Yet another reason why renewable energy is important in rich and poor countries alike.
From the Financial Times:
The rising cost of oil has wiped out the benefits many African countries were expecting from western aid and debt relief over the past three years, new research from the International Energy Agency has shown.
The situation is raising fears that, in spite of the strong growth many African countries have seen in recent years, there could be a repeat of the 1980sâ€™ debt crisis in the developing world that was caused in part by the oil shocks of the 1970s.
Surveying 13 non-oil-producing African countries, including South Africa, Ghana, Tanzania, Ethiopia and Senegal, the IEA found that the increase in the cost of oil bought by the countries since 2004 was equivalent to 3 per cent of combined GDP [or $10.6bn].
This was more than the sum of debt relief and aid received over the past three years by the countries, which have a combined population of 270m, of whom 104m live on less than $1 a day.
A second article from the FT explains factors that are mitigating the negative effect of high oil prices on African economies.
Yet while $90 oil is causing hardship for some in Africa, its economic effects have so far been relatively muted, for three reasons.
First, the rise in the dollar price of oil has been offset for many countries, such as the euro-linked economies of western and central Africa, by an appreciation of their currencies against the dollar. The World Bank has calculated that while the price of oil has more than tripled in dollar terms since 2002, in trade-weighted local currency terms it has doubled.
Second, as oil has risen, so have the prices of other commodities that are important exports for some African countries without oil, including crops such as cocoa and metals such as gold. So although some oil-poor countries have suffered deteriorating trade balances, others have not.
Third, growth in Africa has been sustained by a strong world economy. This year is the fourth in succession in which the economies of sub-Saharan Africa have grown by close to 6 per cent, according to the International Monetary Fund.
via PSD Blog