The report warns that the escalating Iran conflict threatens to increase the cost of living and reduce growth on the continent.
Houssam Shabro/Anadolu via Getty Images
- The Middle East conflict risks creating a cost of living crisis in Africa through higher fuel, food and shipping costs.
- If the conflict continues, Africa's GDP growth rate could slow further, with a projected loss of 0.2% by 2026.
- Currency devaluation and disrupted trade routes are worsening inflation, debt payments and food security across the continent.
The Middle East war “poses a serious threat to Africa”, the African Union and the African Development Bank (AfDB) said in a report seen by AFP on Saturday.
The report warns that the conflict threatens to increase the cost of living and reduce development on the continent.
The report said the Middle East accounts for 15.8% of Africa's imports and 10.9% of its exports.
“The conflict, which has already dealt a blow to trade, could turn into a subsistence crisis across Africa due to high prices of fuel and food, rising shipping and insurance costs, exchange rate pressures and tight financial conditions,” it said.
It said that the growth rate of most African countries remains slower than before the Covid pandemic.
“If it (the conflict) lasts more than six months, it is projected to result in a loss of output growth of 0.2 percentage points to Africa's GDP for 2026,” it said.
The longer the conflict lasts and the more serious the disruption to shipping routes and energy and fertilizer supplies, the greater the risk of a significant growth slowdown across the continent.
It said reduced supplies of liquefied natural gas (LNG) from the Gulf would impact fertilizer production, limiting its availability during the critical planting period until May.
currencies affected
The report was compiled by the United Nations Development Program (UNDP) and the United Nations Economic Commission for Africa (UNECA).
The currencies of 29 African countries have already weakened, increasing the cost of servicing external debt, making imports more expensive and depleting foreign exchange reserves, according to the latest AfDB data.
Some countries may see some short-term benefits, such as Nigeria for its oil exports or Mozambique for its LNG.
Read | Trump threatens to bomb Iran, 'will take them back to the Stone Age where they belong'
Ports in Mozambique, South Africa, Namibia and Mauritius could benefit from rerouting ships around the Cape of Good Hope.
The report said Kenya is positioning itself as a logistics hub in East Africa, while Ethiopian Airlines, the leading carrier in Africa, is serving as an “emergency air bridge” between the continent, Asia and Europe.
But these gains are likely to be uneven and will not offset the consequences for inflation, budgets and food security in Africa, he warned.
On top of that, the current crisis could increase the cost of humanitarian aid and divert donor funds to other priorities.