As the world is grappling with innumerable challenges, in particular the war impacting the Middle East region, ringing in market uncertainty, the Mauritius Commercial Bank has launched the Africa Economic Compass report in April 2026, where it weighs on effect of the war on the region and beyond.
On the onset, African economies were buoyed in the start of the year on account of a relatively stronger economic footing, moderate inflation trickling across countries, coupled with an improvement in external balance, along with frontier markets regaining access to global capital markets.
The recent tension escalation in the Middle East region, the report notes, has impacted markets marked by uncertainty at a time when monetary easing seemed to settle in. Oil markets reacted in a swift manner, with Brent crude briefly peaking close to USD 120 per barrel, with market volatility remaining high despite a fall in oil prices, with a temporary ceasefire.
The after effects of the war will impact the continent in terms of an adverse terms of trade shock transmitted mainly through higher energy prices, despite many Sub-Saharan African countries are well prepared in terms of stronger macro buffers and absorption of oil prices and a firmer US dollar.
The report pointed out that in the pre-war situation, the region was poised to grow at 4.5 percent in 2026, adhering to the IMF’s January 2026 WEO forecast of 4.6 percent. While recent IMF estimates had hinted at 10 percent increase in oil prices, raising global headline inflation by approximately 0.4 percentage point, the impact in Sub-Saharan Africa is expected to be much bigger. The latter takes into account the structure of consumption, with food and energy accounting for 50 percent of the CPI basket, making for faster and stronger pass-through.
Assuming the conflict is prolonged, the analysis points out that Central Banks in Africa will be faced with the delicate issue of how to strike the right balance regarding policy hikes, along with mulling on interest hikes to help contain the inflationary pressures.
Rising Oil prices: Case for exporter nations, opportunity for Dangote as regional supplier
As the price of oil soars to an all-time high, the near impact is assessed to vary across several African economies, supporting exporter nations such as Nigeria. Case in point is the Dangote refinery emerging as a regional supplier, on account of a spurt in demand from African nations while gold started the year at elevated level following a sustained rally.
The MCB study referred to a moderate case study expecting prices to recover gradually and settle around USD 5,500 – 6,000 by year-end. This will help support export revenue from producers such as Ghana, South Africa, and Tanzania, with anticipated gains depending on domestic value retention.
In this context, the Africa Economic Compass has designed a Macroeconomic Pressure Index (MePI) to track economic pressures across countries, in terms of building up or easing over time. MePI combines several core macroeconomic indicators covering public finances, economic growth debt into a single and standardised macroeconomic pressure covering several countries:
Country Spotlight: The case for Egypt, Nigeria and Kenya
As Egypt started to regain its macro stability on the back of IMF-backed reforms and sizeable inflows from GCC partners, tensions in the Middle East have introduced downside risks. The start of the war saw the Egyptian pound weakening beyond EGP 50/USD, with roughly USD 7 billion in portfolio outflows reported, although this remains below the USD 20 billion outflow during the 2022 Russia–Ukraine shock.
As an economy, Nigeria saw a transition towards macroeconomic stabilisation following a policy reset where the exchange rate liberalisation, fuel subsidy removal, and tighter monetary policy helped restore external balance and rebuild credibility. The country seems well positioned on account of the rise in oil prices since the latter help support export revenues, while at the same time ramping up domestic refining, steered by the Dangote refinery, which reduces resistance on imported fuel, and eases FX pressures.
Kenya has made the shift from a period of acute refinancing stress in 2023-24, marked by Eurobond-related default fears and weak external buffers, to a more sustainable fiscal footing. The successful Eurobond refinancing and strong remittance flows have helped restore market access and rebuild reserves with the Moody’s upgrade to B3 in January 2026, reflecting a reduced default risk and improved financing flexibility.
Downsides to conflict: Energy infrastructure, market disruptions and heightened pressures
On the flip side, the Iran-Israel conflict poses a new risk, with Kenya’s 60 percent of fuel imports coming from the Middle East, particularly the UAE, and energy infrastructure taking a hit, which has led to supply disruptions and higher oil-driven inflationary pressures.
However, the Iran–Israel conflict introduces a new risk: around 60 percent of Kenya’s fuel imports originate from the Middle East – largely from the UAE – and attacks on energy infrastructure highlight the potential for supply disruptions and higher oil-driven inflation pressures, feeding into the macro-outlook. On the whole, such factors are adding to heightened pressure, though moderate, as assessed by MePI.
Head of Strategy, Research and Development, Vicky Hurynag in the document’s forward message commented on the continent’s navigating a landscape marked by contrasting macroeconomic forces. He says, “On one hand, there is a more fragmented global environment and on the other, new growth corridors are emerging, underpinned by the energy transition, logistics improvements, digital expansion and rising investment in critical minerals.”
He further explains, “For Africa, this could feed into upside risks to inflation, in particular higher import and transport costs as well as an increased pressure on external balances and debt servicing. A central feature of the report is the integration of Macroeconomic Pressure Index (MePI) – a forward-looking tool anchored in economic fundamentals combining fiscal, external, growth and debt indicators amongst others, into a measure of country-level macroeconomic pressure, while factoring in each country’s idiosyncratic realities.”
