The spurt in oil prices has hurt the global economies, with its epicenter in some African countries. Here, we are here not talking about oil-rich nations like Nigeria, but of the 13 non-oil-producing African countries, including South Africa, Ghana, Tanzania, Ethiopia and Senegal.
With the oil prices threatening to cross the $100 mark, these countries have found that the increased fuel costs have shaved off 3 percent of their GDP. More importantly, they are also nullifying the amounts these countries have received as foreign aid. In a nut-shell, it is back to square one for them. They do not have funds for development purposes. As a result the poor are finding no relief and unrest is breeding fast.
These countries are facing a double whammy of troubles. Rising costs of food has exacerbated the crisis created by rising oil prices. The countries are finding it difficult to arrange money for health, education and poverty reduction programs. But, there are some mercies too –
1- The weakening dollar has meant a stronger local currency. If the oil prices have trebled since 2002, their currencies have doubled in strength against the dollar, thus, thwarting some of the shock of the oil price hikes.
2-The prices of the commodities these countries export have risen, earning them more money on their own.
3-The strong growth in the global economy has pushed these countries’ own growth rates. Thus it reduces bad effects from rising oil prices.
But, the future remains unsure. If global growth rates taper off and if the prices of goods exported by these countries fall, the oil price rises will really start hurting them. They will perhaps have to take measures like forming collectively their own multinational energy corporation to protect themselves.
