AfDB: Championing inclusive growth across Africa. A blog by the former Chief Economist and Vice-President
For the past decade, Africa has had strong growth. A new economic momentum has been created. The continent weathered the financial crisis and has bounced back. But headline economic growth is not enough. Deliberate policies to reduce inequalities and promote inclusion are now needed more than ever before. It is time to focus on what people want: decent work, a living wage, access to basic service, more democracy and accountable governments. Africa and its people aim to be a pole of growth in the decades ahead. Read more
Over the course of 2011, some African countries took steps to drawdown on expensive and unsustainable fuel subsidy programs. Recently, Nigeria joined the ranks of Ghana and Guinea by slashing fuel subsidies to align domestic fuel prices with international prices.
The argument for the removal of fuel subsidies is based on the notion that poorly targeted consumption subsidies deprive the country of scarce resources critical to other priority sectors. Globally, fuel subsidies amounted to USD 410 billion in 2010 as energy prices rebounded strongly. In 2011, fuel consumption subsidies in Nigeria, Cameroon and Ghana cost USD 7.5 billion, USD 600 million, and USD 276 million, respectively. The fuel subsidy was the equivalent of 30% of total federal government expenditure in Nigeria, and approximately 12% and 3% of federal government budget in Cameroon and Ghana, respectively. This sharply contrasts with the proportion of public spending on health in those countries.
Since the beginning of 2011, currency depreciation has occurred in South Africa, and the Rand monetary area, comprising Lesotho, Namibia and Swaziland, and also in Botswana (Figure 1). Mozambique is the exception where, in fact, the currency has appreciated by about 20 per cent to date.