Despite Oil and Gas Reserves, Africa Feels Pressure of Rising Energy Costs

Africans are feeling the pinch caused by soaring global energy prices, say analysts, even in countries like Nigeria and Angola that are major exporters of crude oil.While that handful of oil producers is seeing an increase in revenue – especially since…

Africans are feeling the pinch caused by soaring global energy prices, say analysts, even in countries like Nigeria and Angola that are major exporters of crude oil.

While that handful of oil producers is seeing an increase in revenue – especially since the Russian invasion of Ukraine on February 24 – much of the continent lacks refining capability, forcing countries to pay high prices to import gasoline and other petroleum products from Asia and Europe.

The continent is further affected by increasing costs for natural gas, a key component of nitrogen-based fertilizers used in food production.

With salaries largely stagnant, more than two-thirds of Africans feel pressured by the rising prices, said Franklin Cudjoe, founding president of the Ghana-based Imani Center for Policy and Education.

“The continent is affected simply because we depend largely on global oil suppliers, since not many African countries have [their own] oil products,” Cudjoe told VOA.

Prices spiked on the global oil market after the invasion of Ukraine triggered a wave of international sanctions against Russia, one of the world’s leading exporters of crude. The price briefly climbed to over $120 per barrel this month before settling down to $103 per barrel on Friday.

The surge in energy prices is helping to fuel inflation across Africa. In Ghana, for example, overall consumer price inflation was pegged at 15.7% year-on-year in February compared with 13.9% in January, the country’s Statistical Service said last week.

In Zimbabwe, prices are climbing sharply – even overnight. At a TM supermarket in the capital of Harare, a crate of 30 eggs cost the $6.70 on Tuesday and about $7.81 on Wednesday. The price of a loaf of bread went from $1.49 to $1.84; for a kilo of beef, the price jumped from $3.35 to $5.22.

Gasoline costs climbed, too. In Harare, the per-liter price climbed from $1.41 to $1.69 from Tuesday to Wednesday.

The surge in food prices was the biggest driver behind consumer inflation in Egypt, it rose by 8.8% in February – the sharpest increase in nearly three years, according to the state statistics agency, CAPMAS.

Cudjoe said it was crucial for governments and regional bodies such as the African Union to build defenses to cushion consumers in times of economic uncertainty.

“Even if it means building defenses in terms of the provision of food,” said Cudjoe, adding, “I could imagine Nigeria, if it had had its way, it could be selling foodstuff to most countries at reduced rates by now.”

“There must be that urgency of building for themselves defenses, funds that would make us sustain ourselves — at least to prevent us from being completely annihilated by these uncertainties in the world.”

Chibamba Kanyama, an economist in the Zambian capital of Lusaka, said suspending fuel taxes would be “the most ideal thing to do now under the circumstances” to cushion consumers and industries.

“African governments must find a way of responding,” he said. ‘It is a choice of whether to reduce taxes to lower the prices or to maintain the price levels and use the revenues to subsidize the most vulnerable in society.”

But Kanyama also suggested that the geopolitical crisis involving Russia and Ukraine – both big grain exporters to Africa – may create opportunities for African producers.

“Supply countries like South Africa, with robust and highly mechanized systems, may find a window of exporting [commodities] like wheat and other products to fill the gaps left by Russia and Ukraine,” Kanyama said.

Kanyama also said support by the international community – for instance, in the form of debt relief for some African nations – is welcome.

He noted that the Group of 20 – which encompasses seven industrialized nations, some countries with strong or fast-growing economies, and the European Union – “is trying to offer some debt relief.”

“Some other countries, such as Zambia, [are] undergoing debt restructuring processes and an IMF program, and to me, this is the only way out of the crisis,” Kanyama added.

This story originated in VOA’s English-to-Africa service, with contributions from the Zimbabwe service.

Source: Voice of America

Pan African Forum advocates for removal of sanctions on Zimbabwe

HARARE, The Chairman of Pan African Forum Dr David Matsanga has called on the international community to lift sanctions against Zimbabwe stating the restrictions are hurting the southern African Nation.Matsanga termed the sanctions as illegal and assur…

HARARE, The Chairman of Pan African Forum Dr David Matsanga has called on the international community to lift sanctions against Zimbabwe stating the restrictions are hurting the southern African Nation.

Matsanga termed the sanctions as illegal and assured Zimbabwe of his continued advocacy to ensure that the restrictions are lifted.

“The illicit perpetual sanctions against Zimbabwe has become hallmark of the West’s injudicious mobocracy and sanctimony that has excruciatingly pummeled the lives of Zimbabweans from flesh to bone.

“These senseless sanctions have caused anguish, abject poverty, despair and an economic meltdown that can only border crimes against humanity. Africa should not leave Zimbabwe in the lurch, we must call for the removal of these sanctions” he said.

The international conflict resolution expert said the sanctions are exacerbating corruption in Zimbabwe as banks, companies and individuals banned from trading abroad simply bribe others to conduct their business for them.

“I call on all countries which imposed sanctions as well as banks and companies of third states as well as countries where these banks are registered, to behave in accordance with the rule of law, due diligence, principal, lift sanctions, make legislation which corresponds with international law and principals of human rights protection. And the last point is that all the discrepancies which exist between all parties, between states, between the government and some sort of opposition leaders and any other institutions shall be settled on the basis of structural dialogue,” Matsanga added.

Zimbabwe’s former President Robert Mugabe passed away more than two years ago. The new government thinks it’s high time the human rights sanctions imposed decades ago, during his regime, are removed.

In September 2019, the ministry of foreign affairs and international trade hired the London-based subsidiary of US lobbying firm Mercury Public Affairs to lobby for a fresh start under President Emmerson Mnangagwa.

The European Union imposed travel and financial sanction on allies of then-Zimbabwean president Robert Mugabe in 2002, in response to alleged election rigging and human rights abuses by his party and government. The U.S. followed suit with sanctions in 2003.

President Mnangagwa’s government says the sanctions must be lifted, arguing they are derailing the country’s efforts to climb out of a long economic slump.

In October last year in separate statements, the United States, Britain, and the European Union said Zimbabwe’s economy was suffering not because of sanctions, but because of corruption and government mismanagement of the country’s resources.

Source: NAM NEWS NETWORK

Chinese Imports Edging Out Kenya’s Local Products

Kenyan artisans say they are losing the market for their products to Chinese imports. According to the crafts persons, the high quality and lower prices of Chinese-made goods put them at a disadvantage.Jua kali, popularly known in Kenya as artisanal wo…

Kenyan artisans say they are losing the market for their products to Chinese imports. According to the crafts persons, the high quality and lower prices of Chinese-made goods put them at a disadvantage.

Jua kali, popularly known in Kenya as artisanal work such as toolmaking or textiles, has been a livelihood for more than 7,000 crafts persons at an open market in Kenya’s capital for decades.

Njoroge Macharia has been making charcoal stoves, commonly known as jikos in Swahili, for four decades. He says imports from China have edged out his business. Jikos from China are affecting us, he says, because we used to sell a lot before they started bringing them here. He said, “Now we don’t sell as many as we used to. They are cheaper than ours, but those from China are not better than ours. Ours are really good.”

National data show that Kenya spent nearly $4 billion on imports from China in 2021. Kenya sources a vast array of consumer and capital products from China, while exporting $1.5 billion worth of goods to the Asian market. Traders like Magdalen Vivi, who sells imported kitchenware, say customers demand modernized products like nonstick cooking pots, commonly known as sufuria in Swahili.

“If you suggest the aluminum or the stainless steel, they keep on asking for the nonstick.” Vivi said “(I don’t understand why) they prefer to have the nonstick over the ones that are locally produced in Kenya, because for me, I have not seen any nonstick sufurias made in Kenya.”

An African Union study on international trade finds that the African continent is the largest market for Chinese goods. Some Kenyan consumers prefer the wide variety of the cheap products. Mary Wambui is one such buyer.

“There is always variety,” Wambui said. “All the time, you get new products, and they have different types. You don’t get the same ones all the time. Every time you come, there is something new that has come up.”

Wohoro Ndhoho, an economist in Kenya, says a lack of strong automation and technology in Kenyan manufacturing means most products made locally are by crafts people, not machines.

”The jua kali sector in Kenya has very much been human-power-driven rather than machine-driven,” Ndhoho said. “So, you find that inevitably means that when things are made in China, they can be made in bulk. Which, if today you go to Gikomba, they still beat those karais, for making mandazi (fried bread) with (their) hands. So, for every one hour they make one, a machine can make 1,000.”

The Kenya National Federation of Jua Kali Associations told VOA that imports from China have cost them the regional market. Engineer Charles Kalomba is the secretary-general of the artisans federation.

“The energy-saving jikos, which have got liners, clay liners, and they are just fabricated metal and clay liners.,” Kalomba said. “And we used to produce a lot of them for the East African market. Today, there is a lot of influx of the same into the market.”

Data from the Kenya Export Promotion and Branding Agency show that South Africa is the only African country among the top 25 nations exporting to China. Kenyan authorities are banking on trade agreements to sell more to China. The agency’s chief executive officer, Wilfred Marube, explains.

“There was a bilateral agreement in January where some of the areas were agreed upon,” Marube said “And also, a joint committee established was to basically ask the question, ‘How does the Chinese government work together to increase market access for Kenyan products, especially agricultural products?’”

Tiku Shah is profiting from China’s massive market. Shah exports up to 100 containers of frozen avocados annually to more than 1.4 billion people.

“Now, we have avocados, but it’s got to be very high quality, very big volumes,” Shah said. “And a lot of us are not ready for that scale of business. It’s a big business on a big scale. It requires a lot of investment, and it requires a very dedicated market focus.”

China ranked 11th among Kenya’s top export destinations and accounted for 2.3% of the total exports in 2020, according to national data.

Source: Voice of America

DR Congo and Israeli tycoon reach $2bn settlement over oil and mining assets

KINSHASA— Lucrative oil and mining permits are to be put up for sale in the Democratic Republic of Congo, after the government reached a deal with the controversial Israeli businessman who owned them.Dan Gertler was first sanctioned by the US in 2017 o…

KINSHASA— Lucrative oil and mining permits are to be put up for sale in the Democratic Republic of Congo, after the government reached a deal with the controversial Israeli businessman who owned them.

Dan Gertler was first sanctioned by the US in 2017 over alleged massive corruption in the central African nation – allegations he has always denied.

He and DR Congo’s government reached a $2bn settlement that was signed on Thursday, in which he agreed to relinquish control of the assets but will continue to receive royalties from some.

“This deal can in no way shield Dan Gertler from the accusations weighing him down,” said anti-corruption group Congo is Not for Sale, who demanded that more details of the agreement be released.

Source: NAM NEWS NETWORK

Exclusive-Algeria to allow French wheat imports due to Ukraine conflict -traders

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HAMBURG/PARIS (Reuters) – Algeria will allow French wheat imports in March because of disruption to Black Sea shipments, traders said on Thursday, overturning a recent exclusion that had hit the EU’s biggest wheat exporter. Relations between France and its former colony were damaged in October when President Emmanuel Macron questioned whether there had been an Algerian nation before French colonial rule, accusing it also of rewriting the history of its colonisation. Algerian state grain agency OAIC purchased around 600,000 tonnes of milling wheat in mid-January but according to traders had bar… Continue reading “Exclusive-Algeria to allow French wheat imports due to Ukraine conflict -traders”

Can African Oil Producers Take Advantage of Increasing Oil Prices?

Russia’s invasion of Ukraine, and the sanctions that followed, has pushed the price of oil to over $100 per barrel, the highest level in eight years. But, it’s also opened an opportunity for African oil producers like Nigeria, Angola, Libya, and Algeri…

Russia’s invasion of Ukraine, and the sanctions that followed, has pushed the price of oil to over $100 per barrel, the highest level in eight years. But, it’s also opened an opportunity for African oil producers like Nigeria, Angola, Libya, and Algeria to cash in with more crude oil exports.

Crude oil prices hit $105 per barrel last week, their highest mark since 2014, and up by 47% since December, amid fears that supplies from Russia may be impacted by its war with Ukraine.

Russia accounts for about 10 percent of the world’s crude oil output, making it the third-biggest producer globally, behind the United States and Saudi Arabia.

But experts say the Ukraine invasion and the sanctions slapped on Russia by Europe and the United States could significantly reduce demand for Russian products and increase the demand for Africa’s.

Isaac Botti is a public finance expert in Abuja.

“For Africa it’s a gain, it’s an opportunity,” Botti said. “It presents that window of opportunity for African countries to see how they can increase their production capacity and meet the need of global demands of crude oil.”

Nigeria is Africa’s largest producer of oil at about 1.9 million barrels per day, followed by Libya, Angola and Algeria.

That positions those countries to reap windfall profits from rising oil prices. But economic analyst Paul Enyim notes that Nigeria will have to pay on the other end for finished products like gasoline.

“At the end of the day, it’s going to hit on our economy,” Enyim said. “We may think that we’ll gain but remember we don’t refine our crude oil.”

All of Nigeria’s refineries were shut down in 2020 because of money and maintenance issues and have yet to reopen. The country now depends entirely on imports to meet its fuel needs.

For weeks, Nigeria has been battling to increase its national fuel supply after authorities recalled millions of liters of tainted imported petrol from circulation, causing a major shortage in West Africa’s most populous nation.

In contrast, Algeria, which does have refineries, said this week that it would supply Europe with petroleum products if necessary.

Botti said it’s a good example for other African nations.

“We need to develop our capacity to produce locally, we need to look at various trade agreements that are existing,” Botti said.

As Russia’s war on Ukraine persists, experts say the shifting focus on Africa could be both a blessing and a burden.

Source: Voice of America