Weaker currency eroding benefit of lower product price in sub-Saharan Africa

Weaker currency eroding benefit of lower product price in sub-Saharan Africa

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THE prolonged low price of crude oil and refined product is not reflecting in the pump price of most sub-Saharan African countries. Most countries have either maintained the status quo or lowered pump price by a disproportional margin.
Despite the decline in the international price or refined product by more than 50 percent, prices have only dropped by a disproportionate 5.7 percent, 5 percent, 4.3 percent, and 2.3 percent year-on-year (YoY) in Tanzania, Senegal, Kenya and Rwanda respectively, while an improved decline of 17.2 percent, 16.6 percent and 15 percent YoY was recorded in Ethiopia, Cote d’Ivoire and DRC accordingly.
The lack of correlation in decline between local and international prices is largely due to the weakening of the local currencies against $, which has resulted in lower decline in price in local currency and increase in cost of logistics to local importers. After shelving government subsidy, price of PMS have increased by 77 percent and 11 percent YoY in Angola and Ghana. The inability of African countries to harness the benefit of lower international prices is evidence of the low refining capacity and dependency of African countries on commodities.

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