Saturday, July 12, 2008

Africa Faces Another Rising Expense: Fuel

July 12, 2008
DAKAR, Senegal — In the United States, where the median household income is about $48,000, $4-a-gallon gas is painful.
In Nigeria, most of whose 140 million citizens live on less than $2 a day despite their country’s status as the world’s eighth largest oil exporter, $5.50-a-gallon diesel is excruciating.

Daniel Idoko runs a small business center in Abuja, Nigeria’s capital, and because the country’s electricity supply is so balky, he relies on a diesel generator to run his computers, fax machines and copiers. The price of diesel has increased by 110 percent in the past few months, transforming his once prosperous small business from an asset to a liability.

“I employ six people and pay rent for this shop, salaries, and I maintain equipment,” Mr. Idoko said Friday, with a mix of frustration and resignation. “How much do I have to make to break even?”

Rising global food prices have sent discontent rippling across Africa in recent months, prompting riots and demonstrations from Zambia to Senegal, Tanzania to Niger. Now fuel prices are causing rumblings as well. On Friday, fuel tanker drivers in Nigeria, Africa’s most populous nation, went on strike over rising prices of diesel fuel and poor road conditions, a move that could cripple the economy.

In Africa, fuel prices are a much less emotional issue than food prices. Food takes up 50 percent or more of a household’s budget, but since most people do not have cars, the price of gas is meaningful only as it relates to bus and taxi fares.

But now those are rising rapidly, too. In Namibia this week, bus and taxi drivers increased fares by 10 percent after the country’s sixth fuel price increase this year. In Senegal, a ride in a private minibus that once cost 50 cents can now cost double that.

Fuel prices are also eroding the profits of businesses across Africa — where a single breadwinner sometimes supports a dozen people or more — hurting some of the neediest people in the world. Prices have risen so fast that they threaten to undermine the continent’s nascent economic boom, which has been driven in large part by high prices for the natural resources that many countries export.

Benedicte Christensen, acting director of the International Monetary Fund’s Africa department, told reporters earlier this month that price shocks had raised import costs across Africa, undermining growth.

In Senegal, where power generation is largely dependent on diesel, the state-run electrical company has struggled to provide continuous power to large swaths of the country. Oumar Ba, a tailor who shares a large workshop with dozens of others here in Dakar, said the electricity was usually off half the day, cutting deeply into his income.

“It is very hard to work like this,” Mr. Ba said. “But I have people in the village depending on me, so I try to keep going.”

Countries that set national fuel prices, facing huge import expenses, have had to raise prices. Burundi, a tiny, impoverished nation that has suffered through civil war and mass killings, just raised its prices by 8 percent. Ivory Coast, a onetime regional economic powerhouse also struggling to recover from civil war, raised its fuel prices this week to more than $7 a gallon.

In Nigeria, where corruption and misrule have squandered, by some estimates, as much as $400 billion in oil profits over the past 40 years, cheap gas is nothing less than a birthright. But Nigeria’s dilapidated refineries cannot produce enough gasoline to supply the country. The government imports about $4 billion a year of petroleum products. Government subsidies have kept regular gasoline selling for about $2 a gallon, but the price of diesel, crucial for businesses and heavy transport, has rapidly risen.

“The cost of diesel is too much so we can’t even use the generators any more,” said Dennis Mbang, 35, a pharmacist in a military hospital in Lagos. “The common man doesn’t feel fine. The wealth is here, oil is here, but the masses are suffering.”

High fuel costs are a particularly bitter pill for Nigeria because its own troubles have helped raise prices. Attacks on oil installations by militants in the oil-rich Niger Delta region have helped briefly to knock Nigeria out of its spot as Africa’s top oil producer, in favor of Angola.

The International Monetary Fund’s recent analysis of the effects of rising oil and food prices warned that at least 18 countries in Africa would be pushed to the tipping point by high fuel prices.

“It is a potential source of instability, particularly when you combine the galloping price of petrol with food prices,” said Philippe de Pontet, an analyst with the Eurasia Group, a political risk analysis consulting firm.

In Liberia, one of the world’s poorest countries after 14 years of civil war, price increases for oil and food would consume almost all of the country’s foreign reserves. Higher oil prices will cost Ghana, which has one of West Africa’s most promising economies, 8.1 percent of its gross domestic product, according to the monetary fund.

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amma said...

Its amazing when you live in the midst of plenty, yet you are starving. That presently describes the Nigerian situation, and unfortunately our leaders are either clueless or insensitive to the plight of the masses.
To add to the anguish of the masses , daily the papers chronicle the probes of millions and milions of dollars stolen by our" elected leaders".Money meant for infrastructural development which if done would ease the lives of the entire populace.
Our LEADERS DONT see the stupidity in running generators instead of making the electrical companies work, after all their diesel is paid for by the taxpayers.
However the forget that they wont always be in power, or that a man's best legacy is in his good name. When the bible talks of people suffering when the wicked are in authority, this is it. Until majority of our leaders are God fearing persons , who know they have been placed there by God for the good of the people, and also that ill gotten wealth will flit away like dust in the wind, poverty will continue to prevail.
However, we as His children should take hope in this, that in the midst of all this , He will provide for us, as He did for Isreal during the worldwide famine, also as in Phil 4v19, He will provide all our needs according to HIS RIHES IN CHRIST JESUS, not according to the world riches index.

john said...

The woes of the black man.

XtianDoctrine said...

The blame is not simply that of the leaders alone, the Nigerian people are equally responsible for their woes. The people deserve the kind of leaders they get. In fact these men and women are by products of a culture that breeds and perpetuates corruption.

The average man on the street is engaged in all kinds of corrupt practices - the gari seller who uses uneven measures, the civil servant who goes about his own personal duties during working hours, the doctor who refers patients to his own private clinics, the policeman who demands bribes at checkpoints - they all are as guilty as well.

amma said...

I dont totally agree with Xtiandoctrine. The people deserve the kind of leaders we have because we are by products of a corrupt generation? Have you thought about it that the woman cheating with her garri measures sees it as the only to make ends meet, because if she is to sell at her cost price plus elevated transport fare no one will buy? Am not supporting sin but this is the fact of how to survive to her.
All Nigerians are not involved in corrupt practices as CNN and BBC make it seem. Am a doctor who practices under some unbearable conditions ,yet i dont divert patints. I also know persons who are not Christians, living in most difficilt situtions and yet are not corrupt.

If you say God has allowed us to have such leaders to make us turn and depend on Him, that is more palatable than saying we deserve this leaders cos we are all corrupt. That is more Oprah Winfrey like.

XtianDoctrine said...

Amma, truth is never palatable. Fruits do not fall far from the tree. The leadership of any nation is anchored and deeply rooted among in soil of the people it leads. The Nigerian society and....I say it again....culture permits and fosters corruption.

Now are all Nigerians corrupt? Definitely know! But there are enough corrupt Nigerians out there to earn the nation the dubious reputation of a corrupt nation. You definitely are a honest doctor, but I know of doctors....and I'm sure you do too... who ask for bribe before they can perform surgery...

The men and women who assume positions of leadership are not UFOs from a different planet. They were reared in the crucible of the nation.

They go up there, amass stupendous amount of wealth....overnight at that.....come back home, and nobody asks how they got so suddenly wealthy. They are greeted as "responsible children", hailed and revered as examples of an accomplished sons, and they are crowned as Chief this, chief that.

For corruption to wiped out in Nigeria, it has to start from its root cause.....and it cannot and should not be tolerated at any woman, doctor, or policeman