Resilience Amidst Uncertainty

The Iran War and the transition to clean energy and regenerative farming 

By Camilla Nestor | October 13, 2026

For much of 2026, the Iran War and the adjacent conflicts in the Middle East have provided yet another stress test for the world’s developing economies, albeit with many of the outcomes still uncertain. What is certain is that the combination of rising fuel prices and a shortage of fertilizer – two resources that rely on safe passage through the Strait of Hormuz – will once again hit low-income countries the hardest.

The early days of the conflict saw many countries scrambling to find alternative sources for fuel and fertilizer. Rich countries generally had diverse supply chains and internal stockpiles, and so were able to absorb the initial shock. But low- and middle-income countries have had to resort to creative measures to reduce demand (and therefore costs) – for example, by shortening the work week or restricting who had access to gas/petrol stations. 

As the conflict dragged on with no end in sight, government leaders in many cash-strapped economies began looking for ways to wean themselves off fossil fuels and fertilizers. Impact investors, especially those with a specific focus on developing economies, have played an important role in helping individuals and households navigate these turbulent times.

On the energy front, the initial pain from rising fuel costs has been at least partially relieved by the rapid transition to cleaner energy. Since neither the sun nor the wind have to travel through the Strait of Hormuz to reach solar panels or wind turbines, consumers have adapted by hastily gobbling up as much cleantech as they can get their hands on. The transition is happening the fastest in the very countries that bet their economies on the steady supply of cheap fossil fuels from the Middle East. 

Pakistan is a classic example. In 2024, more than half of Pakistan’s electricity came from fossil fuels. But over the last two years, Pakistanis have been importing solar panels and the associated infrastructure (mostly from China) at record levels. As many as a quarter of Pakistani households are now using solar panels, spurring the country’s government to set a target of 95% renewable electricity by 2040.

Several other countries are following Pakistan’s lead, from the Philippines (which is removing regulatory bottlenecks and offering residents low interest loans of up to $8,100 to help subsidize the switch to clean energy) to Indonesia (which is expanding EV incentives and imposing new taxes on fossil fuels). While these countries will still need some fossil fuels for heavy industry and other hard-to-abate sectors, they are already less reliant on fossil fuels than before the war began. 

On the agricultural front, the story is still developing. The transition to sustainable farming practices has accelerated in recent years as more communities learn about the benefits of a regenerative model that doesn’t rely on artificial chemicals and fertilizers. But with prices for industrial agricultural inputs like urea and ammonia spiking due to geopolitical uncertainty, more farmers are willing to take the leap to regenerative agriculture. 

As a firsthand example of this trend, I recently met with Dale Lewis, CEO and founder of Zambia-based COMACO, a local social enterprise that supports small-scale farmers with agroforestry and sustainable land management practices, including by organizing farmers into cooperatives to gain better access to markets and support services. MCE has provided over $4M in working capital facilities to COMACO since 2020, enabling timely payments to 43,000 smallholder farmers.

Dale told me that the farmers COMACO works with have been reasonably well-insulated from the impacts of the Iran war. Fuel shortages never lasted more than a day or two, though higher fuel costs have contributed to an added cost to transporting crops. And Dale expects the increased cost of fertilizers to be a net benefit for its rice farmers because it will make COMACO’s rice crop (which doesn’t use artificial fertilizers) more competitive in local supermarkets compared to imports from Asia where fertilizer inputs are critical for rice production. 

Not every agricultural community is this well-prepared. The farmers who still rely on monocultures and industrial farming techniques face a comparatively steep hill to climb. The reality is that reducing the use of chemical fertilizers would still reduce crop yields in the short-term, even as it helps the soil regenerate over the long-term. But the disruption to trade via the Strait of Hormuz has at least provided an opportunity for many farmers to explore a different way of doing things.

On both the energy and agriculture fronts, impact investors have played an important role in easing the transition to a more sustainable – and much more resilient – way of life. 

In the 20 years that MCE Social Capital has been in business, we’ve disbursed nearly $450bn in capital to 181 companies spread out across 51 countries. About two-thirds of our portfolio is targeted at rural communities, helping fund organizations like COMACO in Zambia and Cooperativa Agraria Cafetalera Laguna de los Cóndores (Coop. LDC) in Peru. In 2025, more than 100,000 smallholder farmers sold their crops through MCE-supported businesses, many of which also help farmers learn about and adopt regenerative farming practices.

And while MCE doesn’t directly invest in cleantech, many of our peers helped fund many of the technologies (e.g., solar panels, electric bikes, batteries, EV, etc.) that are now popping up in cities and towns around the developing world. Without those early investments, low-income economies wouldn’t have been able to afford the transition to clean energy.

This is how development finance works best, and why more impact investors are now stepping up to address the capital gap in underappreciated markets around the world.

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