Africa’s Growth Gains Meet the Oil Shock

Lerato Molefe

I’m Lerato Molefe, and welcome to Africa.com’s "Doing Business in Africa" podcast. This briefing reflects the latest information available as of today, so we’re speaking to current data, current events, and current risks.

Lerato Molefe

Growth was broad-based. Twenty-two countries grew above 5%. Six were above 7%. That is the part I would not rush past. A continent can post a decent average because one or two large economies bounce hard. That is useful, but it is not the same thing as breadth. Breadth tells you activity is spreading across markets, sectors, and policy environments. It usually means the opportunity set is wider, and frankly a bit more resilient, even when conditions get messy. Which, at the moment, they very much are.

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The supporting indicators also improved in ways executives will appreciate because they affect actual operating conditions. Inflation fell from 21.8% to 13.6%. Still high in many places, obviously, but direction matters. Foreign direct investment rose more than 75% to 97 billion dollars. Remittances climbed 14% to 104.6 billion dollars, overtaking foreign portfolio investment as the continent’s largest source of external non-debt financing. That last bit is easy to overlook, but I would not. Portfolio money can be fast, useful, and gone by Tuesday afternoon. Remittances are a different kind of external support. More stable. More tied to households and domestic demand.

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There is also the global ranking point: twelve of the world’s twenty fastest-growing economies in 2025 were African. So if you are making the case internally for pan-African exposure, the data is helping you. It is not doing all the work, but it is helping.

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Now, as encouraging as those numbers are, they land in a much harsher geopolitical moment than the forecast assumes. At the Abidjan launch, AfDB President Dr. Sidi Ould Tah said the continent is facing geopolitical fragmentation, trade tensions, and declining development finance flows at the same time. That is a neat summary of the problem. And to understand why that matters, it helps to move from the growth data to the pressure building underneath it. The growth story is real, but the road ahead is narrowing.

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And the bank’s own chief economist put a number on one immediate risk: if the Hormuz crisis lasts beyond three months, it could shave 0.2 percentage points off Africa’s 2026 growth rate. That estimate was already sobering before you remember the projections predate the full scale of the current energy disruption. As of Monday, Brent settled at 109.77 dollars. Trump has given Iran a Tuesday deadline to reopen the Strait. The IEA has called this the largest oil supply disruption in the history of global energy markets. Which is not the kind of sentence executives enjoy reading over coffee.

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So the tension is pretty clear. The underlying growth picture improved. The breadth is real. Capital came back. Inflation eased. But the external environment is now tighter, more political, and more expensive. For operators, that means you should hold two ideas at once: Africa is outperforming the world, and the margin for error just got smaller.

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The most immediate business issue this week is fuel. Not abstract energy risk, not a medium-term scenario on a slide deck, actual fuel. Strait of Hormuz traffic is down more than 90% from pre-war levels. Iran has partially exempted Iraq, but the broader closure holds. Brent is near 110 dollars. And two-thirds of sub-Saharan Africa’s GDP sits in net fuel-importing countries. So when oil jumps, this becomes a fiscal problem, a transport problem, a margin problem, and pretty quickly a political problem as well.

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You can already see governments trying to absorb the shock, each in their own way. South Africa raised petrol by 3.06 rand per litre and diesel by up to 7.51 rand. Finance Minister Godongwana then cut the fuel levy by 3 rand for one month, at a cost of 6 billion rand to the state, and said relief could be extended if the conflict continues. That tells you two things. One, the pass-through is painful. Two, even relatively sophisticated fiscal managers are buying time, not solving the problem.

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Namibia cut fuel levies by 50% for three months. Mauritania raised petrol 15.3% and diesel 10%. Senegal, in one of those measures that says quite a lot without saying it directly, banned ministerial foreign travel after oil prices nearly doubled from budgeted levels. Dry policy note, sharp signal. Governments are trying to preserve cash.

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Kenya is worth watching closely because it sits right at the intersection of logistics, energy exposure, and investor interest. Treasury Cabinet Secretary John Mbadi said fuel supply is adequate for now, but rising energy costs, trade disruption, and supply chain pressure are the central risks. UNCTAD says Kenya imports 26% of its fertilizer through the Persian Gulf. Planting seasons are approaching. So this is not just a fuel price story. It can spill into agriculture and food security very quickly. UNCTAD made a similar warning for Ethiopia, Tanzania, and Zambia, all of which import significant shares of fertilizer through the Gulf.

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For executives on the ground, the watchlist is pretty practical. First, fuel and transport costs, obviously. Second, fertilizer and broader input supply chains. Third, whether fiscal relief measures are temporary cushions or signs of deeper budget stress. If oil stays above 110 for any length of time, some of the fiscal gains made since 2024 start to look fragile.

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Now, the more constructive signal underneath the noise is that capital is still moving into Africa. It is just moving differently. African startups raised 554.5 million dollars in the first quarter of 2026, down 8.2% year on year. That decline matters less than who is writing the biggest cheques. Increasingly, it is banks and development finance institutions, not venture funds.

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The pattern is very clear. SolarAfrica’s 94 million dollars came from Rand Merchant Bank and Investec. Enko Education’s 22 million was a Standard Bank loan. Spiro’s 50 million was structured by Afreximbank. And Afreximbank also underwrote 2.5 billion dollars of a 4 billion dollar loan for Dangote’s Lekki refinery, its largest-ever single commitment to an industrial project. So if you are wondering where conviction sits right now, it sits with infrastructure, energy, industrial capacity, and businesses tied to real assets and cash flow. Pure-play tech is not leading this tape.

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That does not mean the story is turning negative. It means the market is being stricter. In a fuel shock, stricter is not always a bad thing. It tells you what lenders think the continent needs most. This week, that answer is fairly blunt: resilience, supply, and projects that still make sense when the world gets expensive. For more clear, data-driven insights on Africa’s business climate, sector trends, and country risk for global decision-makers, visit Africa.com. We’ll keep tracking it.