How does the war in the Middle East affect the African economy?
A joint international report issued by the African Union, the African Development Bank, and UN agencies warned of the serious repercussions of the war in the Middle East on the African continent. The report, seen by AFP, emphasized that the continuation of this conflict poses a grave and direct threat to the economies of African countries, foreshadowing a sharp and sudden rise in the cost of living and presenting millions of people with unprecedented economic challenges.
The roots of trade exchange and economic interdependence
Historically, the Middle East has been a vital artery for the African continent, not only due to geographical proximity but also through trade routes that have existed for centuries. In modern times, this interdependence has deepened to become strategic, particularly in the energy, oil, and natural gas sectors, as well as in agricultural fertilizers, which are the backbone of African food security. This close interconnectedness means that any security or geopolitical instability in the Middle East is immediately reflected in African markets, which explains the growing international concern about the current situation and its direct impact on the stability of global supply chains.
The impact of war in the Middle East on the cost of living
The report, co-authored by the United Nations Development Programme (UNDP) and the United Nations Economic Commission for Africa (UNECA), highlighted key figures illustrating the scale of the crisis. The Middle East accounts for approximately 15.8% of Africa's total imports and 10.9% of its exports. Experts explained that the trade shock resulting from the war in the Middle East could escalate rapidly, transforming into a severe cost-of-living crisis affecting the entire continent. This is primarily due to the exorbitant rise in fuel and basic food prices, as well as the significant increase in shipping and insurance costs, which is placing immense pressure on exchange rates and national budgets in developing countries.
Economic growth slowed and the external debt crisis worsened
At both the regional and international levels, the event has a profound impact that threatens the path to sustainable development. While economic growth in most African countries remains significantly slower than pre-COVID-19 levels, the report projects that the continent’s GDP growth will decline by 0.2 percentage points by 2026 if armed conflicts persist for more than six months. Furthermore, the African Development Bank has warned of currency devaluations in 29 African countries, which will double the cost of servicing external debt and further deplete already scarce foreign exchange reserves. Disruptions to liquefied natural gas supplies from the Gulf are also impacting fertilizer production, threatening agricultural seasons and reducing crop yields.
Strategic shifts: Beneficiaries of changing shipping routes
Despite the bleak picture, the report's authors believe other economic dimensions could produce short-term beneficiaries. With supply chains disrupted, commodity prices are rising, potentially benefiting African energy exporters like oil-rich Nigeria and liquefied natural gas producer Mozambique. Furthermore, the shift in global shipping patterns, driven by a desire to avoid tensions and a preference for circumnavigating Africa via the Cape of Good Hope, has led to a significant boost in activity at southern ports. Countries like South Africa, Mozambique, Namibia, and Mauritius are benefiting from this strategic shift, as increased vessel traffic has temporarily boosted their logistics and maritime revenues.
