How the US-Israel War on Iran is Reshaping African Economies Through Supply Chain Disruptions
The ongoing conflict between the US, Israel, and Iran has sent shockwaves through global supply chains, with African nations facing a complex and nuanced economic impact. While headlines focus on rising fuel and energy costs worldwide, the war's sixth week has intensified shipping restrictions and strikes on energy facilities in the Gulf, disproportionately affecting some of the poorest and most vulnerable economies in Africa.
A Global Shock with Regional Variations
Dr. Zainab Usman, a senior research scholar at the Centre on Global Energy Policy at Columbia University, emphasizes that the obstruction of shipping, particularly at the Strait of Hormuz, has global repercussions. This choke point accounts for 20% of the world's crude oil shipments, with significant volumes destined for Asia and parts of East Africa. Consequently, countries closer to the strait and the Indian Ocean, such as Ethiopia, Kenya, Egypt, and parts of southern Africa, are already grappling with fuel shortages. In contrast, West African nations along the Atlantic coast have avoided similar supply disruptions, though they are not immune to continent-wide fuel price hikes. Dr. Usman reports cost increases ranging from 30-70%, with extreme cases like Somalia seeing spikes up to 150%.
Oil Importers Bear the Brunt
Dr. Usman categorizes 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 imports, 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 at 9 PM to conserve electricity. Oil-exporting countries, however, are not shielded from the crisis. They face inflationary pressures from the global hike in fuel prices triggered by Middle Eastern political shocks. Nigeria, despite having one of the world's largest oil refineries, is experiencing higher fuel costs for its citizens. Dr. Usman notes that rising energy costs are "hurtful to households, businesses, and the budgets of governments," as energy is essential for daily activities like electricity and transportation.
Nuanced Risks to Food Security
There is a tendency to catastrophize impacts on poorer countries, but Dr. Usman cautions against overestimating the threat of a food crisis. While the Strait of Hormuz handles shipments of key resources like fertilizer, the seasonal nature of fertilizer use means current disruptions may not immediately affect farming and harvests. Many African countries, with heavily agricultural economies, prioritize storage, allowing them to tap into reserves even if the conflict prolongs. Dr. Usman advises caution in projecting widespread food insecurity, drawing parallels to how the Covid-19 pandemic was less severe in Africa than anticipated.
Rising Risks and Emerging Opportunities
If the conflict becomes prolonged, deeper impacts on African economies could emerge. Governments might introduce subsidies to cushion higher energy prices, straining budgets. Even oil-rich nations could face supply disruptions due to insufficient refining capacity, forcing them to supplement domestic production with imports. However, a longer-term positive implication is a renewed focus on energy security. Policymakers are shifting from developmental goals like affordable and clean energy to realpolitik strategies that reduce vulnerability to external shocks. This may drive investments in harnessing domestic resources and enhancing regional refining and processing capacities, as seen with projects like the Dangote fertilizer plant in Lagos.
Hostages to an Uncertain Peace
A lingering risk remains: prolonged conflict and shipping constraints could deplete fertilizer stores, leading to weaker harvests and food shortages during farming seasons. Yet, as Dr. Usman summarizes, "we are not there yet." The crisis divides affected nations into two camps: those already feeling the impact and those in limbo, hostage to a de-escalation that seems perpetually imminent but never arrives. This nuanced reality underscores the complex interplay between global geopolitics and local economic stability in Africa.
