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.
Find article here: http://www.nytimes.com/2008/07/12/world/africa/12nigeria.html