The war on Iran is putting heavy pressure on African economies.. So what is the solution?

African economies are experiencing new shocks due to rising global oil prices resulting from the war on Iran, threatening to increase fuel costs, raise inflation rates, and put additional pressure on local currencies. A report indicated that most African countries rely on importing petroleum products, making them directly vulnerable to any disruptions in supplies coming from the region, a pivotal hub for global energy flows.

An analyst explained that Africa is a “net importer of petroleum products,” and therefore any shock in global markets is quickly reflected in its economies.

With global supply tightening, prices are rising while African currencies are depreciating as investors turn to the dollar as a safe haven, doubling the impact of the price surge in import-dependent markets like Kenya and Ghana. South Africa experienced a similar situation following the Russian invasion in 2022, where fuel prices rose by more than 25% within 6 months.

It was clarified that the Strait of Hormuz, through which about 20% of the world’s oil passes, represents a strategic bottleneck, and any disruption there directly raises prices and threatens the stability of African markets.

Varying Impact Between Countries

Countries such as Kenya and Uganda have confirmed that supplies are stable so far, but they are working to ensure continuity. As for Nigeria and Ghana, despite their crude production, they import most refined products, limiting their benefit from rising prices. In contrast, major exporting countries like Angola and Algeria could achieve financial gains if prices stabilize above $100 per barrel, far exceeding the financial estimates set by Nigeria between $64 and $66 per barrel until 2028.

However, it was noted that these gains may be limited, as repeated increases in fuel prices put pressure on citizens and reduce economic benefits.

Impact on Households and Fragile Economies

For the majority of African households, rising oil prices translate directly into increased living costs, as the transport of food and goods depends on road networks. It was emphasized that “rising fuel costs quickly fuel inflation and reduce purchasing power.” Countries under IMF programs may face additional pressures as foreign exchange reserves are depleted.

It was added that these pressures may deepen the fragility of sub-Saharan African economies, which rely heavily on oil imports, making them more vulnerable to external shocks.

The current crisis raises a strategic question again about the necessity of diversifying energy sources and reducing dependence on imports. A researcher stated that “achieving energy security and sovereignty requires balancing short-term financial pressures with long-term investments in clean energy and green manufacturing.”

It was pointed out that solutions lie in accelerating investment in renewable energy, developing local industries, and diversifying energy systems to ensure long-term energy security and economic sovereignty.

While some exporting countries may reap financial gains from high oil prices, the majority of African economies face a dual challenge: accelerating inflation and pressure on local currencies. The crisis may be an opportunity to rethink energy strategies, but it is also a difficult test of governments’ ability to protect their citizens from a new wave of price increases.