A new report by the African Union and the African Development Bank has warned that the ongoing Middle East conflict presents a serious economic risk to Africa, with potential impacts on inflation, trade, and overall growth across the continent.

The report, seen by AFP, said the conflict has already triggered a trade shock and could quickly escalate into a widespread cost of living crisis in Africa through higher fuel and food prices, increased shipping and insurance costs, currency pressures, and tighter fiscal conditions.

It noted that the Middle East accounts for 15.8 percent of Africa’s imports and 10.9 percent of exports, making the region highly exposed to disruptions in global supply chains and energy markets.

The assessment was compiled with contributions from the United Nations Development Programme and the United Nations Economic Commission for Africa.

According to the report, most African economies are still growing below pre pandemic levels, and the ongoing geopolitical tensions could further slow recovery efforts already weakened by global economic instability.

It projected that Africa could lose about 0.2 percentage points of gross domestic product growth in 2026 if the conflict continues for more than six months. It also warned that a longer and more severe disruption to shipping routes, energy supply, and fertilizer availability would deepen economic stress across the continent.

The report highlighted that reduced liquefied natural gas supplies from the Gulf could affect fertilizer production, potentially limiting availability during critical planting seasons and threatening food security.

It also noted that currency depreciation is already affecting at least 29 African countries, increasing the cost of servicing external debt while making imports more expensive and reducing foreign exchange reserves.

Despite the broad risks, the report observed that some countries could experience limited short term gains. These include Nigeria through oil exports, Mozambique through liquefied natural gas exports, and others benefiting from shifting global energy flows.

The rerouting of shipping routes around the Cape of Good Hope was also noted as a potential advantage for logistics hubs in Mozambique, South Africa, Namibia, and Mauritius.

In East Africa, the report said Kenya is strengthening its position as a regional logistics hub, while Ethiopian Airlines is serving as a key air transport link connecting Africa with Asia and Europe during global disruptions.

However, the report stressed that these potential gains would be uneven and insufficient to offset broader economic challenges, including rising inflation, pressure on national budgets and growing food insecurity across the continent.

It further warned that the crisis could increase the cost of humanitarian assistance and force donor countries to redirect funding toward other global priorities, potentially reducing aid flows to vulnerable African states.