Botswana’s central bank became the first in Africa to raise interest rates to tackle surging inflation across the continent triggered by the Iran war.

Oil prices jumped to $126 a barrel on Thursday, their highest level since 2022, on fears supply disruption could continue for months. Botswana policymakers hiked the country’s main rate to 5.5% from 3.5% because they expect higher fuel prices sparked by the closure of the Strait of Hormuz to push inflation to a three-year high. Botswana is already reeling from a slump in the global diamond market: Sales of the precious stones account for a third of government revenues.

Meanwhile, Kenya is eyeing around $600 million in emergency funds from the World Bank to soften the fallout from the global energy shock. East Africa’s biggest economy is particularly vulnerable given it imports the vast majority of its fuels from the Gulf. And while Nairobi has already eased energy taxes in a bid to help consumers, pump prices have nonetheless surged.

“Most of Africa will face worsening terms of trade,” Capital Economics wrote in a note to clients, adding that this would drive inflation, “slowing or even halting monetary easing cycles and dampening economic growth.”