The current conflict in the Middle East “presents a serious risk” for Africa where it risks causing the cost of living to explode, warn the African Union (AU), the African Development Bank (AfDB) and UN institutions in a report received on Saturday by AFP.
The Middle East represents 15.8% of Africa’s imports and 10.9% of its exports, recall the AU, the AfDB, the UN Development Program (UNDP) and the United Nations Economic Commission for Africa (UNECA) in this document.
“The trade shock caused by the conflict could quickly degenerate into a cost of living crisis on the continent”, due to rising fuel and food prices, freight and insurance costs, pressure on exchange rates and the impact on state budgets, the authors of the report detail.
The pace of growth in most African countries continues to be slower than before the Covid pandemic and “overall, a loss of growth of 0.2 percentage points to Africa’s GDP is projected in 2026 if (the conflict) lasts more than six months”, according to the document.
“The longer the conflict lasts and the more the disruptions in the delivery of energy and fertilizers worsen, the greater the risk of a significant slowdown in growth” in Africa, with varying impacts depending on the country.
Problems transporting liquefied natural gas (LNG) from the Gulf will impact fertilizer production, increasing their cost and limiting their availability during the crucial sowing period until May.
According to recent data from the AfDB, the currencies of 29 African countries have already depreciated, increasing the cost of servicing the external debt, making imports more expensive and reducing foreign exchange reserves, underlines the text.
According to the authors, some countries could benefit in the short term from the conflict, via the rise in raw material prices, Nigeria, an oil producer, or Mozambique via LNG, a reorientation of trade or the rerouting of maritime traffic via the Cape of Good Hope, likely to benefit the ports of Mozambique, Africa from the South, from Namibia or Mauritius.
Kenya is establishing itself as a logistics hub in East Africa, while Ethiopia’s national company Ethiopian Airlines, the first in Africa, serves as an “emergency air bridge” between the continent, Asia and Europe, according to the authors.
But these gains should be uneven and not offset the consequences on inflation, budgets and food security in Africa, they warn.
They also fear an intensification of conflicts in Africa due to external “competitions of influence” but also increased rivalries for control of ports, minerals and security in the Red Sea.
Above all, the current crisis could impact the costs of humanitarian aid and divert donor funds towards other priorities.
AFP
