How the U.S. war with Iran is impacting African economies

Leaders and policymakers from across the globe are meeting in New York for the United Nations General Assembly, and the ongoing conflict in the Middle East is top of mind for many member nations, including countries in Africa.

For more on how the conflict is affecting economies on the continent, “Marketplace Morning Report” host Kimberly Adams was joined by Mavis Owusu-Gyamfi, a political economist and president and CEO of the African Center for Economic Transformation. The following is an edited transcript of their conversation.

Kimberly Adams: How are the various parts of the continent feeling the economic pressures of this war domestically?

Mavis Owusu-Gyamfi: Most African countries are net oil importers, so higher and more volatile oil prices feed into transport, electricity, food distribution, and the cost of basic goods. So, for households on the continent, the war has quickly become a cost-of-living shock.

Agriculture is exposed too, because farmers rely on fertilizer, alongside fuel and transport. If these costs rise, food prices and food security come under pressure, and we are already starting to see that in the Horn of Africa and in the Sahel. Now, trade is also at risk, especially when strategic routes such as the Gulf of Aden become unstable, and shipping costs rise.

So, this is why our governments are thinking harder about resilience, including stronger refining capacity, more reliable regional supply chains, and increased domestic production. South Africa is a good example of this defensive approach that many governments on the continent are taking. It is stockpiling fuel and urgently trying to revive domestic refining capacity after years of relying heavily on imported fuel.

Adams: Back in the spring, Chinese President Xi Jinping promised that China would implement zero tariffs on 53 African countries, taking basically an opposite approach from President Trump to tariffs. How has that been playing out so far?

Owusu-Gyamfi: A lot of countries are really thinking through this. A lot of countries are looking at the fundamental challenges to their industrialisation policy. So, how do you improve access to energy? How do you enhance labor productivity? How do we better use technology? The challenge is building the product that makes you competitive to be in that market. So, I'm really excited about African countries stepping back and asking, where are the opportunities? Where are the value chains? What are the few things we can do that will enable us to take advantage of this trading opportunity that China has given us? So it's a space to watch, Kimberly. We are not there yet. The door has been open. The onus is now on us to build the products to enable us to compete in the Chinese market effectively.

Adams: China has already invested for decades quite a bit in Africa and building relationships there — I'm thinking about the Belt and Road Initiative and other things. With this latest move and China trying to develop even deeper trade ties with African countries, what does that mean, do you think, for the United States' trade relations there?

Owusu-Gyamfi: We are looking at the type of partnerships that enable us to really realize our own agency. We are simply not choosing between Washington and Beijing, as the world is thinking. What we are thinking about is working with multiple partners, avoiding dependency, and choosing arrangements that support African priorities.