Far from the battlefields of the Middle East, Botswana is already counting the cost.
‘The conflict’s ripple effects – energy, freight and fertiliser are already transmitting into Botswana through higher fuel and import costs,’ says Taimur Khilji, an economist with the United Nations in Botswana. His recent presentation warns that the shock is not theoretical: it is already feeding into prices, trade and household welfare.
At the centre of the disruption lies the Strait of Hormuz, through which about a fifth of the world’s oil supply passes. Ship traffic has fallen by roughly 97 percent since late February, severely constraining global energy flows. The result has been a sharp rise in oil and gas prices, with Brent crude climbing by about 27 percent in early March.
Botswana’s vulnerability is structural. The country imports all its fuel and about half its electricity, while more than 60 percent of its goods pass through South Africa. This leaves it acutely exposed to global price shocks.
The transmission is swift. Fuel costs push up transport prices, which account for nearly a quarter of the consumer basket. Food and housing costs follow, amplified by rising fertilizer and freight prices. Inflation, in short, becomes broad-based.
The shock comes at a difficult moment. Botswana’s economy has already contracted and unemployment remains high, particularly among the youth. A prolonged war could deepen fiscal pressures, widen the trade deficit and dampen diamond demand.
As Khilji notes, the burden will not be evenly shared. Low-income households those spending the largest share on food and transport stand to bear the brunt of a crisis that began thousands of kilometres away.