The Iran war will fan inflation and cost Africa vital economic growth, the World Bank warned, with oil-importing nations including Kenya and Ethiopia potentially at the greatest risk.
The Washington-based lender cut its 2026 economic growth forecast for the region by 0.3 percentage points to 4.1%, the same pace as last year, in a report last week. Inflation was seen rising 4.8% versus 3.8% previously expected.
“Sub-Saharan Africa’s economic recovery from a decade of global shocks is showing signs of stalling,” the bank said. “Geopolitical risks — including the conflict in the Middle East and high debt service burdens and long standing structural constraints, continue to weigh on the region’s capacity to accelerate growth and create jobs.”
Brent crude surged as much as 55% to more than $112 per barrel after the US and Israel began attacking Iran on February 28, with a similar move in the cost of fertilizer as harvests get underway in key African growing areas adding to cost pressures.
Oil prices slumped back below $100 overnight last Wednesday after US President Donald Trump announced a two-week ceasefire to allow for negotiations to end the conflict. Still, they remain significantly higher than before the war began.
With half of the continent already near or in debt distress, the fallout from the conflict will push more people into poverty in a region that’s already home to many of the world’s poor.
In Kenya, which relies on imports of fuel and food, inflation may rise by four percentage points or more, shaving 2.6% from household incomes and casting a million people into poverty, the bank estimates
Parts of Africa have also recently benefited from significant investments by Gulf nations in infrastructure critical for future growth, and that support may be at risk if it’s redirected toward domestic rebuilding once the war ends.
Likewise, remittances by African nationals working in the Gulf make sizable economic contributions back home and would be hard to replace for a nation like Ethiopia. Around 750,000 of its citizens work in Saudi Arabia alone, with money sent home worth around 5% of the Horn of Africa nation’s gross domestic product.
That creates political pressure to soften the blow. Andrew Dabalen, the bank’s chief economist for Africa, cautioned against blanket subsidies on items like fuel.
He recommended that governments focus on protecting the most vulnerable, while controlling inflation and public spending to keep their economies on a solid footing and stage a faster recovery once the crisis is over.
“This is an incredibly dangerous moment for a lot of these countries if they don’t maintain macroeconomic stability despite the shock,” he told reporters during a virtual briefing hours before the ceasefire was announced. “Hopefully they have learned to manage these kinds of crises.”
