Monday, April 4, 2011

FACTBOX-Winners and losers in Africa from commodity cycle.


(Reuters) - Booming commodity prices are seen driving growth in much of Africa this year, and have been a blessing for some countries but a bane for others.

Following are some facts about how the boom is playing out and may impact African countries, economies and peoples.


High oil prices will benefit government revenues in producers such as Nigeria, Angola and Gabon, although the impact on growth is more debatable given the inflated costs of importing refined oil products.

In top African oil producer Nigeria, higher oil prices have spurred spending ahead of elections this month.

Partly as a result, growth is seen at a brisk 7 percent for 2011, according to the latest government projections which were in line with International Monetary Fund (IMF) forecasts.

The economy of Angola, Africa's number two oil producer, is seen growing at a median 7.3 percent this year and 7.1 percent next year due to higher oil prices and investment spending, a Reuters poll showed in February.

But Africa's oil exporters import the refined product and Standard Chartered recently noted that prices at current levels "may even translate into growth headwinds" as a result.

Brent crude is currently $119 LDOc1 a barrel. The latest Reuters poll of analysts forecast Brent averaging $104.57 a barrel this year, up from $92.50 in the February poll. In 2012 prices are forecast at $103.22 and $106.85 for 2013.

Higher oil prices are seen crimping growth in non-oil producing African states, not least because of the inflationary effect which may lag the spot crude price and ripple into 2012.

Even when oil inspires growth it seldom translates into the job creation so badly needed on the world's poorest continent. For example, oil accounts for 90 percent of Angola's export income but employs less than 1 percent of its people.

The dependence of Angola on crude also underscores how oil -- especially when prices are high like they are now -- can hamper development and why it is often seen as a curse.

This is because it is an easy and opaque source of revenue for governing elites, giving those at the top little incentive to pursue policies to diversify the economy.

In countries such as Angola and Equatorial Guinea, critics say petrol dollars have been squandered with little benefit to the impoverished masses and high prices merely strengthen the hands of ruling autocrats.


Record gold prices have already swelled the coffers of frontier market Mali, Africa's third largest gold producer.

Gold prices boosted revenues from mining to its budget to a record 191 billion CFA Franc ($411.6 million) in 2010, compared with 130 billion in 2009.

But the gold price does not rise in isolation and miners say many of the factors lifting its price are also pushing up their costs, a point made at the Reuters Mining and Steel Summit by Gold Fields (GFIJ.J: Quote) chief executive Nick Holland.

Strength in the rand has also eaten into the earnings of gold miners in South Africa, the continent's top producer, as their product is priced in dollars but costs are in rand -- and high commodity prices are one reason for the rand's robustness.

The rand ZAR=D2 has gained close to 30 percent against the dollar since the start of 2009.

In Ghana, Africa's number two producer, strong prices translated into gold mining revenues of $2.6 billion in the first to third quarters of 2010, a 30 percent rise on the previous year.


High grains prices are a double-edged sword for a continent with vast agricultural potential but which struggles to feed itself.

They are seen fuelling inflation in regions such as east Africa, where adverse weather patterns and currency weakness are also combining to push food prices higher.

Food inflation may be contained in Zambia and South Africa thanks to currency strength and good harvests but the central bank in the latter has warned that it remains a concern.

And while the main maize contract MAWc3 in South Africa is up about 20 percent since the start of the year, gains for producers have been capped by strength in the rand.


Conflict over a disputed presidential poll in Ivory Coast, the world's largest cocoa producer, helped push prices for the key chocolate ingredient CCK1 to 34-year peaks last month.

But many farmers and traders there have seen little benefit as cocoa arrivals to Ivory Coast's ports have ground to a virtual halt due to an export ban.

European Union sanctions on cocoa exports from the country remain in force.

These include sanctions from shipments from major exporting port San Pedro, which has been seized by forces loyal to Alassane Ouattara, widely believed to have won last year's presidential election.

If presidential incumbent Laurent Gbagbo falls, cocoa prices are likely to fall to levels seen before the disputed November election. [nLDE7301OA]

(Sources: Reuters, Standard Chartered, World Bank, IMF) (Reporting by Ed Stoddard; editing by James Jukwey)

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