On 9 March, the AU expressed concern over recent attacks on critical energy and transport infrastructure, amid the ongoing conflict between the US/Israel and Iran.
- A prolonged conflict in the Persian Gulf could further expose some African countries to debt distress, as high fuel import bills hamper fiscal reforms and concessional lending.
- This, coupled with the likely reduction in foreign aid and investment, could worsen socio-economic grievances, increasing the frequency of violent protests in countries such as Kenya, Senegal, and Madagascar.
- Western and Gulf partners are also likely to be less engaged in mediating African conflicts, potentially contributing to an escalation of tensions in South Sudan, Sudan, and the DRC.
- Meanwhile, the Horn of Africa region, given its proximity to Yemen, will become even more strategic for the US and its allies. This could heighten regional competition and increase the threat of terrorism.
- The rising oil prices will encourage Uganda, Tanzania, Madagascar, and Senegal to expedite oil and gas projects, boosting the bargaining power of foreign investors.
Supply chain disruption
The AU warned that persistent fighting between Iran, the US and their respective allies could seriously disrupt important energy supply chains, threatening global stability. The AU also said that this could have serious implications for African economies, especially as oil prices rise. Following multiple US/Israeli airstrikes on Iran on 28 February, several attacks on oil refineries and tankers have been reported in Saudi Arabia, the UAE, and Qatar. Moreover, Iran, on 2 March, announced the closure of the Strait of Hormuz. This strait is a key component of global oil supply chains, providing passage to at least 20% of the world’s oil and gas. In this context, the price of Brent Crude oil rose above USD 100 for the first time since 2022, and has since experienced major fluctuations.
As Africa is a net oil importer, several countries are worried that a prolonged conflict could worsen inflationary and fiscal pressures. African oil producers with established export supply chains, such as Angola and Gabon, could benefit from increased oil revenues, but would still need to navigate a constrained international capital market and reduced development aid.
Existing fiscal pressures
The fighting in the Gulf has exposed the continued vulnerability of African economies to external shocks, especially as it comes when several countries are scrambling to prevent or mitigate debt crises. This is the case for Senegal, which, despite its nascent oil sector, is scrambling to avoid foreign default. Even countries with relatively healthier foreign reserves, such as Kenya, could see increased import bills derail their debt sustainability strategies if the conflict persists, complicating access to concessional lending. To shield their populations from inflation, many countries will have to deprioritise fiscal reforms, especially those aimed at removing expensive fuel subsidies. This could complicate their performance under existing IMF facilities or prolong talks for new, much-needed concessional loans.
At the same time, as the conflict exacerbates global economic uncertainties, investors and commercial lenders will increasingly prioritise stable markets, further reducing capital inflows to Africa. Different countries will leverage their diplomatic ties to the US to push for flexible arrangements with the IMF and continued aid, with varying success. Kenya, which enjoys strong relations with the US, is likely to be among the successful, while South Sudan, whose relations with the US have been hampered by repeated violations of a 2018 peace agreement, will struggle to obtain more funding.
Impact on unrest and conflict
In any case, these fiscal and budgetary constraints come at a time when many African governments are struggling to appeal to a more politically engaged youth. Many governments have thus far relied on repression and, to a lesser extent, increased social spending to navigate this. However, inflation and budgetary shortfalls resulting from a prolonged conflict could make it harder for many governments to contain youth protests, especially in countries with a relatively active civil society, such as Madagascar, Kenya, Ethiopia, and to a lesser extent, the DRC. Although we do not expect multiple popular uprisings, the number of coups d’état would increase in the event that the conflict persists for over a year. This would mostly affect countries with especially fragile institutions, for instance, in the Sahel region, South Sudan, and Madagascar.
Meanwhile, as the West focuses on mediating between the US and Iran and mitigating the impacts of the conflict on their economies, they will be less incentivised to intervene in African political crises and conflicts. Warring parties in countries such as South Sudan and DRC/Rwanda would take advantage of this to maximise their positions, causing a spike in fighting. For South Sudan, this would precipitate another civil war, ending all prospects of stability. As the UAE and Saudi Arabia, key US allies, focus on mitigating Iran’s military campaign, funding for the Rapid Support Forces (RSF) and the Sudanese Armed Forces (SAF) could be reduced. This could reduce the intensity of the fighting, but in the absence of US pressure, neither camp would be incentivised to engage in negotiations, potentially allowing a wide range of military actors to entrench their control over different parts of Sudan.
The Red Sea and the Gulf of Aden
At the same time, however, a conflict would increase the strategic importance of the Gulf of Aden and the Red Sea to the US and its allies in the Gulf, particularly due to their proximity to Yemen, where the Houthis (key allies of Iran) have bases. These actors would be keen to increase their military presence in these areas, especially in Somaliland, Somalia, Djibouti, and Eritrea. Although this could lead to increased military cooperation between these countries and the US/UAE, it would also worsen existing regional competition. In particular, given Somaliland’s bid for international recognition, the federal government will strongly oppose military partnerships between Somaliland and the US/UAE/Israel. The likelihood of widespread proxy fighting between Somaliland and Somalia would increase in the event that the US and Israel establish a military base in Somaliland. These tensions would also further undermine Somalia’s relations with Ethiopia, which is also closely aligned with the UAE.
In the same vein, a prolonged conflict would increase the likelihood that Houthi rebels join Iran’s regional campaign, including sporadic attacks on US and UAE military bases in Kenya, Somaliland, and Djibouti. However, in our view, support from the US/UAE would enable these countries to prevent large-scale attacks. Nonetheless, the threat of terrorism would be elevated in Kenya and Somalia, where al-Shabaab, which has links to the Houthis, operates.
In Kenya, this greater collaboration between the Houthis and al-Shabaab would result in an increase in attacks in north-eastern counties, close to Somalia. Somalia, which is still grappling with serious institutional and security force deficiencies, would struggle to contain al-Shabaab attacks, potentially causing the group to regain control of parts of the country.
All in all, the terrorism threat in Kenya, Somalia, and the greater Eastern Africa region is likely to increase as the conflict unfolds, especially because other Islamist groups would be keen to gain international notoriety through attacks regardless of any link to the Houthis. The Allied Democratic Forces (ADF), which operates in the DRC and Uganda, is likely to step up opportunistic attacks on Western interests as a signal of its capabilities to larger Islamist groups.
Business implications
African countries lack the diplomatic power to influence the trajectory of the conflict and will therefore be exposed to major uncertainties. To counter this, they will prioritise revenue collection, worsening tax risks for large businesses.
Companies should also expect existing security issues, especially crime, unrest, conflict and terrorism, to intensify, requiring more forward-looking approaches to crisis management.
On the positive side, oil-producing countries will seek to maximise the benefits of the rising oil prices, including by expediting ongoing and planned projects. For example, Uganda will be keen to prevent further delays to oil production from the Albertine Rift, which is planned for mid-2026. Likewise, Tanzania will seek to speed up the construction of a Liquefied Natural Gas (LNG) plant in Lindi Region, which had stalled for years due to disputes with investors. Meanwhile, the Malagasy government will be more open to resuming the licensing round for 44 offshore oil and gas exploration blocks in the Morondava basin, which was suspended in 2018. Given the urgency and the reduced risk appetite of investors, it will be easier for businesses to obtain concessions from these governments, especially with regard to taxation and local content.
Sources
Statement by the Chairperson of the African Union Commission on the Situation in the Persian Gulf, African Union
Sub-Saharan Africa’s economy is heavily exposed to the Middle East conflict, but solutions exist, Zero Carbon Analytics
For tailored analysis on the political, security, and socio-economic impacts of the US-Iran conflict in Africa, please contact Africa Investigates Incorporated.
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