Tunisia is among the countries that are paying a very high price for the Russian-Ukrainian war which is taking place about 2,528.37 km (as the crow flies) from the capital Tunis. The impact of this war on the country is estimated at a variation in the growth rate of -2.5% and -2.2%, respectively in 2022 and 2023, compared to a situation without a war, according to a study carried out by UN-Habitat and United Nations Economic Commission for Africa (UNECA).
This study on the impact of this war on the country was the subject of a workshop organised on Thursday in Tunis by the UN-Habitat Maghreb office and the ECA North Africa regional office (UNECA) in partnership with the UN Resident Coordinator’s Office in Tunisia, on the theme “Detecting the effects of the Russian-Ukrainian war: How to anticipate and prepare for the fallout of the Russian-Ukrainian war on food security in Tunisia?
“Tunisia imported on average over the period 2018-2021, 93% of its consumption of soft wheat, 67% of barley and 40% of durum wheat. More than half of its grain imports depend on Russia and Ukraine. The country, which pays for its imports in dollars, is thus suffering a double shock, that of the war and that of the depreciation of its currency,” stressed economist Mohamed Haddar, author of this study.
According to him, “the surge in the price of cereals, fertilisers and energy following the war in Ukraine has caused, for example, an explosion in subsidy spending, an increase in the budget deficit and a consequent reduction in budgetary space, a reduction in the budgets devoted to education, health, investment, etc., supply difficulties, shortages (bread, flour, semolina, sugar, rice, agricultural products, etc.), a depreciation of the national currency and a worsening of inflation…
Regarding the impact on households, Haddar said, “Our simulation indicates that the war in Ukraine affects both men and women in almost the same way.
The winners of the war are mainly small business owners in industry, who would see their welfare increase by about 16% in 2022 and by more than 18% in 2023, as well as senior managers, who would see their welfare improve by about 0.6% in 2022 and 0.4% in 2023.
However, Haddar noted that “the list of losers is much longer. For example, agricultural workers would be severely affected. Their welfare loss would be more than 13% in 2022 and more than 16% in 2023. Middle managers would suffer a 4% drop in welfare. The unemployed would lose 3 to 4% of their well-being. Retired people would lose almost 2%, farmers would lose about 2% in 2022 and 4% in 2023. Other inactive people would lose about 0.3% of their welfare (900 thousand workers are in informal jobs in 2020).
// Mitigation measures
The author of the study believes that in order to mitigate the impacts of the war on growth, the budget and households, the state must act on four main axes.
The first axis consists of controlling inflation through, for instance, improving the business climate (elimination of authorisations, fiscal transparency, etc.) to boost economic growth, boosting exports in order to substantially reduce the trade balance deficit and indexing wages to productivity.
The second axis consists of the elaboration and implementation of a new participatory cereal policy in a food security, productivity and resilience approach. In this regard, it will be necessary to review the governance of the cereal sector in a participatory approach; support agricultural producers; rehabilitate the Small Cereal Farm (SCF) in view of its economic, social and environmental role; reduce the country’s dependence on soft wheat from 93% to 40% by 2030; revise the mechanisms for setting the prices of cereals and other food products and develop research and innovation.
The third axis is the guarantee of controlled energy security. It is thus important to reduce the country’s energy dependency rate to 35% in 2035, by controlling demand in all sectors of activity (industry, transport, construction), through a gradual elimination of energy subsidies, by developing all the country’s natural resources (fossil, renewable, conventional and non-conventional) and by encouraging significant private investment.
It is also imperative in this sense to apply the principles of good governance by institutions and public companies, to ensure the protection of vital infrastructure against the risks of degradation leading to long and frequent stoppages, to constitute a strategic and security stock, to anticipate changes and mutations in the region and in the world and to boost foreign investment.
The fourth axis is the revision of the subsidy system. This would involve setting up programmes to help companies and households invest in energy efficiency and self-production of renewable energy and reducing the impact of the reform on the poor and vulnerable populations (stable tariffs for electricity and gas reserved for these populations, etc.).
Source: Agence Tunis Afrique Presse