Many countries in sub-Saharan Africa are experiencing cautious relief following the announcement of a ceasefire between the United States, Israel and Iran and the reopening of the Strait of Hormuz to maritime trade.
But while markets reacted quickly, economists are warning that a broader recovery will take time.
Relief is affected by insecurity
Daniel Silk, head of the Cape Town-based Political Futures consultancy, said many countries in the developing world have had some success in reducing inflation after the pandemic, but this is unlikely due to rising global prices, “not just in terms of oil, but also in terms of fertilizer costs, liquefied natural gas (LNG) costs and other critical energy supplies.”
The situation is particularly acute among households that spend a large share of their income on energy and transportation, “and this will obviously impact and reduce demand across Africa that was growing until this particular crisis,” he told DW.
South Africa’s poor hope for relief
This is the case of South Africa, which announced a historic fuel price increase on April 1. Earlier, the government had secured a deal that allowed its ships carrying cargo and fuel shipments to pass through the strait.
In mid-March, Iran’s ambassador to South Africa, Mansour Shakib Mehr, indicated that South Africa was not a target because Tehran had blocked the US, Israel and their allies.
As the conflict began, Iran’s embassy in South Africa issued a strong statement that read: “The Strait of Hormuz is located within the territorial waters of Iran and Oman. South African ships can pass through the Strait of Hormuz.”
But this did little to bring down prices. Many of those fueling their cars were relieved before prices rose at gas stations across the country in early April.
“We were thinking it would be six rand, but at least it’s just three rand for petrol, that’s at least something. We shouldn’t get involved in other areas when we have our own issues here,” a Cape Town motorist told DW on April 1, declining to be named.
Meanwhile, the price of diesel rose sharply by 7 rand ($0.41, €0.36) per litre.
In under-resourced communities in Cape Town, some residents told DW they were worried the worst was yet to come as conflict continues in the Middle East.
“We have to pay extra electricity, extra food, extra transportation to get to the hospital,” said Vella Lawrence, a pensioner in Mitchells Plain. “The government only looks at its own pockets. We are the poor people who are suffering.”
However, now there is some relief. News of the ceasefire is having a positive impact on the country: the rand, government bonds and stocks have increased. Silke expects consumers to feel the impact immediately at the fuel pumps.
Broadly speaking, however, experts say consumers should temper their expectations.
Dr. Abdul Hakeem Ahmed, an expert in international political economy at Winneba University in Ghana, explains that any decline in prices remains unexpected, given that the ceasefire agreement is still unstable. He said that once prices go up, they take time to come down.
A turning point for Africa’s energy strategy?
Both experts say the crisis should provoke deep reflection across the continent.
Silke argues that recurring global shocks are forcing African countries to reconsider their dependence on external energy sources.
“I think African countries are going to have to do another round of introspection about how they find themselves at the mercy of major economic centres,” he said.
Ahmed emphasizes the need for structural change, pointing to domestic production and refining.
“We need to be able to revive our solvency and then where it no longer exists, [countries] There is a need to invest there to be able to refine a lot of crude and take advantage of the huge reserves of oil and gas, especially in Nigeria, Libya and Angola,” he said, highlighting the need to diversify into alternative energy sources such as nuclear power.
For now, the ceasefire provides immediate financial relief, but analysts say the broader outlook remains uncertain.
As negotiations continue and tensions persist, Africa’s economies remain exposed – not only to the consequences of this conflict, but also to the deeper structural challenges that it once again brings into focus.
Despite the US–Israeli war with Iran and Tehran’s selective sanctions on the Strait of Hormuz, cargo and fuel shipments have been allowed to transit to South Africa.
In mid-March, Iranian envoy Mansour Shakib Maher indicated that South Africa was not a target because Tehran had blocked the US, Israel and their allies.
Is Iran merely making a political statement?
At the beginning of the conflict in the Middle East and as global energy supply chains became strained, Pretoria called for restraint and offered mediation.
South Africa is dependent on gas and oil imports but its cargo ships move very little through the strait. About 24% of the country’s crude oil imports come from Saudi Arabia, with refined oil and petroleum products shipped via the Arabian Sea.
“Iran is part of a broader source of oil for South Africa. Therefore, it gets part of its supply from other countries, including Iran, Nigeria, Algeria and Angola,” said economist Dr Lumkile Mondi, an economist and lecturer at Wits Business School.
“I think the announcement that the ship that was bringing oil to South Africa was allowed to pass was really just a political statement.”
According to Mondi, food prices are likely to rise and South Africans can expect greater difficulties as a result of the US-Israel war with Iran.
Early signs of political rethink
The war with Iran has grabbed headlines in South Africa and there is public speculation about what impact it will have on the country that relies heavily on imported oil and gas.
There has also been much debate over whether Iran has become a liability as a traditional ally.
At a regional industry conference in Cape Town in March, Mineral and Petroleum Resources Minister Gwede Mantashe said Africa as a whole needed to focus on its oil and gas.
“We must use these resources responsibly to promote inclusive economic growth, create employment opportunities and eradicate poverty,” Mantashe said.
South Africa’s relations with Iran date back to the Cold War, when the African National Congress – today the ruling party – was fighting apartheid.
According to Mondi, “The relationships are continuing and I think they are continuing not only in terms of business.”
Edited by: Keith Walker