With a growing number of oil-dependent economies in the continent, the crash of oil prices in the midst of cataclysmic Covid-19 has vast repercussions on the development process of Africa. Many of these countries are heavily dependent on oil earnings
for everything including import of food materials, medicines and even
household utensils. One can very well imagine the fallout when the
crude prices, which ruled so high at US$ 114 per barrel in 2014, have
nosedived to below US$25 as of now. Still, the forecast is another
downward spiral, given the low demand pickup since the oil guzzlers
like China and India are in the brink of a recession thanks to the supply
disruptions created by the pandemic.
It is instructive to see how long the oil shock will continue? To
believe that it would be over once the world economy recovers from the
pandemic is a myopic assessment of the situation. Oil prices have
been sliding much before the pandemic gripped the world. Also, no one
is predicting as to when the pandemic will be over as also how much
time it will take in the post-Covid -19 days to get back into the
rail since the damage created by the pandemic might even take years
to get into the normal mode.
These days there are a plethora of forecasts about the post-Covid-19
days. We cannot brush aside all of them as nonsense. There is every possibility that the oil demand to a great extent may get gradually replaced by clean energy from alternative sources. There is a growing public opinion gaining currency that during the pandemic days, life was more conducive without the usual traffic and
the consequent pollution. To believe that it would be the order of the
coming days, it is going a bit too far visualizing things that may not
happen at all. Yet, there is going to be a heavy drop in oil demand
since concepts like work from home or communications through virtual
platforms will be the order of the day cutting across geographies.
That means travel within and internationally will be considerably
curtailed in the coming days.
Those tectonic shifts in oil demand may impact Africa less as compared
to its peers in the Middle East, Russia, Mexico and the US since
fossil oil is a recent phenomenon in the continent. Not long ago,
most of the countries in the region had agrarian societies. Also, oil
and natural gas is not the only mineral that the region can boast of.
Embedded in its soil are gold, diamonds, manganese, dolomite, cobalt
and the list is expanding. The prices for these minerals, used by the
high tech industries across the world are bound to go up. Till date,
the Chinese were the major importers of these goods. The new
geopolitical architecture suggests that many other countries are
eying on these minerals to emerge as tech leaders. Amongst them
include the US, Europe, India, Japan, South Korea and of course China
in the lead place.
Does it mean oil is a sunset industry for Africa? Far from that! Oil
like its texture and composition is slippery and by way of its
intrinsic attribute highly inflammable: in today’s development
discourse highly undependable. It will be advisable for oil rich
countries in the region not to forget their agriculture base and huge
tracts of fertile soil, which can give bountiful dividends. Treat
oil as a supplementary source of revenue; and not the
other way round! It may sound apocalyptical but not bereft of
reality.
