S&P on Thursday said the longer the conflict persists, the greater the strain on African sovereigns—particularly those heavily reliant on imported energy and agricultural inputs.
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African economies are facing mounting financial pressure as the ongoing Middle East conflict drives up fuel and fertilizer costs, with S&P Global Ratings warning that the situation could weaken sovereign credit profiles across the continent.
In a new report released on Thursday, S&P said the longer the conflict persists, the greater the strain on African sovereigns—particularly those heavily reliant on imported energy and agricultural inputs.
The agency cautioned that rising global prices are already feeding into inflation, fiscal deficits and external imbalances.
“We believe that the risk of the Middle East conflict to African sovereigns will likely worsen as the disruption continues,” S&P noted, highlighting that most countries in the region are net importers of oil, fuel and fertilizers.
The surge in energy prices has been a key transmission channel. Brent crude prices have climbed sharply in 2026, increasing import bills for many African economies and placing additional pressure on currencies and foreign reserves.
According to S&P, the higher cost of imported energy is expected to weaken balance of payments positions and could even force some governments to reintroduce fuel subsidies that had recently been phased out.
Beyond fuel, fertilizer costs are also emerging as a major concern. The report warns that sustained increases could disrupt agricultural production, reduce food supply and push up prices for households already grappling with high living costs. This, in turn, risks prolonging inflationary pressures across the continent.
S&P further noted that second-round effects are likely to deepen the economic strain.
“The second-round effects on inflation will also increase the demand for foreign currency, leading to exchange-rate pressures and higher domestic refinancing costs,” the agency said.
Despite these challenges, the impact is expected to vary significantly across countries. Oil-exporting nations such as Nigeria and Angola may benefit from higher crude prices, although gains could be partially offset by continued reliance on imported refined fuels.
Meanwhile, countries like Egypt, Mozambique and Rwanda are seen as more vulnerable due to their exposure to external financing needs and import dependence.
S&P pointed out that African sovereigns entered 2026 on relatively stronger footing, with improved foreign-exchange reserves and lower borrowing costs following two years of credit rating stabilization. However, the current geopolitical shock has dampened that positive momentum.
“African sovereigns generally have limited direct exposure to the Middle East,” the report said, noting that only about 11% of imports come from the region.
Nevertheless, indirect effects—particularly through global commodity markets—are proving far more significant.
Rising borrowing costs are another growing concern. As global risk aversion increases, African countries may face tighter financing conditions and higher interest rates. This comes at a time when many governments already allocate a substantial share of revenue to debt servicing, limiting their ability to respond to new shocks.
Fiscal constraints are expected to further complicate the policy response. With limited room to increase spending, governments may struggle to cushion households and businesses from the rising cost of living.
S&P warned that this could slow economic growth and exacerbate social pressures in vulnerable economies.
Still, some mitigating factors remain. Stronger reserve buffers, deeper domestic capital markets in select countries, and access to concessional financing could help soften the blow. In addition, global trade rerouting may benefit countries with strategic port infrastructure.
Looking ahead, S&P’s baseline scenario assumes that disruptions will persist for several months, even if the conflict stabilizes.
However, a prolonged escalation would significantly heighten risks for African economies and could lead to broader credit deterioration.
As the geopolitical situation evolves, S&P emphasized that uncertainty remains high. For African policymakers, the challenge will be balancing fiscal discipline with the need to shield economies from external shocks—at a time when global conditions are becoming increasingly unpredictable.
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