Plunging prices deal blow to Africa crude explorers

Plunging prices deal blow to Africa crude explorers

Plunging world oil prices have dealt a blow to Africa far greater — in purely economic terms — than Ebola, setting back investment in exploration and plans to industrialize.
The highest profile victim so far has been Africa’s top producer, Nigeria, which was forced to devalue its naira currency by 8 percent this week after the central bank admitted dwindling reserves were making it hard to defend it.
In dollar terms, the devaluation knocked $40 billion off the value of Nigeria’s economy — considerably more than the $32 billion worst-case scenario the World Bank projected in October for Ebola’s economic impact on the entire sub-Saharan region.
Last week, the bank’s chief Africa economist said the latest assessments of the epidemic suggested the economic fallout might not be as bad as feared, and was likely to be closer to the $3-4 billion end of its projected range.
The same cannot be said for crude-backed African currencies.
Even after the Nigerian devaluation and a 100 basis point hike in interest rates, the naira came under more pressure, trading at a record low of 178.85 to the dollar.
It opened flat […]

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