Oil price rise adds 2.6 pct to African countries’ inflation

22 May 2006

Ouagadougou, Burkina Faso, 22 May – Oil price rises on the international market will lead to an average increase of 2.6 percent to inflation in African countries, the African Development Bank (ADB) said.

The BDA’s most recent report showed that in 2005 Africa’s oil importing countries were subjected to an average inflation increase of 1.3 percent, due to crude oil price hikes.

“While the high price of oil is a unique opportunity for exporting countries, it is also a serious challenge for importers, and may lead to a deceleration of recent economic advances and greater financial constraints,” said the BDA report.

Last week, Mozambique asked the International Monetary Fund (FMI) and the World Bank for supplementary funding of US$50 million to boost its currency reserves and ensure its capacity to import fuel, saying that oil price rises could affect the economic growth expected for this year.

According to the BDA, oil currently represents around 10 to 15 percent of all imports to African countries.

In Africa, 39 countries are importers – amongst these Angola, Mozambique and Sao Tome – and 13 are exporters, with Angola as one of those to have benefited most from oil price rises, as it is the second-largest oil producer in sub-Saharan Africa, after Nigeria.

According to the BDA, an increase of US$10 on the price of oil is the equivalent of a 30 percent increase of Angola’s gross domestic product (GDP).

Last year, average inflation in Africa stood at 8.2 percent, 0.4 percentage points greater than in the previous year, according to a report from the United Nations Commission on Africa, published this week.

The Organization for Economic Cooperation and Development (OECD) expects average inflation in Africa to slow to 7.3 percent this year. (macauhub)