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Africa keeps going despite high oil prices
Record high global oil prices have so far had a muted effect on sub-Saharan Africa, with exporters reaping rewards and importers less badly hit than many had feared.
- Reuters
- Published: 23:15 August 9, 2007
Kampala: Record high global oil prices have so far had a muted effect on sub-Saharan Africa, with exporters reaping rewards and importers less badly hit than many had feared.
A combination of demand, refinery bottlenecks and political fears drove crude oil to a record high last week. But economic worries, the debt market squeeze and falling stock prices have knocked US oil from an all-time high of $78.77 struck last week.
While the poorest on the world's most impoverished continent are paying the price, the impact has not been the disaster some forecast.
Kenya absorbs burden
In Kenya, robust economic growth of 6.3 per cent in the first quarter of 2007, compared with 4.1 per cent in the same period last year, has cushioned the blow on a country that spends around 23 per cent of its import bill on oil.
"Pump prices are still rising, but that didn't stop Kenyans buying some 50,000 cars last year," said Mwendia Nyaga, head of the National Oil Corporation of Kenya.
Oil prices that have nearly doubled from $40 a barrel in 2004 brought dire warnings of inflation overtaking African economies. But Nyaga said Kenya could handle it.
Higher foreign currency reserves and a lower debt burden have all helped absorb the burden of months of high oil prices.
Infrastructure concerns
The largest threat is to infrastructure projects, many funded by donors like the African Development Bank (AfDB), which were planned when oil prices were much lower.
In a report last year, the Tunis-based AfDB said many ongoing thermal power production projects were in danger because they were set up on the assumption that oil prices would remain at around $25 a barrel.
It hopes higher prices to spur governments to invest in cleaner, alternative energies like solar and wind power.
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