Tensions in the Strait of Hormuz are hitting Africa hard financially. This is not just because of reduced oil supply, but also because the US dollar is getting stronger. As conflict between the US and Iran worsens, global investors are moving their money to safer assets, especially the dollar. This shift is pushing the dollar up and making imports like fuel more expensive for African countries.

The shift has significantly weakened numerous African currencies, drastically inflated the cost of servicing dollar-denominated debt, and increased the cost of paying for essential imports. For a continent reliant on foreign goods and investment, the rising dollar is acting as a multiplier, turning logistical disruptions into a full-blown economic crisis.

The physical chokepoints are creating the scarcity that drives these financial pressures. According to the Atlas Institute, disruptions in the Strait, compounded by tensions in the Red Sea, have forced vessels to reroute around the Cape of Good Hope.

This has caused freight costs to surge to record levels, with tanker charter rates exceeding $400,000 per day. Simultaneously, war risk insurance premiums have jumped to as high as 3% of vessel value, a steep increase from the 0.25% rate seen before the conflict.

Since global shipping is priced in dollars, African nations must convert significantly more of their weakening local currency to pay for these inflated logistics costs.

The supply chain data, provided by maritime intelligence firm AXSMarine, reveals a drastic reduction in the availability of critical goods. Dry bulk goods shipments through the Strait dropped by 83% from February to March.

Most alarmingly, fertilizer shipments collapsed by 92%, falling from over one million tonnes to just 82,000 tonnes. This is catastrophic for food security, as Gulf states supply 16.7% of Africa’s fertilizer imports and up to 25% of nitrogen fertilizers.

With East and Southern Africa most exposed, the combination of lower supply and a stronger dollar threatens to make agricultural inputs unaffordable for farmers, potentially leading to lower crop yields later in the year.

The crisis extends to food staples and industrial materials. Rice shipments westbound through the strait plunged by 92%, a risk for price stability since major exporters like India and Pakistan purchase significant portions of their fertilizers from the Gulf.

Furthermore, industrial commodities vital for mining and construction are stalling. Shipments of bulk commodities like limestone and gypsum fell 93% in March, while iron ore exports dropped 65% and steel shipments declined by 93%.

For copper producers in Zambia and the DRC, and steel importers like Nigeria, Egypt, Kenya, and Tanzania, these statistics translate to higher production costs and delayed infrastructure projects.

Stalled tanker traffic is not just a logistical issue but a symbol of economic stagnation. The diversion of traffic away from the Suez Canal also threatens revenue for Egypt, which relies on the gateway linked to the Bab al Mandab Strait.

The long-term fiscal implications are equally concerning. As the war intensifies, wealthy Gulf nations may delay planned investments in Africa. Additionally, job insecurity among migrant workers in Gulf economies risks disrupting vital remittances to countries like Kenya and Uganda.