Prices of common commodities to continue hiking in Africa

Commodity prices in Africa are set to continue rising due to global economic demand and inadequate supply, according to experts. The situation is compounded by elevated geopolitical risks, which could lead to supply disruptions and intensify price volatility in common commodities like wheat, maize, and sugar across the continent. Nick Kwolek, Founder of Kulea Africa, shared insights on the current challenges facing the market. The crisis in the Red Sea and the Suez Canal have significantly impacted the supply chain and prices of commodities. Delays in shipments and longer transit times have caused supply shortages in certain markets, leading to price spikes. Freight prices have soared, with rates from West Coast India to Eastern Coast Africa jumping from $20 to $70 a tonne and from Indonesia to Africa soaring from $50 to $150 a tonne. This has had a considerable effect on commodity prices in the region. In terms of maize production and pricing in Kenya, the country is experiencing a surplus due to favourable weather, but neighbouring countries like Uganda and Rwanda are just beginning their harvesting season. Kenya may need to rely on South Africa, Malawi, and Zambia for maize supply, and potential drought conditions could impact future crops, leading to price fluctuations. The wheat market in East Africa is facing challenges, given the conflict in Russia and Ukraine, key wheat suppliers. Shipping rates have skyrocketed, posing logistical complexities and potential supply bottlenecks in the region. The sugar sector in Kenya is undergoing privatization efforts by the government to enhance profitability. The depreciation of the Kenyan shilling has made sugar milling in the country attractive to foreign investors. However, the currency crisis remains a significant obstacle. To ensure stability and affordability of common commodities, increasing domestic production through privatization and boosting exports could mitigate reliance on costly imports. Diversifying exports and market destinations could also help East African countries address rising commodity prices and currency challenges. Despite these efforts, uncertainty looms due to the ongoing geopolitical tensions and supply chain disruptions affecting the market. Strategic measures to enhance production and export capabilities will be crucial in navigating the volatile commodity landscape in Africa.