Africa Confronts Falling Oil Prices Amid Coronavirus

The new coronavirus has led to a slowdown in economic activity in China and East Asia more broadly. The global price of oil has now fallen to $53 a barrel. This is beginning to affect the oil-exporting countries of Africa. According to Africa Confidential, three-quarters of Nigeria’s and Angola’s oil production ear-marked for export in April is unsold. Similar deficits are reported from Chad, Republic of Congo, and Gabon.

Though oil is a declining percentage of African economic activity, many governments remain overly dependent on it for their revenue. In Nigeria, oil accounts for as much as 70 percent of total government revenue (federal, state, and local) and 90 percent of export earnings; in Angola, oil accounts for around 75 percent of total government revenue and 90 percent of export earnings. The budget of the Federal Republic of Nigeria, however, is based on an oil price of $57 per barrel. The Nigerian finance minister, Zainab Ahmed, is accordingly conducting a review of the national budget. 

Thus far, Africa appears to be less directly affected by the coronavirus than other parts of the world. Sub-Saharan Africa has only eight reported cases as of March 5. (Including North Africa brings the total to forty-three.) But it is not clear whether the weakness of public health systems means that the disease is present to a greater extent than statistics would indicate. Still, the experience of West Africa and Democratic Republic of Congo with Ebola may have left those health systems more prepared to prevent coronavirus from spreading. 

Governments in Africa overall remain weaker and less developed than in other parts of the world. Countries there, particularly where governments are heavily reliant on commodities for revenue, are likely to suffer more from the general global economic slowdown, even if they avoid a major local coronavirus outbreak.