Oil Price Rise Squeezes Africa
AFRICA will be hurt at first by the blockade of Iraqi and Kuwaiti oil exports. But in the long run, African economies may benefit from energy-saving conservation measures, analysts say.
With oil prices already up, and likely to stay high, Africans will soon see prices of almost everything they buy going up, including food, transportation, and fertilizers for agriculture.
African oil-producing nations, including Nigeria, Egypt, Libya, Algeria, Cameroon, Gabon, and even Benin, will have a ``boom'' from higher oil revenues, says Isamail Serageldin, a senior official at the World Bank. Nigeria, sub-Saharan Africa's largest oil producer, has indicated willingness to increase output.
``Importers will definitely loose; it will be an oil shock,'' Mr. Serageldin says. Even after the confrontation with Iraq ends, he says, prices are likely to be higher than before.
``High, medium, and low income'' people will be hit, says a Kenyan economist. Television sets, imported on oil-fueled ships, will cost more, as will plastic jugs used by millions to haul water.
``Everybody's already complaining of how prices have gone up,'' says a shopkeeper here, who sells both locally-made and imported goods. Some merchants are likely to take advantage of the oil price increases to hike prices on whatever they sell, he adds. The effect is felt as Kenya, like many African governments under pressure from World Bank and International Monetary Fund restructuring programs, has withdrawn subsidies from many food items.
But over time, the current crisis could force governments and individuals to pay more attention to ways to cut oil imports, economists and conservationists say.
Food and transportation
In Africa and other parts of the developing world, farming productivity increases have become steadily more dependent on oil-based fertilizers.
Lester Brown of the Worldwatch Institute noted in a report two year's ago that many nations such as Nigeria were subsidizing fertilizer costs, thus encouraging farmers to use more.
Peter Veit, an ecologist with the World Resources Institute, says that improved soil and water conservation techniques are needed, not more fertilizer. He suggests planting farmland partly with trees to make the land more productive without depending on oil. Important strides have been made here in Kenya and elsewhere in slowing soil erosion through use of terracing on thousands of small farms, experts say.
``Higher oil prices mean higher transportation costs. Africans will probably travel less [or] use more public transportation'' as gasoline prices go up, says a World Bank economist.
Gas prices in Kenya have not changed, due to government subsidies, also common in other African nations.
But car owners may continue driving despite higher prices at the pumps, says Calestous Juma, executive director of the African Center for Technological Studies, in Nairobi. ``Its a social problem,'' he says. ``Those who drive cars see themselves belonging to another group of people.''
Higher oil prices may give a long-term boost to tree planting. When oil prices go up, so do prices for wood, often used in the form of charcoal. That could spur a short-term burst in the rate of tree destruction. But it may well encourage farmers and communities to to grow more trees on their land for sale as fuel, says Robert Winterbottom, forester at the World Resources Institute.