Middle East Conflict Heightens Risks for African Economies, S&P Global Warns
The ongoing conflict in the Middle East is amplifying economic vulnerabilities across Africa, according to a recent assessment by S&P Global Ratings. The agency warns that prolonged hostilities could deepen inflationary pressures, strain fiscal balances, and exert downward pressure on sovereign credit ratings for many African nations.
Why Net Importers Are Most Exposed
S&P Global notes that the majority of African states are net importers of refined fuel, fertilizers, and other essential commodities. Higher world prices for these goods directly increase import bills, which in turn:
- Push up consumer price inflation;
- Widen current‑account deficits;
- Erode fiscal buffers, especially for governments with limited revenue‑raising capacity.
The agency emphasizes that countries with thin fiscal space have little room to absorb such external shocks without resorting to emergency borrowing or spending cuts.
Varied Impact Across the Continent
The severity of the shock differs depending on a country’s trade structure and financial resilience:
- Energy importers – nations that rely heavily on imported gasoline, diesel, and jet fuel face the most immediate cost pressures.
- Fertilizer‑dependent economies – rising prices for sulfur‑based inputs threaten agricultural output and food security.
- States with shallow capital markets – limited access to domestic financing makes external borrowing more expensive.
Conversely, a handful of oil‑exporting countries could see a boost in export revenues, although gains may be muted by their own need to import refined products.
Potential Winners and Caveats
S&P highlights Angola, the Republic of Congo, and Cameroon as major crude exporters that could benefit from higher oil prices. However, their refining sectors remain underdeveloped, meaning they still purchase a significant share of refined fuel abroad.
Nigeria stands out because of the Dangote refinery—currently the largest in Africa with a capacity of 650,000 barrels per day. While the facility could alleviate regional fuel shortages, it still requires imported crude to meet domestic demand, limiting the net advantage.
Role of Local Capital Markets
For economies with deeper financial systems—such as South Africa, Morocco, and Egypt—local bond and equity markets can provide alternative financing sources, partially offsetting the rise in external borrowing costs. S&P notes that these markets have helped cushion the impact of previous shocks, though their effectiveness depends on investor confidence and macro‑stability.
Fertilizer, Supply Chains, and Second‑Round Effects
The agency warns that higher fertilizer prices could suppress domestic food production, prolonging household budget strains and potentially reigniting social unrest. Additionally, disruptions to Middle Eastern trade routes raise logistics costs for both imports and exports, affecting commodities such as gold and diamonds that transit through the region.
These second‑round effects feed back into inflation, increase demand for foreign currency, and exert pressure on exchange rates—further raising the cost of servicing external debt.
Rating Outlook and Borrowing Costs
At the start of 2026, S&P’s outlook for African sovereign bonds was positive, reflecting two years of net rating upgrades. The Middle East conflict has introduced new headwinds:
- Higher refinancing costs due to global risk aversion;
- Potential reinstatement of fuel and fertilizer subsidies that governments had recently removed;
- Exchange‑rate volatility that raises domestic funding costs.
As a result, the agency anticipates a gradual rise in borrowing costs across the region, with the magnitude varying by country‑specific exposure.
Insights from Local Experts
Samira Mensah, S&P Global’s head of South Africa ratings, told Business Day that South Africa remains on track to maintain its current rating and positive outlook. She cautioned, however, that the May 2026 rating review could shift if the conflict markedly worsens key economic indicators such as the current‑account balance or inflation trajectory.
Mensah’s comments underscore the importance of monitoring real‑time data—fuel import volumes, fertilizer price indices, and exchange‑rate movements—to gauge how external shocks translate into fiscal pressure.
Conclusion
The Middle East conflict is not a distant geopolitical event for Africa; its ripple effects are already visible in fuel queues in Ethiopia and Kenya, and in the tightening of fertilizer markets continent‑wide. While some oil‑exporting nations may capture short‑term gains, the broader risk landscape points to higher inflation, strained public finances, and rising sovereign borrowing costs for the majority of African economies. Policymakers and investors should watch closely how these dynamics evolve, particularly as rating agencies like S&P Global prepare their next assessments in mid‑2026.
