Fuel, food, fertilizer inflation rise could drive 20mln people into food insecurity
A new forecast from the International Monetary Fund (IMF) warns that Sub-Saharan Africa could be hit hard by the global supply chain disruptions brought on by Washington’s war in Iran, with countries dependent on fuel imports especially vulnerable to the repercussions, while oil exporters could see any benefits offset by volatility.
The IMF has cut its growth forecast for the region by 0.3 percentage points from its previous optimistic outlook of 4.6 percent for 2026.
The report notes that Sub-Saharan Africa entered 2026 reaping the benefits of hard-won stabilization gains after a strong 2025.
“Economic activity accelerated broadly across country groups, with regional growth estimated at about 4.5 percent —the fastest in a decade—reflecting favorable external factors and good policies, particularly in several large economies. Inflation moderated through the end of 2025, because of lower global food and oil prices, easing exchange rate pressures, and appropriately tight monetary stances in many countries. Fiscal positions improved, supported by stronger growth and favorable exchange rate developments,” it reads.
But the war in the Middle East has clouded the outlook.
Oil, gas, and fertilizer prices, together with shipping costs, have risen sharply. Furthermore, the shock has disrupted the trade with Gulf partners, reduced tourist arrivals, and is likely to dent remittances to some countries. Risk appetite has decreased, negatively affecting financing conditions, while buffers in many countries are limited.
“Regional growth is expected to reach 4.3 percent in 2026, 0.3 percentage points lower than our prewar forecast, with significant heterogeneity across countries. Oil-importing, non-resource-rich countries face a deterioration in trade balance and higher cost of living, while oil exporters will benefit from stronger export revenues but remain exposed to volatility and procyclical policy risks,” reads the forecast.
The IMF predicts median inflation will pick up to five percent by the end of the year, nearly double the 3.4 percent rate recorded in late 2025.
“Poverty, food insecurity, and other social indicators, already weakened by the pandemic, face renewed headwinds from declining foreign aid and rising food prices. IMF staff estimates that a 20 percent increase in international food prices can push more than 20 million people into moderate or severe food insecurity across the region,” warns the report.
The Fund urges African governments to tailor policies focused on addressing the shock in the near term and building resilience over the medium term.
“Near-term priorities are to keep inflation expectations well anchored and protect the most vulnerable from higher living costs through targeted, time-bound support. Fiscal strategies should balance credibility with flexibility. Oil exporters should treat windfalls as temporary and rebuild buffers. Oil importers should protect priority social and development spending while mobilizing domestic revenues, improving spending efficiency, and strengthening public financial management,” reads the forecast.
In a related note, the report indicates that Ethiopia, Ghana, and Zambia have made significant progress with sovereign debt restructuring over the course of the year. The IMF praises exchange rate reforms and fuel subsidy cuts in Ethiopia and Nigeria for “improved external balances, more stable inflation dynamics, and a clearer path for private investment.”
However, it warns that these gains could be reversed by rising fuel and fertilizer prices, which could see a drop in agricultural and overall economic productivity.
The IMF estimates potential losses due to higher fuel costs at between USD 240 million and 780 million in Ethiopia, Democratic Republic of the Congo, and Nigeria.
On Thursday, outgoing IMF Africa Department Director Abebe Aemro Selassie emphasized the potential economic shocks further during a briefing at the 2026 Spring Meetings in Washington, DC.
“This latest shock comes on the heels of the dislocation caused by the sharp and unprecedented decline in official development assistance, which is compounding all these pressures. Past aid shocks were largely cyclical; donors cut back and then returned. What we are seeing now appears more structural. And it is falling hardest on the region’s most vulnerable countries, fragile states, and low income economies that depend on aid not as a supplement, but as a critical source of budget financing, healthcare, and food assistance in many cases,” stated Abebe.
He called on governments to keep inflation expectations anchored and protect the most vulnerable through targeted, time-bound support.
“Fiscal strategies must balance credibility with flexibility. Oil exporters should treat windfall revenues as temporary and rebuild buffers. Oil importers must protect priority social and development spending while mobilizing domestic revenues, and there is real room to do so,” he stressed.
During the briefing, Abebe was asked whether the IMF is considering expanding special drawing rights issuance for Ethiopia.
“I’m not aware of any such discussions. Rather, as I mentioned earlier, what we are trying to do is at the individual country level to try and see how best we can help. As Kristalina [Georgieva] has been saying, this crisis is different to the pandemic. The pandemic was something that hit all countries almost uniformly and required a uniform response by countries, by policymakers. This one is hitting countries in a very asymmetric fashion. Even in our region, we have oil-exporting countries. As our report goes through in explaining, you know, the response has to be very country-specific and depending on how countries are being hit,” responded Abebe, who is set to wrap up his three-decade career at the IMF next month.
