For Africa, one of the world's most exposed continents to external shocks, the Iran war is set to have profound economic and social consequences. In its latest Regional Economic Outlook for sub-Saharan Africa, the International Monetary Fund (IMF) has warned that the economic progress the continent has made in recent years is likely to come under severe pressure.

"Sub-Saharan Africa entered 2026 reaping the benefits of hard-won stabilisation gains after a strong 2025. Economic activity accelerated broadly across country groups, with regional growth at about 4.5% - the fastest in a decade," the IMF notes. "But the war in the Middle East has clouded the outlook."

By practically every conventional economic measure, the IMF expects the war in Iran to cause significant economic costs in Africa. Its regional growth forecast stands at 4.3% for the year, down by 0.3% compared to its prewar estimate. Median inflation is projected to hit 5% by the end of the year, compared to 3.4% in 2025.

In those countries which do not export commodities, the current account deficit could be set to widen by about 1.4% of GDP. Median fiscal deficits are predicted to reach 3.2% of GDP, a 0.2% increase from 2025.

Speaking at a press briefing at the launch of its World Economic Outlook: Global Economy in the Shadow of War report on April 14 in Washington DC at the IMF/World Bank Spring Meetings, Deniz Igan, division chief of the IMF's research department, said that with the war "we have reduced global growth and softened prices for non-oil commodities and also worsened terms of trade for oil importers, and that is an important aspect for variation within the region, as well. And on top of that, the region is also facing significant challenges from headwinds from declining foreign aid... the bilateral aid cuts range from 16 to 28% in 2025, and we project that trend to continue."

The impact of the conflict has tempered the cautious optimism that closed out 2025, a year in which African economies proved resilient despite trade disruption and policy uncertainties.

The IMF identified the shocks as coming from three primary channels: a negative supply shock, as higher commodity prices raise production costs, disrupt supply chains and erode household purchasing power; amplified inflation pressures, as firms and workers attempt to recoup real income losses, heightening the risk of wage-price spirals in economies where inflation expectations remain fragile; and tighter financial conditions, driven by falling asset valuations, rising risk premiums, capital flight and a strengthening US dollar.

Currency chaos

As of early April, 29 African currencies had weakened against the US dollar, with Africa's most widely traded currency, the South African rand, falling by as much as 5% against the greenback.

The depreciation of the euro - which is one of the worst hit major currencies - has also had a knock-on effect on the CFA franc. This currency, which is used by 14 countries in West and Central Africa, is pegged to the euro at a fixed exchange rate and therefore weakens in tandem.

Currency depreciation makes it more expensive for African countries to import oil and other essential commodities, the prices of which are usually denominated in US dollars and can therefore contribute to increased inflation.

The United Nations Development Programme (UNDP) is now forecasting double-digit inflation this year in Ethiopia, Egypt, Nigeria, Angola, South Sudan, Malawi, Burundi and Sudan.

Higher inflation, both in Africa and globally, could also cause central banks to increase interest rates. Jamie Dimon, CEO of US global investment bank JPMorgan Chase, has warned that "because of the war in Iran, we additionally face the potential for significant ongoing oil and commodity price shocks, along with the reshaping of global supply chains, which may lead to stickier inflation and ultimately higher interest rates than markets currently expect."

This may prove particularly problematic for African nations that have bonds set to mature this year. Benin, Egypt, Ghana, Morocco, South Africa and Tunisia face a combined $11bn in international bond maturities over the next twelve months - and will likely need to refinance this debt at higher interest rates.

This shock comes at a time when many African countries are already operating with very little room for manoeuvre. The World Bank has noted that debt servicing costs in sub-Saharan Africa have risen from 9% of government revenues in 2017 to 18% in 2025. At the start of this year, 22 African countries were in or at high risk of debt distress - almost half of the continent. In light of this, Yemi Osinbajo, former vice-president of Nigeria, has argued that "for the most heavily indebted countries, nothing short of comprehensive debt restructuring will suffice."

He has further called for multilateral institutions to assist with "credit enhancements, guarantees and debt suspension mechanisms" to help the continent navigate difficult macroeconomic conditions.

Vehicles drive past a giant billboard reading 'The Strait of Hormuz remains closed' at the Revolution Square in Tehran on April 22, 2026. (Photo by ATTA KENARE / AFP)

Iran war hits Gulf investment

The conflict in Iran will also likely dent investment flows from the Gulf to Africa. The region is becoming increasingly economically important to the continent, with the United Arab Emirates, for example, now being one of the largest single investors in Africa. Last year, Qatar's Al Mansour Holdings announced a $103bn investment pledge across six African nations, to deepen cooperation in strategic industries such as critical minerals, energy and infrastructure.

But with the conflict quickly spreading to the Gulf as Iran retaliated against the US-Israeli military strikes by targeting US allies in the region, it is likely that Gulf nations will need to reallocate resources closer to home. The IMF has already wiped three percentage points off Middle East growth forecasts for 2026, with the UNDP arguing that members of the Gulf Cooperation Council (GCC) could stand to lose up to 8.5% of their annual GDP for this year.

While the economic damage is partly offset by higher oil prices, the Gulf has also had approximately 11m barrels per day of crude production taken offline as a result of attacks on energy infrastructure and disruption in the Strait of Hormuz.

The World Travel and Tourism Council has also estimated that the region is currently losing $600m every day in lost international visitor spending. The longer-term impacts of the war - disruptions to Qatari energy could take up to five years to resolve - will likely limit the Gulf's ability or willingness to invest in Africa.

Furthermore, the Gulf is home to over 3.6m African workers, with 6% of the region's population being of African descent. This makes the Gulf a vital source of remittance flows to Africa: African workers in Saudi Arabia send $12.5bn to the continent annually, with a further $8.2bn coming from the UAE and $2.7bn from Qatar.

With the UNDP forecasting that the conflict will turn out to have already increased unemployment in the Middle East by up to 4%, representing 3.6m jobs lost, remittance volumes to Africa are likely to be impacted. This could further increase current account deficits and lower foreign exchange inflows, particularly for countries such as Egypt, Sudan, Ethiopia and Kenya, which have large diaspora populations in the Gulf.

The human impact

The continent could also face a worsening humanitarian situation as a consequence of the war in Iran. The Gulf is not only a crucial region for oil and gas, but also for fertiliser supply, with around one-third of global sea-borne fertiliser trade passing through the Strait of Hormuz prior to the war.

Iran, Saudi Arabia and Qatar are leading exporters of the ammonia, urea and phosphate fertilisers which are vital for African agriculture. Indeed, the continent imports over 12m tonnes of fertiliser annually, including nitrogen-based fertilisers produced in the Gulf.

Some African countries have introduced emergency measures to support farmers. Ghana, for example, is offering free fertilisers and Khartoum has launched a "Sustain Sudan" project to support agricultural production despite supply chain disruptions. While the interventions are designed to sustain farming during the peak season, these moves are likely to put further pressure on government budgets and lead to larger deficits.

Robert Matthee, sub-Saharan Africa economist at S&P Global Market Intelligence, tells African Business that "over the medium term, fiscal positions that are already under strain will be stretched further. "Emergency subsidy bills, fuel stabilisation costs and higher food import expenditure will compete for limited fiscal space, pushing deficits and debt metrics in the wrong direction - particularly in countries like Ghana, Ethiopia and Zambia that are mid-way through debt restructuring or IMF-backed reform programmes," he notes.

Even prior to the Iran war, the UN World Food Programme (WFP) warned that cuts to humanitarian aid meant 55m people in West and Central Africa could be facing "crisis levels of hunger" between June and August this...

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