Soaring oil prices: what impact on Africa?

With the rise of tensions in the Middle East, oil prices could rise again in the long term. Good or bad news for Africa? Decryption.

In the wake of drone attacks on oil installations in Saudi Arabia – the world’s largest exporter – oil prices soared by more than 10% on Monday, September 16. A crisis situation whose long-term consequences still seem difficult to assess: on Sunday, the day before the opening of the markets, US President Donald Trump tweeted that « there[was] reason to believe that the[United States, NDLR] knew[had] the culprit and that they[were] ready to respond », thus raising the threat of armed intervention.
In the short term, however, this fear about available stocks and the concomitant sharp rise in prices automatically make other exporting countries, particularly in Africa, happy. In fact, with nearly 14% of the world’s crude oil production, African states generated the equivalent of $155 billion in revenues in 2018. The financial stakes associated with the oil windfall are therefore considerable, particularly among the continent’s main hydrocarbon producers, Nigeria, Angola, Libya and Algeria. Beyond these heavyweights, any sustained increase in prices will also benefit the CEMAC zone, whose economies (Gabon, Chad, Congo and Equatorial Guinea in particular) are heavily dependent on oil gold exports. Also concerned are countries such as the two Sudanese countries and, to a lesser extent, Niger, Egypt, Côte d’Ivoire, Tunisia, Ghana… whose public finances are partially correlated with oil revenues.
Yet, on the continent as elsewhere, the revenues of some represent expenses for others. Thus, most of the 54 African countries are not oil producers, which means that if prices remain high and public services at the same levels, the growth in their energy expenditure will inevitably lead to a deterioration in their cash flow. In North Africa, this is the case in particular for Morocco – the second largest African oil importer after South Africa – while in West Africa, most countries are concerned (Senegal, Mali, Burkina Faso, Gambia, Benin, Togo, Guinea-Bissau and Conakry, Liberia, Sierra Leone…), as well as in East and Southern Africa (Ethiopia, Tanzania, Rwanda, Zambia, Zimbabwe, Namibia, Botswana…). In the end, therefore, beyond the gains made by the continent’s few major oil-exporting nations, Africa would emerge as a global loser from any sustained increase in oil prices.

The world’s major oil exporters in 2018 (value in billions of dollars. Highlighted in yellow, African countries) Source: International Trade Center (ITC)