Fuel price shocks hit African SMEs as conflict drives volatility
War in the Middle East is pushing up global fuel prices, placing increasing pressure on small and medium-sized businesses across Africa, according to Zohakiy Mbi-Njifor, CEO of Endless Life Group.
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Brent crude rose to nearly $120 a barrel in March, its highest level since 2022, with prices now significantly higher since the conflict began. For many African economies that rely on imported fuel, this is translating into rising operating costs.
Mbi-Njifor says SMEs operating across borders are particularly exposed. Higher fuel prices are increasing transport costs, which already account for a large share of export value in Africa. “If fuel goes up today, their margins are also gone today,” he says.
Limited room to absorb shocks
Unlike larger companies, SMEs have a limited ability to manage sudden cost increases. They typically lack access to hedging tools or long-term contracts that could cushion the impact of price volatility.
Fuel price increases are also affecting regional trade at a time when initiatives such as the African Continental Free Trade Area aim to expand cross-border commerce. Rising logistics costs risk limiting participation, particularly for smaller businesses.
“You can open borders, but if SMEs can’t move products efficiently and affordably, participation becomes limited,” Mbi-Njifor says.
Regional supply offers limited relief
Africa has increased fuel sourcing within the continent, including exports from Dangote Petroleum Refinery in Nigeria. While this supports supply, it has not shielded businesses from price volatility.
“For SMEs, price – not supply – is the reality,” Mbi-Njifor says.
Pressure on supply chains
Some SMEs are adapting by consolidating deliveries, reducing travel and digitising operations, but these measures offer limited relief.
Mbi-Njifor says larger companies have a role to play in stabilising supply chains, including improving payment terms, sharing logistics networks and providing supplier financing.
“For companies relying on regional suppliers, fragile SMEs create fragile supply chains,” he says.
Focus shifts to resilience
The current volatility highlights the need for stronger energy resilience and more efficient supply chains across the continent.
Mbi-Njifor says businesses that invest in efficiency, partnerships and more localised operations will be better positioned to manage future shocks.