African economic officials have warned that the sharp rise in global oil prices caused by the conflict involving Iran could threaten the continent’s fragile economic recovery.
Many central banks across Africa had recently begun cutting interest rates as inflation eased and currencies stabilised. However, the new global uncertainty may force policymakers to rethink those plans. The central bank of Uganda said periods of global instability are making monetary policymaking more difficult than ever.
In Angola, the central bank decided to hold interest rates after several cuts, with Governor Manuel Tiago Dias warning that the prolonged conflict in the Middle East could disrupt supply chains, especially for agricultural inputs and fertilisers.
Analysts say other countries such as Ghana, Nigeria, Kenya, and Zambia may also pause their rate-cutting cycles as governments assess the economic impact of higher oil prices.
According to economists at Standard Chartered, higher energy costs could push inflation up again and affect broader economic stability. Meanwhile, research from JPMorgan suggests expected rate cuts across several African economies may now be reduced.
Oil prices have surged, with Brent crude oil approaching $100 per barrel and briefly reaching close to $120 earlier in the week. Analysts warn that if oil remains around $100 for a year, many African currencies could weaken and foreign exchange reserves may fall.
Energy-dependent sectors could also suffer. In Zambia, Mines Minister Paul Kabuswe said rising fuel costs could reduce productivity in the country’s mining sector, which is a key source of foreign currency.
Some governments say they are monitoring the situation. Kenya has assured citizens that fuel supplies remain secure for now, while Ethiopia has increased fuel subsidies to protect consumers from price increases.
Source: TRT Afrika
