This has not been a walk in the park as an economy like Germany has taken a hit with some analysts stating that it used to fuel a two trillion economy on 20 billion dollars of Russian energy . That Germany the biggest economy in Europe and fourth largest in the world sank into a recession in the first quarter of 2023 is a major testament of the aftermath of the sanctions or impact of reducing reliance on Russian energy . It is difficult for anyone to convince me that the recession has nothing to do with the war in Ukraine . The world economy is also projected to slow down in 2023 which is also very closely related to the war .
De-Dollarization Calls are Emerging and Increasing in addition to Segmentation of the World into Global North and South
Another consequence of the war that we can term as unintended is the increasing call for dedollarisation , with Russian Banks unable to transact from the SWIFT platform some financial innovations have emerged . One of these innovations has been the call for the world to be less reliant on the US dollar for trade , as a medium of exchange or a reserve currency . This is driven by a concern that the US has weaponized the dollar through actions such as the monetary sanctions imposed on Russia due to the war .
Russia responded by trying to use cryptocurrency which didn ’ t work very well , now they are in the frontline of efforts for dedollarisation . One of the initiatives involve them accepting the Chinese Yuan for petroleum export instead of the petrodollar and the creation of the BRICS currency under an expanded group of Nations termed as BRICS +.
BRICS countries include Brazil , Russia , India , China and South Africa . BRICS + will include new members such as Argentina , UAE and Saudi Arabia which have indicated their intentions to join the BRICS block .
This has also seen an increase in the use of the term Global South in reference to these countries and others that were previously referred to as developing countries . The opposite the Global North refers to developed countries especially the North America and Europe , the term is not exclusively geographic as it includes countries like Australia and New Zeeland that are geographically in the South .
Price of Bread Keep Increasing but That of Mandazi Remain Constant
After talking to various Bread bakers , I realized that the war in Ukraine has impacted the cost of baking resulting to an increasing trend in the price of bread . This has also contributed to the increasing cost of living as a result of the effect on the middle-class breakfast spending .
Russia and Ukraine account for about a quarter of world wheat exports , Russia and their ally neighbor Belarus also supply about 15 % of the world fertilizers . Supply of world wheat has been affected by the war which has resulted in scarcity of the commodity which bread bakers associate with the delivery of a certain taste in bread . Shortage of wheat from these sources pose a major challenge to bread manufacturers and hence affecting the cost of breakfast which also increases inflation . Recent increases in taxation as included in the Finance Bill 2023 in Kenya will only make it worse for bread consumers .
I got an interesting insight from a consumer who noted that regardless of the price of wheat flour , the cost of mandazi ( deep fried wheat pie ) has not changed in a long time , it has remained at ten Kenyan shillings . Apparently , those who make mandazis may have a trick up in the sleeves that can help marketers maintain the price of their brand in an environment of increasing cost of living . In your pricing strategy you may consider the mandazi wisdom and thank me later .
Boniface Ngahu is a seasoned marketing research expert and runs the Talking Point column in Marketing Africa magazine . He is the Marketing Director of SBO Research . You can commune with him on this or related matters via email at : Boniface @ sboresearch . co . ke , or follow him on Twitter @ bngahu .