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Oil price double-edged sword for Africa

While the surge in world oil prices has been a godsend for African exporters, it has placed an extra burden on other economies on the world's poorest continent, whose governments have passed on the cost increase to the petrol pumps.

Exporters such as Gabon, Algeria and Nigeria, which produces the bulk of Africa's crude, have seen profits soar.

But the surge in crude oil prices has brought an even greater increase in refined petroleum products, which largely leaves Africa on the back foot as it depends almost entirely on imports.

According to the head of Algeria's agency for external commerce Mohamed Bennini, it is a "double-edged sword" for Africa, as industrialised nations are more likely to recoup their costs.

Nowhere is the dichotomy more apparent than in Nigeria, which has enjoyed a $2.5 billion (R16.85 billion) boost in profits from crude but is likely to pour the bulk of it into its imports of refined oil.

President Olusegun Obasanjo, mindful of mounting costs, has moved to deregulate the oil market - a decision that has inflamed the population and sparked 14 months of riots and nationwide strikes among citizens vehemently opposed to any change in the fixed prices set by the government.

Gabon had enjoyed an increase in oil revenues but would not release its figures until the end of the year, a finance ministry official said from Libreville, so as to amortise the increase into its budget.

That decision has helped Gabon, like its neighbour Cameroon and the Central African Republic, to keep pump prices relatively stable.

There has been little movement at the pumps in Burkina Faso, Togo or Ivory Coast - which continues to pump offshore oil despite 23 months of crisis crippling the rest of its agriculture-based economy.

Most other African countries, however, have no choice but to burden their already struggling populations with higher pump prices, which in turn increase costs across the board.

In war-torn Sierra Leone, which ranks last on the UN's human development index, mounting costs for crude have added about 50 percent to the price of a ride in a shared taxi, which is the preferred method of transport around the tiny state.

And while prices for petrol in neighbouring Liberia are nowhere near the levels they reached during its 14 years of war, any increase in the cost of staple goods is felt by the population, 80 percent of whom are unemployed.

Commerce minister Samuel Wlue said recently. "We are trying very hard not to increase the burden on the people, but we have no choice."

Guinea announced a 66 percent hike on prices at the pump on August 13. Mauritania, in the throes of its worst locust invasion in more than a decade that could lead to food shortages in coming months, last week raised diesel and petrol prices by 30 percent and 41 percent respectively for its 2.7 million people.

Madagascar has seen prices on petroleum products climb by 41 percent since January, while in Ethiopia and restive Burundi, residents are also paying more at the pump.

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