US-Israel War on Iran Impacts African Economies Through Supply Chain Disruptions
The ongoing conflict between the US, Israel, and Iran is sending shockwaves through global supply chains, with African economies facing significant and nuanced repercussions. As the war enters its sixth week, shipping restrictions and strikes on energy facilities in the Gulf region are exacerbating vulnerabilities for some of the world's poorest nations, while others remain in a precarious limbo.
Global Shock and Regional Disparities
Dr. Zainab Usman, a senior research scholar at the Centre on Global Energy Policy at Columbia University, emphasises that while shipping obstructions affect the entire world, the Middle East choke point accounts for 20% of global crude oil shipments. A substantial portion of this oil flows to Asia and parts of East Africa, making countries closer to the Strait of Hormuz and the Indian Ocean particularly susceptible.
Nations such as Ethiopia, Kenya, Egypt, and parts of southern Africa are already grappling with fuel shortages. In contrast, West African countries along the Atlantic coast have avoided similar supply disruptions. However, fuel price hikes are sweeping across the continent, with costs soaring by 30-70% in many areas and reaching up to 150% in extreme cases like Somalia.
Oil Importers Bear the Brunt
Dr. Usman categorises African countries into two groups: oil-importing nations in the east, north, and southern regions, and oil-producing countries like Nigeria, Angola, Gabon, and Congo-Brazzaville. The former, which rely entirely on imported oil, are doubly impacted if their supplies transit through the Gulf. For instance, Egypt has implemented energy-saving measures, including reduced street lighting and a decree mandating early closures for shops, restaurants, and entertainment venues to conserve electricity.
Oil-exporting countries are not immune, either. They face indirect effects from the global surge in fuel prices triggered by the Middle East political shock. Nigeria, despite having one of the world's largest oil refineries, is witnessing higher fuel costs for its citizens. Dr. Usman notes that rising energy costs have inflationary impacts, hurting households, businesses, and government budgets by increasing expenses for electricity and transportation.
Food Crisis Not Inevitable, but Risks Loom
There is a tendency to catastrophise impacts on poorer nations, but Dr. Usman cautions against overestimating immediate threats. While the Strait of Hormuz handles fertiliser shipments, seasonal usage patterns and serious storage practices in agricultural economies like Malawi mitigate short-term disruptions. Similar to the Covid-19 pandemic, which proved less severe in Africa than anticipated, projections of widespread hunger may not materialise if countries tap into stored supplies.
However, prolonged conflict could lead to deeper economic strains. Governments might increase subsidies to cushion higher energy prices, straining budgets. Even oil-rich nations with insufficient refining capacity, such as those in West and Central Africa, may face supply disruptions as they rely on imports for refined products.
Rising Risks and Emerging Opportunities
If the conflict persists, African countries could see a shift in energy policy priorities. Dr. Usman suggests that policymakers may now focus more on energy security beyond developmental goals, emphasising realpolitik to reduce vulnerability to external shocks. This could drive investments in domestic resources and regional refining capacity, as seen with projects like the Dangote fertiliser plant in Lagos.
Yet, a lurking implication remains: prolonged shipping constraints could deplete fertiliser stores, risking weaker harvests and food availability during farming seasons. Dr. Usman summarises the situation as splitting affected nations into two camps—those already feeling the impact and those awaiting a de-escalation that seems perpetually imminent.
