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A Bank Born in Eleven Months

Last week, Oman launched its long-awaited African Bank of Oman in Luanda. An investment bank, the institution primarily focuses on energy-related transactions between Angola and the Middle East. Eleven months after Angolan President João Lourenço visited Muscat, Oman had converted diplomacy into a licensed bank.

The move comes off the heels of bilateral agreements between Oman and Botswana covering renewable energy, mineral exploration, and infrastructure.

These developments upend what market analysts had predicted in the wake of the Iran war. With GCC countries emerging as key hubs through which global capital transits, spectators speculated that those very hubs would feel the pressure of the crisis. Mohamed El-Erian of the Financial Times, for instance, warned that the war is a “risk” to Gulf foreign investments.

Yet Muscat’s recent dealings with Southern Africa flip this presumption on its head. Significantly, these aren’t just developments deepening existing agreements. The African Bank of Oman aims to set up new trade ties between Southern Africa and the GCC by targeting roughly 50 multinationals and public entities.

Similarly, the Botswana deal backs a joint 500 MW solar plant, double Botswana’s current generation capacity; officials describe it as part of a wider initiative consisting of 3,000 MW of energy projects. A joint exploration pact was also signed between the Botswana Geoscience Institute and Minerals Development Oman to explore mineral-rich areas across Botswana, covering nearly 70% of the country’s land.

An Empire Remembers Its Ports

While GCC investments in Africa are far from abnormal, the continent has long been dominated by the UAE, Saudi Arabia, and Qatar. During a time of fiscal pressure, Oman’s new investments represent a turning point in the country’s capital strategy.

Oman’s Vision 2040, similar to Saudi Arabia’s Vision 2030, demands diversification away from hydrocarbons, turning to other industries and resources, chief among them critical minerals. In January of last year, Oman made its first export of copper concentrate in 30 years. Later in August, Muscat signed three mineral exploration and mining agreements worth a combined $500 million, covering copper, chromium, salts, and industrial minerals.

Yet these minerals are found not along the shorelines of the Gulf, but deep in the mines of Central and Southern Africa, drawing the Sultanate’s footprint there. Last December, Muscat hosted the “Advantage Oman – South Africa” business dialogue, focused on fostering deeper economic ties with Pretoria; mining was one of four key sectors of focus.

The investments go beyond Southern Africa. With the Omani Empire once holding territory along East Africa, Muscat is reviving its longstanding economic ties with the Horn. Last May, the country hosted the two-day Oman-East Africa Business Forum and East Africa Trade and Investment Exhibition 2025, inviting delegates from across East Africa to engage in investment discussions surrounding port infrastructure and 5G.

Not Catching Up, Carving Out.

In this regard, Oman may be catching up with its Gulf neighbors. According to Business Insider Africa, the GCC invested over $179 billion in Africa, yet those investments have largely been driven by Abu Dhabi, Riyadh, and Doha.

The Sultanate’s aim isn’t to close the gap or compete head-on. Rather, it’s to contribute to the GCC’s wider deepening of African ties through deals and agreements that advance its own national interests.

The concerns of analysts over the Iran crisis’ capital reverberations remain legitimate. Yet the GCC remains far outside the global finance firing line. If anything, the Gulf war has prompted the GCC to assess and reorient its foreign investments toward new priorities. Oman’s deepening financial footprint across Africa represents exactly that reorientation.

For the Sultanate, this is just the beginning. The real question: Can Oman turn these flagship deals and conferences into a repeatable template across more African markets?

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KEY FACTS

• WHAT HAPPENED? The Iran crisis is pushing countries worldwide to increase defense spending, including Algeria and Morocco

• WHY IT MATTERS? Algeria and Morocco already have a military competition and the Iran crisis is deepening that struggle

• WHAT’S NEXT? As the Gulf war continues and energy markets remain volatile, both countries are likely to engage in increased defense spending

Across the desert dunes of the Maghreb, two countries—Algeria and Morocco—navigate a rising competition. Their enduring dispute over Western Sahara seems to be entering a new chapter: The ongoing Iran crisis is heightening the importance of both energy and maritime trade for Europe, expanding their territorial dispute into new waters. As the trade competition deepens, it’ll inevitably bleed into the military struggle between the two, as well.

In 2020, when the Western Sahara ceasefire collapsed, Algeria allocated $9.11 billion to defense compared to Morocco’s $5.38 billion. By 2024, Algerian spending had exploded to $21.8 billion, nearly 8% of GDP, while Morocco held steady at $5.52 billion. The spending ratio, once relatively balanced, now stands at nearly 4:1.

But spending reveals only part of the picture. Morocco’s steady defense investments mask deepening military integration with the West: The US and France supply cutting-edge aerial technology, while normalization with Israel has advanced to joint defense systems development, per a military agreement signed this January. Meanwhile, unconfirmed reports emerged earlier this year of Algeria acquiring Russian Su-57 stealth fighters, deepening its Eastern orientation.

Geography as Destiny

The 2020s have been transformative for Algerian military investment: From 2014 to 2024, Algiers poured $128.37 billion into defense, nearly triple Morocco’s $47.44 billion during the same period. The most striking figure: a 100.88% year-over-year spending increase in 2023 alone.

What’s driving this surge? Consider Algeria’s geography: to the west, the Western Sahara dispute; to the east, chaotic Libya; to the south, insurgencies in Mali and Niger threatening spillover. When Algeria shot down a Malian drone last April, it revealed just how fragile its borders have become, translating into strengthening of its military apparatus.

While Rabat did boost spending following the 2020 ceasefire collapse—jumping from $4.83 billion to $5.38 billion in 2021, a 44% baseline increase—its investment philosophy emphasizes controlled growth over shock spending.

Again, geography explains much of this divergence. Morocco faces fewer immediate threats along its borders, allowing for measured, long-term procurement cycles. Even at its 2024 peak, defense spending represented just 3.52% of GDP, less than half of Algeria’s proportion.

The year 2022 proved pivotal for both nations, though for reasons beyond their rivalry: Russia’s invasion of Ukraine sent global energy prices soaring and pushed European powers to court North African gas suppliers. Both Morocco and Algeria, particularly Algiers, suddenly found themselves with greater market leverage, and with it, greater reason to maintain military readiness as international competition for influence intensified.

Eastern Guns vs Western Systems

More revealing though than spending levels are procurement patterns. Algeria’s military remains overwhelmingly oriented toward Eastern suppliers: 61% of arms imports come from Russia, another 15% from China. Approximately 413 of Algeria’s active aircraft originated from the Soviet Union, a legacy relationship that Moscow continues to cultivate with advanced systems like the Su-57.

Morocco, by contrast, has built its defense architecture firmly within the Western orbit. The US supplies 59% of its arms imports, France another 26%. Both countries dominate Morocco’s aircraft weaponry pipeline. Israel has likewise emerged as a growing important partner, providing 3.7% of Moroccan arms imports. At least 51% of Rabat’s defense missiles now come from Israeli sources, according to DW.

The Road Ahead

As the Iran crisis continues, the Algeria-Morocco rivalry has long transcended its regional origins. The 4:1 spending gap, the divergent alliance structures, and the competing procurement philosophies represent more than a bilateral dispute; they reflect two fundamentally different visions of security and global alignment playing out in a region that increasingly matters to energy markets. And as those markets spiral, the threat of military outbreak anywhere in the world heightens, too, pushing countries across the world—including Algeria and Morocco—to fortify their first lines of defense.

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KEY FACTS

• WHAT HAPPENED? The Iran conflict has sent fuel, food, and fertilizer prices surging across Africa

• WHY IT MATTERS? Africa’s heavily indebted, import-dependent economies are among the least equipped to absorb the shock

• WHAT’S NEXT? If hostilities resume, it could push already disgruntled African youth to the brink

A Continent That Can’t Afford It

An Accra Technical University student takes the bus to school every day. It’s become such a staple of his routine that he already knows the exact price by heart. It was thus to his shock when, last week, he found that the price of the bus ticket had suddenly risen.

Why? The Iran war, thousands of miles away, is quietly making not only bus fares but bread, cooking gas, tea, and a whole host of other products far more expensive across a continent of 1.4 billion people.

The Middle East is far from the only region watching the next developments in the Iran crisis. In Ghana, fuel prices spiked 15-19% early this month. Meanwhile, on the other side of the continent, nearly 8 million kilograms of tea are trapped in Kenya due to the Strait of Hormuz closure, prompting weekly revenue losses of close to $8 million.

While these reverberations are being felt worldwide, countries across Africa are among the least equipped to absorb them. The World Bank says external debt service has more than doubled in Africa over the last decade and reached 2% of GDP in 2024.

The IMF warns that a sustained 10% energy price rise adds roughly 40 basis points to global inflation. That speaks trouble for Sub-Saharan Africa, which the World Bank projects will see median inflation of 4.8% this year.

For low-income households spending the bulk of their income on food and energy, “moderate” inflation isn’t moderate at all. This is especially true for large food and fuel importers like Egypt and Ethiopia, which are far more exposed to ongoing energy shocks. Egypt has already been forced to increase imports of Libyan energy to compensate for disruptions to Kuwaiti supply chains.

The Generation Watching Closely

The people absorbing these pressures most acutely are also the most politically combustible. Africa is home to the world’s largest youth population; over 60% of the continent is under 25, and UN Africa Renewal projects that number to double to over 830 million by 2050.

Yet this youth explosion has not been matched with economic opportunity. The African Development Bank reports that a third of Africans aged 15 to 35 are unemployed. Even South Africa, the continent’s largest economy by GDP, recorded a youth unemployment rate of 60.2%, the highest in Sub-Saharan Africa.

Global shocks have consistently amplified these difficulties. The Russia-Ukraine war, for instance, stressed African food imports significantly: prior to the conflict, 27% of Ukrainian wheat exports were delivered to North Africa, sparking food insecurity across the region.

Since then, youth across the continent have taken to the streets. In Morocco last September, mass protests erupted over the Kingdom’s $41 billion investment into stadium infrastructure for the 2030 FIFA World Cup, over necessary safety net services, like healthcare. In Kenya, 2024 produced over 1,800 recorded demonstrations, uniting students, health workers, and teachers alongside the TikTok generation. The domino fell elsewhere too: Togo, Tanzania, Nigeria, and beyond.

African youth are hyperaware of how their futures are being shaped by socioeconomic pressures, a fire that the Iran crisis is throwing more gasoline on.

How Bad Could It Get?

African governments are watching Pakistan’s role in mediation closely for signals on what comes next. If the ceasefire holds but tensions persist—keeping Iran’s grip on the Hormuz tight—oil prices will remain elevated and inflation will rise gradually, leaving states like South Africa increasingly vulnerable.

If fighting resumes and air strikes return, import-dependent Sahel countries will be hit hardest. A scenario in which Houthi attacks on Red Sea shipping vessels resume alongside Hormuz disruptions could stifle close to 30% of global oil trade, a shock African economies have no buffer to absorb.

Whether it’s the student in Ghana trying to get to class or the Kenyan farmer watching his tea pile up, the people most exposed to this war aren’t in the Middle East. They are the same people who already showed they won’t stay quiet.

The price of oil is, in that sense, also the price of political patience.

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KEY FACTS

• WHAT HAPPENED? The Iran war is pushing Europe into its deepest energy and trade crisis since Russia's invasion of Ukraine

• WHY IT MATTERS? Europe is turning to North Africa: Algeria for energy and Morocco for maritime trade

• WHAT’S NEXT? Europe faces a structural choice: deepen dependence on Algerian gas via expanded pipeline deals, double down on Moroccan logistics as a rerouting hub, or accept that both relationships carry their own geopolitical risks

European markets are rattled. Following President Donald Trump’s televised threat to bomb Iran “back to the Stone Ages,” crude oil has surged from roughly $102 to a high of $112 a barrel. The market turbulence is straining Washington’s already-fraught relations with Europe: Trump’s war of words with French President Emmanuel Macron, who publicly criticized the Iran war, is the sharpest symbol of a transatlantic alliance under pressure.

With oil markets in turmoil and the Strait of Hormuz closed, European investors are confronting a familiar question in an unfamiliar form: where does the continent turn when its energy corridors go dark? Increasingly, the answer runs through North Africa, and through two neighboring rivals with very different things to offer.

Africa’s Sleeping Energy Giant Wakes Up

Europe entered the Iran crisis badly exposed. Gas storage was already running 35% below the five-year average, leaving almost no cushion against supply shocks. It’s here that Algeria goes from being important to becoming indispensable.

As Africa’s third-largest holder of oil reserves and among its leading producers at roughly 1.2 million barrels per day, Algeria exported 39.2 billion cubic meters of gas to the EU in 2024, approximately 14-15% of the bloc’s total imports, making it Europe’s fourth-largest supplier behind Norway, Russia, and the United States.

For Spain, the dependence is acute. Algerian gas accounted for more than 29% of Spanish imports in January and February according to Reuters, and Madrid is now in active talks with Algiers about expanding Medgaz pipeline capacity by up to 10%. Italy is moving in the same direction: Algeria already supplies 30% of Italy’s gas, a share likely to grow as the two countries negotiate expanded volumes and new upstream projects.

Algeria cannot instantly flood Europe with unlimited gas; pipeline capacity and upstream investment remain real constraints. But the strategic logic is compelling. Every percentage point of Hormuz risk makes Algerian pipeline gas more valuable precisely because it bypasses maritime chokepoints entirely.

The Kingdom at the Crossroads

The Hormuz closure is only part of Europe’s maritime headache. Iran-backed Houthi forces are raising the specter of a renewed Red Sea blockade, a corridor through which 12% of global trade flows. Key commodities, from coffee to tea, face supply chain disruption at a moment when Europe can least afford it.

This is Morocco’s opening. Rather than energy, Morocco is positioning itself as Europe’s indispensable logistics partner when shipping lanes become unreliable. Tanger Med, the Kingdom’s flagship industrial port complex, handled 10.24 million TEUs and 142 million tonnes of cargo in 2024, cementing its place as one of the Mediterranean’s leading container hubs. Its rise was already accelerated by the earlier Red Sea crisis, as shipping companies rerouting around South Africa found Tanger Med a natural convergence point at the Atlantic-Mediterranean junction.

The trade numbers reflect this deepening relationship. EU-Morocco trade exceeded €60 billion ($69 billion) in 2024—a 7% increase from 2023—with the EU absorbing roughly two-thirds of Moroccan exports. Brussels designated Morocco a “crucial trading partner” last April. Vehicle exports alone tell part of the story: nearly 540,000 finished cars shipped from Tanger Med to Europe in 2024. With companies like Maersk now avoiding the Red Sea, that volume is set to climb further.

Old Rivals, New Stakes

Underneath the opportunity lies a long and unresolved rivalry. In 2021, Algiers halted natural gas exports via the Maghreb-Europe pipeline transiting Moroccan territory, weaponizing infrastructure amid escalating tensions over Western Sahara. The closure was a statement as much as a decision: Algeria would not allow Morocco to benefit from its energy exports, even indirectly.

The Iran crisis intensifies that dynamic. Algeria can double down on its energy edge: expanding pipelines, negotiating new volumes, and deepening bilateral ties with Spain and Italy. Morocco, lacking Algeria’s energy reserves, responds by leveraging its geographic proximity to Europe and its expanding port infrastructure to lock in its role as the continent’s trade facilitator. Both countries grow more important to Europe in parallel, and by extension, their rivalry deepens.

For European investors, this is where opportunity shades into risk. Algeria’s gas leverage cuts both ways: Algiers can restrict supply as easily as it expands it, as 2021 demonstrated. Morocco’s supply chain integration is real, but still maturing. The continent needs both Algeria’s molecules and Morocco’s logistics, and dependence on each carries its own political price.

The Iran crisis is accelerating a realignment that was already underway. The lesson for Europe is that energy security and supply-chain resilience are now inseparable, and that both increasingly run through a stretch of coastline the continent has long underestimated.

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KEY FACTS

• WHAT HAPPENED? Ghana replaced its flat 5% gold royalty with a price-linked sliding scale of 5-12%

• WHY IT MATTERS? Ghana is Africa’s largest and the world’s sixth largest gold producer, and the reform has drawn rare joint opposition from the US and China, signaling that what happens in Accra doesn’t stay in Accra

• WHAT’S NEXT? If Ghana’s royalty overhaul proves lucrative, it’s likely to accelerate a broader wave of resource nationalism across Africa

Gold prices have been hitting historic highs, trading above $5,000 an ounce. Even after facing a sharp fall earlier in March, rates for gold are now seeing a comeback.

With the Iran war threatening the global economy, investors are fleeing to safe-haven assets, chief among them gold. Yet unbeknownst to them, one of the world’s most important gold hubs just rewrote the rules of the game.

Ghana is not only Africa’s largest gold producer, but the sixth largest in the world, producing roughly 140 tonnes annually. Effective this month, Accra replaced its flat 5% royalty fee with a price-linked sliding scale of 5-12%.

While primarily a domestic fiscal move, the reform’s effects are likely to ripple into investment flows, supply chains, and commodity markets in the long term. Already, world powers such as the US and China—competitors for influence in Africa—have both voiced their opposition to the policy, along with other countries, signaling the geopolitical stakes.

A Gold Rush Dividend

For decades, producers tapping into Ghana’s vast gold wealth were subject to a flat 5% royalty on gross revenue. 2025, however, saw the introduction of a new regime created by the Minerals and Mining Royalty Regulations.

The regulations introduce variable royalty bands for gold, lithium, and selected minerals, with rates adjusting automatically to international prices. For gold specifically, the rate is pegged between 5% and 12%, with the top rate activated when gold exceeds $4,500 per ounce.

The royalty aims to leverage higher gold prices for Ghana, already a key economic pillar for the country. The Minerals Income Investment Fund reported that mineral royalty receipts reached a record high of GHS 5.43 billion (~$494 million) in 2025, up 10.8% from GHS 4.90 billion (~$446 million) in 2024. With J.P. Morgan predicting spot gold prices to potentially surpass $6,000 an ounce in the long term, the sliding scale aims to capture more revenue during high-price cycles without deterring investment when prices are low, a rules-based alternative to a windfall tax.

With gold demand spiking, so too does the demand for Ghanaian gold production. Yet as the mineral 9is already above $5,000 an ounce, the top band of Ghana’s new fiscal regime is immediately operative for any new operations.

Ghana produced roughly 4.9 million ounces of gold in 2024, according to the International Trade Administration. That marked an 8.5% year-on-year increase, and a moderate royalty hike is unlikely to reverse this momentum in the short run.

Yet in the long term, mining companies could gradually shift exploration capital toward other African nations to avoid incurring steeper costs. While fellow West African nations such as Mali are likewise rich in gold, the country’s ongoing conflict heightens security risks for production.

Rather, mining companies would more likely shift capital to Southern Africa, where countries such as South Africa are home to numerous gold mines. Yet even Southern Africa remains risky; the region continues to struggle with illegal mining operations that threaten long-term production and export projects.

Critically, Ghana is far from the only African gold producer to flirt with a royalty-scaling regime. Last November, Zimbabwe, the eighth largest producer on the continent, formulated a new revenue policy in which miners are required to pay a 10% royalty when prices exceed $2,501.

If gold prices continue to surge and Ghana accrues significant revenues as a result of its fiscal program, other states across the continent are likely to follow suit.

Global Ripple Effects

Ghana represents a mid-single-digit share of global mine supply. Its royalty change alone is unlikely to structurally move global prices, which remain driven by real interest rates, dollar dynamics, and geopolitical risk.

Yet the cost-curve effect is undeniably there, though its full weight may take years to materialize. A higher fiscal take does nudge Ghana’s all-in sustaining costs upward, marginally steepening the global cost curve over time, especially if neighboring countries develop similar policies.

Producers facing steeper marginal royalties at higher prices may be incentivized to increase forward contracts to lock in cash flows, adding incremental selling pressure in futures markets.

In that regard, Ghana’s sliding-scale royalty is a calibrated bet: capturing more upside from a historic gold price rally while attempting to preserve long-term competitiveness.

For investors, miners, and policymakers looking from the outside, it signals a broader African trend toward resource nationalism: Where the state is rewarded more generously in exchange for greater international supply access. And from that angle, this trend may not be Africa-exclusive for long.

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KEY QUESTIONS

• WHAT HAPPENED? Coffee prices are seeing historic highs just as tensions between Ethiopia and Eritrea escalate over Red Sea access

• WHY IT MATTERS? Ethiopia is one of the world’s largest exporters of coffee, and conflict could disrupt global supply chains, sparking price hikes

• WHAT’S NEXT? If war erupts, the world could face anywhere from modest Arabica price premiums to a loss of millions of bags from global supply

If your morning cup of joe has started feeling like a luxury, you’re not imagining it. Coffee prices have approached historic highs of 325 cents per pound in 2025, according to the International Coffee Organization (ICO). Starbucks’ Tall Mocha Frappuccino jumped from $3.75 in 2014 to $4.95 in 2024, a 32% increase; my personal favorite, Venti Caramel Macchiato, similarly rose 17% over the same period.

For coffee lovers living paycheck-to-paycheck, they’re left wondering what’s driving this rise. Global inflation plays a role, but an under appreciated driver are geopolitical shocks to the supply chains underpinning coffee prices. And another one is now taking shape in the Horn of Africa.

Neighbors Ethiopia and Eritrea are edging toward conflict, with Addis Ababa seeking Red Sea access through Eritrea’s port city of Assab. For global coffee markets, already stretched thin, the timing could hardly be worse.

The Producer Behind Your Morning Coffee

Ethiopia is the world’s fifth-largest coffee producer and third-largest exporter of Arabica, the bean that accounts for roughly 60% of global production. In 2024/25, the country exported $2.65 billion worth of coffee, a 21.5% year-on-year increase, supplying premium beans to Saudi Arabia, Germany, and beyond.

Yet Ethiopia’s dazzling numbers have a kryptonite: Djibouti is its sole maritime gateway, connecting Ethiopian coffee to global markets via the Red Sea. That chokepoint was already severely stressed by the Houthi campaign in the Red Sea in 2024. Before the crisis, at least one vessel arrived daily in Djibouti; that fell to one per month at its worst, according to trade intelligence platform Tridge. Royal Coffee’s 2024 logistics update similarly reported that export capacity from Djibouti was cut by half. Ethiopia’s supply chains are as fragile as they are impressive.

Some will point to the Tigray War—a civil war that erupted in Ethiopia’s northern Tigray region from 2020 to 2022—as reassurance that conflict won’t disrupt coffee exports. Despite the war’s devastation, Ethiopia’s main coffee-producing zones in the south kept functioning, and exports actually rose: Bloomberg reported 86,000 tons shipped in the three months to October 2021, a 77% increase on prior estimates.

But a war with Eritrea would be a different beast.

Three Roads to Disruption

Diverging paths lie ahead for the Horn. While varying in their intensity, all three threaten volatility to coffee markets.

Border Skirmishes: Noise Without Signal

Localized clashes, contained in the north along the Ethiopia-Eritrea border and away from the southern coffee-producing regions of Oromia and Sidama, would leave physical supply largely intact. Market impact would be driven more by ESG anxiety than security shocks over humanitarian and reputational concerns regarding the war.

Drones, Railways, and Economic Warfare

A full-scale confrontation raises far graver risks. While ground fighting will remain concentrated in the north, the real risk is elevated in the skies. East Africa has become awash with drone warfare, used extensively during the Tigray conflict by both Addis Ababa and Asmara and in the ongoing Sudan war, to strike deep into rival territory. Eritrea could target Ethiopia’s southern coffee regions, knowing the industry underpins 30-35% of the country’s export earnings and supports 15 million people. More critically, the Addis Ababa-Djibouti Railway—which carries roughly 25% of Ethiopia’s exports—would be a prime target. Its effective shutdown could cost over two million bags in a single season.

Red Sea in the Crossfire

The most severe scenario. Assab sits adjacent to the Bab el-Mandeb strait, having been the world’s most disrupted shipping lane in 2024. Fighting near or around it would compound looming Houthi-driven volatility, spook carriers further, and potentially reduce Ethiopian export capacity by 50%, erasing over 2 million bags from global supply. Freight costs and insurance premiums would spike, pushing coffee prices sharply higher regardless of what happens on the ground.

The Bigger Picture

This isn’t just about one conflict. Coffee has become increasingly exposed to overlapping, simultaneous shocks: Brazilian drought, Indonesian climate stress, and now a potential Horn of Africa war. Each alone is manageable. Together, they point to a commodity whose supply chains are structurally fragile.

As sourcing grows more precarious, the question facing roasters, retailers, and everyday consumers is no longer whether diversification is needed, but whether it’s already too late.

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