As oil prices soared to more than $100 a barrel this week, what will the economic consequences of the war in the Middle East be for African countries? Which sectors are most at risk? RFI spoke to Guinea-Bissau economist Carlos Lopes, former executive secretary of the United Nations Economic Commission for Africa and now a lecturer at the University of Cape Town.
RFI: What impact is the rise in oil prices having on African economies? Have prices at the petrol pump increased? What are the consequences for industry, transport and power stations?
Carlos Lopes: First, there is the impact on prices for imports in the immediate future. We can imagine that prices will continue to rise. A number of countries do not have sufficient reserves to cope with the logistical difficulties we are going to face, with all the demand, whether it was passing through the Gulf countries for refining or coming from the Gulf countries. So we have a whole host of difficulties with insurance. Maritime transport is undergoing a complete reorganisation. All these consequences will of course be reflected in the price at the pumps.
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But we also have two other huge logistical difficulties, namely African exports that used to pass through the Gulf, particularly gold, which was helping quite a few African countries and is normally transported by air. So there is a lot of disruption to air traffic. There are also a number of minerals that were being sent for refining in the Gulf countries. So we will have cash flow problems in these countries. And then there are fertilisers: a number of fertilisers used in Africa come from the Gulf. And now that the Strait of Hormuz is practically closed, we will also have disruptions in agricultural campaigns.
All of this will increase inflation, cause the value of African currencies to plummet, and lead us to a situation that, in my opinion, will be much more difficult than the one we experienced at the beginning of the war in Ukraine. We are in a situation that could be very costly for Africa, because in the last five years, most of the major investments have come from the Gulf countries, particularly the United Arab Emirates. And so all of this is going to be extremely disruptive.
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But for countries with significant reserves, such as Nigeria and Angola, and for oil-producing countries, could the situation be seen as an opportunity?
Of course, rising oil prices will help a number of oil-producing countries. But in my opinion, these countries will suffer much more from imported inflation and other difficulties, particularly logistical ones, and so any gains will not be enough to offset the losses.
On the subject of logistics, the reorganisation of maritime traffic involves, in particular, rounding Africa via the Cape of Good Hope in South Africa. Do you think this could be beneficial for African ports?
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Theoretically, yes, but let’s say that the big advantage is that they can resupply themselves, particularly with fuel. Of course, there will be an increase in demand, but this demand will still be largely dependent on logistical factors that are not entirely controlled by African ports.
For example, in South Africa, we already had fuel supply problems with the traffic as it was. There are countries such as Namibia that are, let’s say, better organised to benefit, for example, from the Cape of Good Hope bypass. We have countries like Kenya that may also benefit, with the port of Mombasa. Djibouti is certainly well prepared to absorb some of the traffic. But there are many countries that do not have, let’s say, the logistical flexibility to take advantage of these supplies.
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In the longer term, could this crisis be a signal for certain countries to speed up decisions and investments in order to better cope with global energy shocks?
Absolutely. And politically, there is already a desire to change things a little. So now we need to speed things up because, with everything that is happening in the world of development aid, there is a realisation that Africa needs to take care of its own problems, rather than relying on others who have priorities that are becoming increasingly complex given the state of the world.
This article was adapted from the original version in French by Charlotte Idrac.
