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Market Brief - Africa Economic Financial Brief 02-06 September 2013


From 2011 to date, many African countries took steps to drawdown on unsustainable fuel energy programs. The case for energy subsidy reforms was based on the fundamental argument that poorly targeted energy consumption subsidies deprive countries of scare resources critical to other priority sectors. In Africa it is estimated that the top quintile of the income distribution captures about 45 percent of energy subsidy; the bottom quintile only receives 8 percent. In 2011 alone, fuel consumption subsidies in Nigeria, Cameroon and Ghana cost USD 7.5 billion, USD 600 million and USD 276 million, respectively. These spending accounted for 30%, 12% and 3% of federal government spending in those countries. These shares sharply contrasted the proportion of public spending on health in these countries which stood at 7.5%, 8% and 4% of total federal government spending, respectively.

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