Higher oil prices a mixed blessing for Africa

The recent rally in oil prices – Brent crude has climbed to a fresh four-year high of $77pb in recent days – will provide a welcome boost to the region’s major oil exporters, Angola and Nigeria. If oil prices stay at their current levels, Angola’s export revenues will rise by more than 10% of GDP compared with last year, while Nigeria’s exports will increase 3.5% of GDP compared with last year. As it happens, we expect oil prices to give up some of their recent gains but both countries should still receive a windfall this year compared with last. The big currency falls are probably now behind us in both countries and we expect interest rates to be lowered in Nigeria. But while Angola and Nigeria benefit from higher oil prices, the majority of African economies are net oil importers and are facing higher import bills. Those countries with large current account deficits, notably Kenya, are most vulnerable.