AfDB warns Middle East crisis could slow Africa’s growth as fuel and food prices rise

Africa’s economic momentum is coming under fresh pressure from the Middle East crisis, with rising fuel, fertiliser and food prices now threatening growth across one of the world’s fastest-growing regions.

• Africa’s economic growth is expected to slow in 2026 as the Middle East crisis drives up fuel, food and fertiliser prices.
• The African Development Bank says inflation, rising debt costs and weaker foreign funding are increasing pressure on African economies.
• Despite the challenges, Africa is still projected to remain one of the world’s fastest-growing regions.
• AfDB President Sidi Ould Tah says Africa must rely more on local capital, pension funds and financial markets to fund development.

The warning came Tuesday from the African Development Bank, which said Africa’s economy is projected to grow by 4.2% in 2026, slightly lower than the 4.4% recorded in 2025.

The slowdown may look small, but for millions of Africans already battling inflation, currency weakness and rising living costs, the consequences could be severe.

The AfDB said geopolitical tensions and supply chain disruptions linked to the Middle East crisis are increasing import costs for many African countries, especially those heavily dependent on imported fuel, fertiliser and food.

“The impact of this shock on growth and macroeconomic stability will depend on the duration of the supply chain disruptions and their effects on global energy and fertiliser prices,” the bank said in its 2026 African Economic Outlook released at its annual meetings in Brazzaville.

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The report assumes the disruption lasts only a few months. A prolonged conflict could create a much deeper economic shock.

Africa still outperforming much of the world

Despite global turbulence, Africa continues to outperform many advanced economies.

The AfDB said the continent remains among the world’s fastest-growing regions alongside Asia, growing faster than Europe and Latin America.

More than 20 African countries are expected to record growth above 5%, helped by stronger agricultural output, higher commodity prices and reforms aimed at stabilising economies after years of inflation and debt shocks.

But the recovery is becoming increasingly fragile.

Inflation across Africa is projected to remain elevated at 10.4% in 2026, while currency depreciation and tighter global financial conditions continue to pressure government budgets.

For many African countries, the timing could hardly be worse.

Several governments are already spending huge portions of state revenue servicing debt, while international aid flows are weakening as Western economies focus more heavily on domestic political and economic pressures.

That growing squeeze is forcing African leaders to rethink how the continent funds its development.

Africa’s $1.3 trillion financing gap

At the centre of the AfDB report is a striking figure: Africa faces an annual development financing gap exceeding $1.3 trillion.

That gap covers funding needed for infrastructure, energy, transport, healthcare, climate adaptation and other Sustainable Development Goals.

The bank argues the continent cannot continue depending largely on foreign lenders, donor agencies and external capital markets.

Instead, it says Africa must mobilise more of its own wealth.

According to the report, Africa could unlock as much as $1.43 trillion annually through stronger tax collection, reduced corruption and illicit financial flows, improved public investment efficiency and deeper capital markets.

The AfDB also pointed to Africa’s massive institutional investment pool.

Pension funds, sovereign wealth funds and insurance firms across the continent already manage close to $4 trillion in assets, yet less than 2.7% is invested in infrastructure and productive sectors within Africa itself.

That imbalance has become a major focus for AfDB President Sidi Ould Tah, who took office last year.

Tah has made the creation of a New African Financial Architecture for Development, known as NAFAD, a key pillar of his presidency as foreign aid and concessional funding continue to shrink.

“Achieving sustained and inclusive growth will require a substantial increase in investment,” Tah said.

He added that Africa must sustain growth above 7% for decades to generate enough jobs for its rapidly expanding population and significantly reduce poverty.

Some African regions face sharper pain

The economic pressure will not be evenly distributed.

East Africa is expected to remain Africa’s fastest-growing region, but higher energy and import costs are projected to slow growth slightly.

Southern Africa faces weaker prospects as mining output, agricultural production and energy supply struggles continue to drag on economic activity.

North Africa could experience one of the sharpest slowdowns as weaker tourism flows from Gulf countries and broader supply chain disruptions hit regional economies.

Central Africa, however, may benefit from elevated oil prices, giving petroleum-exporting economies a temporary boost.

The report also warned that prolonged geopolitical tensions, exchange-rate volatility and global market fragmentation could worsen debt vulnerabilities and reduce access to external financing.

Why Africa’s financial future matters globally

The AfDB meetings this week are attracting global attention because Africa is becoming increasingly important to the future of the global economy.

The continent holds some of the world’s largest reserves of minerals critical to electric vehicles, renewable energy infrastructure and artificial intelligence supply chains.

Africa is also projected to account for a significant share of global population growth over the coming decades, making it one of the world’s biggest future consumer markets.

But without stronger financing systems, economists warn the continent risks missing a historic economic opportunity.

The AfDB said stronger pan-African banks, integrated capital markets and new financing tools such as climate finance and Islamic finance could help reduce Africa’s dependence on volatile foreign capital.

The bank also highlighted the launch of the African Credit Rating Agency earlier this year, a move aimed at challenging what many African governments see as unfair sovereign risk assessments from major global rating agencies.

Meanwhile, concerns surrounding a recent Ebola outbreak in neighbouring Democratic Republic of the Congo briefly raised fears ahead of the meetings in Brazzaville.

Authorities in the Republic of the Congo and the World Health Organization have said no Ebola cases have been detected in the host country, while surveillance measures remain active.