Iran War Hits Africa but Opens Door for Economic Reset

The ongoing war in the Middle East is dealing a significant blow to African economies, but, on the sunny side, it could also catalyse long-overdue structural reforms across the continent.

A new joint report by the African Development Bank, African Union Commission, United Nations Development Programme, and the UN Economic Commission for Africa warns that the conflict is rapidly transmitting economic shocks to Africa through rising energy prices, disrupted supply chains, and weakening currencies.

The Middle East accounts for 15.8 per cent of Africa’s imports and 10.9 per cent of its exports, making the continent highly exposed to developments in the region. The Strait of Hormuz, a critical global shipping route, handles about 20 per cent of global oil exports, further amplifying the impact of any disruption.

Since the escalation of the conflict, global oil prices have surged by more than 50 per cent, while at least 29 African currencies have weakened against the US dollar, increasing the cost of imports, debt servicing, and basic commodities such as food and fuel.

The effects are already being felt across households and businesses. Rising fertiliser prices and supply disruptions are threatening agricultural production during critical planting seasons, raising the risk of worsening food insecurity across several regions.

Eastern and Southern Africa are among the hardest hit, with many countries heavily dependent on fuel imports from the Gulf. More than 15 African nations source over half of their oil from the Middle East, leaving them particularly vulnerable to prolonged disruptions.

“Africa is being hit by another external shock,” said Uhunna Eziakonwa Onochie of the UNDP, noting that the speed and intensity of the current crisis are greater than in previous global disruptions.

Yet beyond the immediate challenges, the report highlights a potential turning point. Institutions are urging African governments to use the crisis as an opportunity to accelerate structural transformation, reduce dependency on external supply chains, and strengthen regional integration.

“Africa must defragment even as the rest of the world fragments,” said African Union Commission Chairperson Mahamoud Ali Youssouf, calling for faster implementation of continental frameworks such as the African Continental Free Trade Area.

Experts argue that increasing intra-African trade, which currently stands at around 17 per cent, could significantly improve resilience by reducing reliance on external markets and supply routes.

The report also points to opportunities emerging from the crisis. Some countries may benefit from higher commodity prices and shifting trade routes. Nigeria could see gains from elevated oil prices, while Mozambique may attract renewed interest in its gas sector. Ports in South Africa, Namibia, and Mauritius are experiencing increased traffic as shipping routes adjust.

In East Africa, Kenya is strengthening its position as a logistics hub, while Ethiopia continues to expand its role as a key aviation link between continents.

However, these gains are expected to be uneven and insufficient to offset broader pressures. Inflation, fiscal strain, and rising debt costs remain significant risks for many economies.

To manage the impact, several countries have already introduced targeted measures. Morocco has suspended certain import taxes on fuel, while Kenya has implemented government-to-government fuel procurement systems to stabilise supply. Other nations are shifting toward targeted subsidies and renewable energy investments.

Looking ahead, institutions are calling for deeper collaboration between governments, private sector players, and development partners to build resilience. This includes investing in local fertiliser production, renewable energy, and regional infrastructure.

The crisis also underscores the urgency of addressing long-standing structural challenges, including weak manufacturing capacity, high logistics costs, and policy barriers that limit trade and mobility across the continent.

Ultimately, while the Iran war presents a significant economic shock, it is also forcing a rethink of Africa’s development model.

For policymakers, the message is clear. The continent can continue reacting to external crises or use this moment to build stronger, more self-sufficient economies capable of withstanding future shocks.

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