Middle East crisis presents Africa with ‘short-term gains’

The ongoing war in the Middle East presents a mixed but potentially beneficial trade outlook for Africa, according to a new joint report by the African Union (AU) and the African Development Bank (AfDB), which projects that some economies within the continent could record short-term gains from the current global shipping disruptions, even as immediate shock absorption from the US-Israel – Iran conflict continues to rattle the global economy.

Released this month, the report noted that the conflict, which already has triggered a trade shock, could, however, quickly turn into a cost-of-living crisis across Africa through higher fuel and food prices, rising shipping and insurance costs, as well as exchange rate pressures, and tighter fiscal conditions.

To fix these foreseen economic challenges, the report holds that it will need rapid and coordinated policy responses by African governments and their development partners.

“While the conflict is generating broad economic risks for Africa, a few countries may see short-term gains through higher commodity prices, trade diversion, and rerouted logistics,” reads the report in part.

Nigeria is one of the countries the report says is expected to benefit from higher oil prices and the export expansion of the Dangote Refinery, while Mozambique could gain from renewed momentum in LNG and increased traffic through the Port of Maputo.

Maritime hubs like South Africa’s Durban port, Walvis Bay in Namibia, and Mauritius have also started to reap the conflict’s leftovers and are also benefiting from shipping rerouting around the Cape of Good Hope, which is boosting port activity, bunkering, and naval services.

In East Africa, Kenya is emerging as a logistics hub through Lamu Port and Nairobi, while Ethiopia is benefiting from its role as the emergency air bridge linking Asia, Africa, and Europe through Ethiopian Airlines.

“These gains, however, are likely to be uneven and may not offset the wider inflationary, fiscal, and food-security pressures affecting the continent,” notes the report.

Challenges abound

The report warns that the conflict poses a significant downside risk to Africa’s growth position. If it persists beyond six months, the continent’s GDP growth could decline by at least 0.2 percentage points this year.

Africa’s economic growth was projected to show resilience and continue accelerating, with major institutions like the World Bank forecasting growth around 4.0% to 4.3% for the year, driven by stronger macroeconomic stability in several large economies, digital transformation, and rising investment in energy and logistics.

However, the Iran war seems to have complicated the metrics for the continent, which is still handicapped by significant headwinds, including high debt service costs, persistent inflation, and geopolitical risks that are causing some institutions to revise their forecasts downward.

Last week, for instance, the World Bank cut its 2026 growth forecast for Sub-Saharan Africa to 4.1%, down from its previous 4.4% projection, citing the conflict’s disruption to global trade and investment, while the International Monetary Fund (IMF) – an affiliate of the global lender, has since downgraded the growth outlook for Sub-Saharan Africa for 2026 and 2027 by a cumulative 0.4 percentage points, citing the severe energy shock and rising inflation, noting that net energy-importing countries are among the hardest hit.

Similarly, AfDB has warned that a prolonged conflict could severely impact the continent’s growth, with projections that the war could reduce growth by up to 1.5 percentage points if the conflict lasts for six months.

Indeed, the Middle East accounts for 15.8 percent of Africa’s imports and 10.9 percent of its exports, while the Strait of Hormuz handles around 20 percent of global oil exports and nearly 90 percent of Persian Gulf oil exports.

So realistically, the longer the conflict lasts and the more severe the disruption to shipping routes and energy and fertilizer supplies, the greater the risk of a significant growth slowdown across the continent.

What must African economies do?

It is not all gloom, as the joint report recommends that Africa adapt its policy responses and strengthen coordination mechanisms at the earliest, relying more on regional coalitions to mobilize domestic resources and innovative finance.

But early planning and fast response before fuel and financing shocks feed into inflation, debt distress, and social pressures will be crucial to help to facilitate a quick recovery and lower the costs to the economies.

They are being urged to strengthen tax administration, broaden the revenue base, deepen domestic capital markets, and expand the use of instruments such as diaspora bonds, blended finance, and thematic sovereign issuances.

“Concomitantly, Africa must accelerate the reform of its financial architecture, using the principle of subsidiarity to deepen collaboration among African financial institutions and mobilize development finance on a greater scale,” it said.

Further alerting Central banks to implement flexible strategic monetary and exchange rate policies, curb cash hoarding and foreign exchange market speculation during episodes of depreciation and other inflation mitigation measures in coordination with ministries of finance, “to balance price and exchange rate stability with growth objectives.”