningful contributors to the global food chain, accounting for at least 30 per cent of the world’s wheat exports; 20 per cent of maize exports; and at least 80 per cent of sunflower oil exports.
Impact
“Ukraine’s wheat has the greatest impact on food security throughout the world, as the country exported at least 18 million tonnes of wheat in 2020, making it the world’s fifth-biggest wheat exporter,” reads the report. Wheat prices are said have risen to the highest level since 2008, as the Russian invasion of Ukraine led to expectations of supply disruptions from two of the world’s largest producers. According to the last National Agricultural Marketing Board (NAMBoard) report, Eswatini’s wheat imports volumes were calculated at over 44 800 metric tonnes. This translates to over E185.25 million. The importance of wheat cannot be overstated. It is typically milled into flour which is then used to make a wide range of foods including bread, crumpets, muffins, noodles, pasta, biscuits, cakes, pastries, cereal bars, sweet and savoury snack foods, crackers, crisp-breads, sauces and confectionery. An economist, on condition of anonymity, said it would be blow if the Ukraine crisis could drag longer, as there was a likelihood of increases in prices of basic commodities like bread that are made from wheat.
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