The Afreximbank African Commodity Index (AACI) rose by 6.7 per cent in the first half (H1) of the year, driven largely by a sharp increase in energy prices, with oil-producing economies like Nigeria benefiting from stronger export earnings.

According to the July 2026 edition of the Afreximbank African Commodity Index, the composite index increased from 195.5 at the end of December 2025 to 208.6 by the end of June 2026.

The report said the performance reflected significant differences across commodity groups, with the Energy Sub-index recording the strongest growth, rising 13.6 per cent from 168.7 to 191.6 during the period.

Afreximbank attributed the energy rally principally to heightened geopolitical tensions in the Middle East and concerns over possible disruption to shipping through the Strait of Hormuz, which pushed crude oil prices higher.

For Nigeria, the development provided a boost to export earnings and government revenues.

“Higher energy prices improved fiscal revenues and export earnings for oil-producing countries such as Nigeria, Angola and Libya,” the bank said.

The report, however, cautioned that the gains from higher commodity prices remain unevenly distributed across Africa.

While oil exporters benefited from stronger earnings, net energy- and food-importing economies faced higher import costs, inflationary pressures, and increased external financing requirements.

Afreximbank said the disruption risks surrounding the Strait of Hormuz had also exposed Nigeria and the rest of Africa’s heavy dependence on imported refined petroleum products.

Higher freight and insurance costs, it noted, can translate into higher domestic fuel prices and, in turn, raise transportation, electricity, and production costs.

The bank, therefore, called for faster investment in domestic refining capacity, regional energy infrastructure and alternative energy sources to improve Africa’s energy security and reduce exposure to external shocks.

Beyond energy, the base metals sub-index recorded an 8.1 per cent increase, rising from 241.9 at the end of 2025 to 261.6 by June 2026.

Afreximbank attributed the growth to stronger copper, aluminium, and zinc prices, supported by constrained supply and rising demand linked to electrification, renewable energy, electricity grid expansion, and artificial intelligence infrastructure.

The report noted that the trend could create opportunities for African mineral-producing countries if they move beyond exporting raw materials and develop domestic processing and downstream industries.

In Guinea, for instance, investments in bauxite-to-alumina processing were advancing, while other African mineral producers were seeking to expand domestic refining and downstream manufacturing to retain more value from their natural resources.

Agricultural commodities, however, recorded a 2.7 per cent decline during the period, with the Agriculture Sub-index falling from 146 to 142.1.

The decline was driven largely by a sharp correction in cocoa prices after the exceptional rallies recorded in 2024 and 2025.

Improved cocoa arrivals from Côte d’Ivoire and Ghana, seasonal mid-crop harvests and the unwinding of speculative positions eased immediate supply concerns during the first quarter.

But Afreximbank warned that structural challenges, including ageing cocoa trees, disease, rising labour and fertiliser costs and climate risks, continued to threaten the sector’s medium-term supply outlook.

Cotton, meanwhile, rebounded strongly on improving textile demand, lower global production and tightening inventories, while wheat prices remained broadly stable amid favourable harvests and comfortable global stocks.

The Precious Metals Sub-index declined by 2.7 per cent, from 389.5 to 378.8, although gold remained close to record highs. Afreximbank said sustained central-bank purchases, geopolitical uncertainty and investor demand for safe-haven assets continued to support gold prices.

Looking ahead, the bank expects commodity markets to remain highly differentiated for the rest of 2026.

Energy prices are expected to remain relatively contained as additional supply from the United States, Brazil and Guyana offsets moderate demand growth, although geopolitical tensions and possible disruptions to major shipping routes could continue to generate volatility.

Metals, particularly those required for electrification, renewable energy and AI infrastructure, are expected to remain supported by long-term demand, while agricultural commodities are projected to stabilise. Gold is also expected to remain resilient amid geopolitical uncertainty and continued safe-haven demand.

Afreximbank said the H1 2026 commodity performance reinforced the need for African economies to reduce their dependence on unprocessed commodity exports.

The bank urged policymakers and businesses to expand investments in processing, refining and mid- and downstream infrastructure; diversify exports and markets; strengthen regional production networks and intra-African trade through effective implementation of the African Continental Free Trade Area; and develop innovative financing instruments to support value addition and protect economies from external commodity price shocks.

The report’s assessment comes against a broader backdrop of continued volatility in global commodity markets. 

The World Bank, in its latest commodity-market update, said its energy price index eased 1.1 per cent in July, while noting that the outlook for 2026 remained heavily influenced by the Middle East conflict and energy-market disruptions.

For Nigeria, the Afreximbank findings underline both the immediate benefit of higher oil prices and the longer-term challenge of converting commodity windfalls into broader industrial and economic gains.