African currencies have come under pressure as the ongoing Middle East conflict drives up oil prices, disrupts shipping flows, and sends inflationary shocks across the continent.
As of late March, 29 local currencies had depreciated under the weight of these pressures, according to data cited in a joint policy brief by the African Development Bank (AfDB), African Union (AU) and the United Nations (UN), released earlier in the month. For better context, Africa has about 42 currencies in total.
The declines are already increasing the cost of servicing external debt and financing imports, particularly in economies with limited foreign exchange buffers, the report said.
Senegal, Sudan, Cabo Verde, South Sudan and The Gambia were identified among the most exposed, reflecting constrained fiscal space and weak reserve positions.
Since the escalation of hostilities on February 28, disruption to the Strait of Hormuz — a key corridor for oil and fertiliser trade — has tightened global supply conditions, lifting input costs for agriculture and industry and transmitting price pressures across African economies
The brief warns that a six-month continuation of the war could shave 0.2 percentage points off the continent’s 2026 growth, with the impact varying based on import dependence and exposure to global markets.
“The longer the disruption to energy, fertiliser and shipping routes persists, the greater the risk of a significant growth slowdown across the continent,” it noted.
Oil shock feeds directly into inflation
The authors argue that the most immediate transmission channel has been energy. By March 24, global crude oil prices had risen by around 50% as the Strait of Hormuz remained closed, raising costs across transport, manufacturing and agriculture. For net fuel importers, the pass-through has been swift, feeding into inflation and threatening Africa’s fragile price stability.
Currency depreciation has reinforced these vulnerabilities. Weaker exchange rates are pushing up import costs while increasing the burden of dollar-denominated debt, leaving policymakers with limited room to respond.
Fertiliser disruption raises food security risks
Beyond oil, fertiliser supply is emerging as a critical pressure point. The Middle East is a key supplier of ammonia and urea used in African agriculture, particularly during the March-to-May planting season. Disruptions risk tightening supply, raising input costs and food prices.
“For some African countries, the fertiliser channel may be even more consequential than the oil shock,” the report warned, highlighting the risk to food security.
For households already facing elevated living costs, the combined impact of rising energy and food prices could deepen economic strain.
“The conflict, which already has triggered a trade shock, could quickly turn into a cost-of-living crisis across Africa through higher fuel and food prices, rising shipping and insurance costs, exchange rate pressures, and tighter fiscal conditions,” the report says.
Uneven impact across countries
While the continent faces broad cost pressures, some countries may see short-term gains. Nigeria could benefit from higher oil prices and rising export revenues from the Dangote Refinery, while Mozambique may gain from renewed LNG exports and increased traffic through the Port of Maputo. South African, Namibian, and Mauritian ports are also seeing increased shipping activity due to rerouted trade flows.
Meanwhile, Kenya is emerging as a logistics hub via Lamu Port and Nairobi, and Ethiopian Airlines is benefiting from its role as an air bridge connecting Asia, Africa, and Europe. Even so, the report cautions that these gains are uneven and unlikely to offset continent-wide inflation and fiscal pressures.
Immediate action needed
To limit the fallout, the brief calls for immediate policy action aimed at stabilising supply and easing financial strain. Governments are urged to activate contingency import financing arrangements, including pooled procurement of fuel and the establishment of emergency food corridors. Diversifying fertiliser sourcing, where feasible, is also identified as a priority.
Financial support will be critical. The report recommends temporary liquidity lines from central banks and regional institutions, alongside countercyclical tools such as rapid budget support, trade finance facilities and import guarantees for vulnerable economies.
Targeted social protection measures are also advised to shield the most exposed households, while avoiding broad-based subsidies that could exacerbate fiscal risks. Commodity exporters, meanwhile, are encouraged to save windfall revenues into sovereign buffers to cushion against a future price correction.
With risks to inflation mounting, the brief calls on central banks across the continent to focus on monetary and exchange-rates policies that support macroeconomic stability along with measures designed to curb speculative pressures in FX markets.
How African nations are responding
So far, policy responses across African economies have varied sharply, reflecting differences in fiscal space and exposure to the ongoing conflict.
In East Africa, Kenya has opted to keep pump prices for petroleum products unchanged through April, easing the pass-through of higher global oil costs.
As inflation risks re-emerge in Nigeria, the government has moved to reduce import duties on food, vehicles and industrial inputs from July 1, aiming to temper cost pressures arising from a spike in fuel and diesel prices.
Elsewhere, pressure from business groups and trade unions has forced South African authorities to cut the fuel levy for one month to prevent further increases in pump prices during April.
In Egypt and Ethiopia, the focus has tilted more towards managing consumption as supply constraints deepen, although Addis Ababa has also introduced subsidies to cushion households and businesses.
These relief measures, however, come at a fiscal cost.
Zambia, for instance, is forgoing about $100 million in revenue after suspending fuel taxes for three months in March, underscoring the trade-offs facing policymakers as the conflict persists.
Analysts warn the strain will intensify if the disruption continues, raising questions over how long governments can sustain these buffers before they crack.
Abuja-based development economist Aliyu Adamu says African economies will remain highly vulnerable to these external shocks unless governments address longstanding structural weaknesses, particularly in domestic production across energy, manufacturing and agriculture.
“What we have in Africa are reactive policies, we don’t plan for these shocks, so when they happen, governments are not prepared and they start to scramble about for bailouts and emergency measures to curb the fallout,” Adamu said in an interview with FIA.
He stresses that efforts to boost food self-sufficiency and diversify economies away from commodity dependence need to be accelerated to build resilience and reduce exposure to global disruptions.
