The United States (US) and Israeli-led war in Iran has entered its fourth week, sending seismic shockwaves across the world. African economies have not been spared the repercussions of soaring petrol and other oil prices. However, there is also the matter of transforming this economic crisis into an opportunity. There is hope for adaptation. Now that fuel exports from the Gulf have become scarce, there could be an acceleration in the use of environmentally sustainable energy as well as alternative sources of fuel. African nations, together with the African Continental Free Trade Area (AfCFTA), could move to centre stage. Much depends on how the crises resulting from the war are utilized.
In all, a lower global fossil fuel addiction would reduce risks of conflict. It would simplify energy logistics chains as frequent long-distance transport via oil tankers and pipelines would be needed less, and lower carbon budgets. This could also reduce pressure in other maritime choke points like the Suez and Panama canals. But these equations, while mathematically elegant, have many nuances in the real world. A key constraint to energy transition, especially in Africa, has been finance. By the end of 2024, the Gulf countries – United Arab Emirates, Saudi Arabia, Qatar, Kuwait and Bahrain – had invested US$101.9 billion in Africa’s renewable energy sector. This is both an important part of their quest to reinvent themselves as diversified global energy players, and to use African carbon markets as a key tool to balance their carbon budgets. Renewables also represent a growing investment sector in Africa.
A long war in the region would damage Gulf economies sufficiently to send shock waves worldwide, with the potential for a pullback of Gulf sovereign wealth funds. This could set up a catastrophic pathway for the global economy, perhaps for Africa especially, given its low economic diversification levels. This could negatively impact Africa’s development agenda as a whole; and its climate adaptation efforts.
African economies need investment to grow their market for the creation of goods and create employment for their people. Respect and support for private enterprise are key. War, however, is bad for business and trade in the long term, especially a protracted war. South Africa and other major African economies must play their part in calling for a ceasefire. The actions of US President Donald Trump and Israeli Prime Minister Benyamin Netanyahu could jeopardize economic progress, energy extraction, and investment in the long run. African nations such as South Africa, Kenya, Tanzania, Egypt, Morocco, and Ethiopia must work together to utilize their resources and forge a new path in sustainable energy – provided they can exert pressure on Washington and Tel Aviv for a truce. Financing the transition to sustainable energy remains at the heart of the situation. Africa may only secure the necessary investments for sustainable energy and agricultural advancement once peace takes effect.
Key to the transition to sustainable energy is the promotion of electric vehicle (EV) manufacturing within Africa, especially in South Africa. At the heart of this matter lies the monopoly on critical minerals and rare earths in Africa, which is held by private corporations, as well as the issue of transparency and accountability.
This is a time for African and other leaders in the developing world, particularly in the Far East and Latin America, to stand together. Adversity and conflict are greater teachers than security and comfort. In the short term, the effects will be harshly devastating, but once South Africa and other African markets adapt to survive, they may learn how to prosper. Much will depend on how the aftermath of the Third Gulf War is utilized.
War is cruel, but even in times of hardship, developing nations must forge ahead with reform and focus on solidarity, cooperation, and self‑reliance on the domestic front.
Africa must accelerate investments in the following:
- Oil and gas production
- Refining capacity
- LNG infrastructure
- Energy logistics and shipping
- Strategic petroleum reserves
For example, Nigeria must move beyond being merely an exporter of crude oil. It must become a refining and energy hub capable of serving African and global markets. Thanks to the initiatives by Dangote. The completion and optimisation of facilities such as large-scale refineries and gas infrastructure will become even more critical in the coming years. The war is also accelerating a broader trend that began during the COVID-19 pandemic—the diversification of global supply chains. Multinational companies are increasingly wary of overreliance on a single geopolitical region. If the Middle East becomes unstable and shipping routes remain uncertain, global industries will seek new production and logistics hubs.
With the African Continental Free Trade Area (AfCFTA) creating the world’s largest integrated market of over 1.4 billion people, the continent has the potential to become a major manufacturing and logistics centre.
When it comes to accelerating investments, the question will be: from whom? Where will African nations such as South Africa find investors from stable economies? China, Russia, the United States, and the European nations remain at loggerheads since Washington and Tel Aviv started the war in Iran. The US remains the largest investor and aid provider to Africa. Since the start of the war, its resources have been diverted to supporting Israel, while the Russian Federation has moved to support Iran with intelligence. China may also support Iran if the war becomes protracted. Only the nations of Europe remain neutral, and they need a new source of energy to import, to sustain their economies. The Persian Gulf region is no longer available. If the European countries and the European Union (EU) turn to Africa, it could accelerate progressive economic growth.
However, Africa must be the initiator of its own destiny, cooperating with external actors – such as the EU – while relying on its own capital and knowledge to advance along an independent path.
If African leaders can change the trajectory of the continent and welcome investment in infrastructure from Europe, they might pave the way for the integration of their much-anticipated common market. Then African nations can begin implementing Agenda 2063.
Article written by:
Yacoob Cassim
Journalist at Radio Al Ansaar
