High Fuel Prices Squeeze African Consumers, Strand Truckers and Snarl Flights

While Subsaharan Africa hosts an estimated 125 billion barrels of crude-oil reserves, almost all oil produced there is exported and then imported again as refined fuel at much higher prices. That has made African countries especially vulnerable to the sharp increase in global fuel prices triggered by Russia’s war against Ukraine. They also often find themselves at the back of the line for fuel imports, with refineries giving priority to larger markets in developed countries in times of high demand.

In more developed countries, most consumer goods are produced and sold by large companies that often try to absorb some fluctuations in input costs. But the predominance of small-scale informal traders in many African economies means that fuel-price increases are typically passed on to consumers more quickly, said

Sebastian Spio-Garbrah,

chief analyst at risk consulting firm DaMina Advisors.

“Fuel prices determine the cost of almost everything in Africa, including food,” said Mr. Spio-Garbrah.

That effect is exacerbated by low median incomes and, in some countries, plunging currencies that have left millions struggling to pay for fuel—whose price is determined by the exchange rate with the dollar—or the rising fares charged by shared minibus taxis on which many depend to get to work.

“No one wants to go anywhere anymore unless it’s absolutely necessary,” said

Khetiwe Moyo,

a primary-school teacher in the Zimbabwean capital of Harare.

Several governments, including Kenya, where motorists have endured weeks of long lines at gas stations, have increased subsidies or dropped fuel taxes to lower prices at the pump, further eating into already stretched budgets. Others have banned or violently cracked down on protests against the rising prices.

Countries in Subsaharan Africa depend on imported fuel for more than 90% of their domestic demand, with refineries on the continent producing as little as 400,000 barrels a day, according to data from the U.K.-based energy consulting firm CITAC. Inefficiencies and lack of proper investments in maintenance mean that the existing refineries are operating at less than 30% of their optimum capacity, CITAC says.

Supplies are particularly tight in Nigeria, Subsaharan Africa’s biggest exporter of crude oil and its most populous nation, because none of the country’s four state-owned refineries are operational due to maintenance issues, according to the state oil company, Nigerian National Petroleum Corp. Two small, privately owned refineries meet less than 1% of the country’s energy needs.

Last month, airlines in Nigeria threatened to ground all domestic flights, blaming shortages of jet fuel and prices that have more than tripled to $1.70 a liter since before the war in Ukraine. National Petroleum promised to increase supplies and grant operators licenses to import their own fuel, staving off the grounding of carriers’ fleets. But flight cancellations recently have been widespread, and operators say the rising costs pose an existential threat to the industry.

“No airline in the world can absorb this kind of sudden shock from such an astronomical rise over such a short period,” said

Abdulmunaf Yunusa Sarina,

the president of an association of Nigerian airline operators.

In Cameroon, whose ports are the main entry point for supplies to landlocked neighbors such as the Central African Republic and Chad, hundreds of trucks have been stranded along highways in recent weeks. The backup was triggered when gas stations in the capital Yaoundé and along the main highway ran out of diesel, according to Cameroon’s biggest trucking body, the Professional Transporters Network.

Cameroon’s 42,000-barrel-a-day Sonara refinery has been closed since a fire ripped through the plant in 2019.

Zambia, one of Africa’s top copper and cobalt producers, has struggled to keep its sole 24,000-barrel-a-day Indeni Petroleum refinery open since French oil major

TotalEnergies

sold its stake to the government a decade ago. In April, the Zambian government said it would end fuel refining at the plant at the end of the year due to inefficiencies, in favor of importing fuel.

The refinery supplies the bulk of its fuel products to Zambia’s mines, where mineral production slumped by 5% last year as miners suffered operational disruptions, including erratic fuel supplies, according to the chamber of mines. Finance Minister

Situmbeko Musokotwane

told Parliament last month that fuel prices might prevent the cash-strapped country, which defaulted on its debt in 2020, from meeting growth targets this year.

Last week, police officers in northern Zambia opened fire on a crowd of workers at a coffee farm who were protesting low pay in the wake of rising costs, killing one worker and injuring several others, according to union officials.

A bakers’ association in Kampala, Uganda, said some bakeries in the city have had to scale down operations or even close as the cost of fuel added to pressures from higher prices for wheat flour and vegetable oil.

Ugandan authorities have banned any protests against the rising cost of living and repeatedly arrested opposition leader

Kizza Besigye

and other activists for organizing demonstrations.

—Aaisha Dadi Patel contributed to this article.

Write to Nicholas Bariyo at [email protected]

While Subsaharan Africa hosts an estimated 125 billion barrels of crude-oil reserves, almost all oil produced there is exported and then imported again as refined fuel at much higher prices. That has made African countries especially vulnerable to the sharp increase in global fuel prices triggered by Russia’s war against Ukraine. They also often find themselves at the back of the line for fuel imports, with refineries giving priority to larger markets in developed countries in times of high demand.

In more developed countries, most consumer goods are produced and sold by large companies that often try to absorb some fluctuations in input costs. But the predominance of small-scale informal traders in many African economies means that fuel-price increases are typically passed on to consumers more quickly, said

Sebastian Spio-Garbrah,

chief analyst at risk consulting firm DaMina Advisors.

“Fuel prices determine the cost of almost everything in Africa, including food,” said Mr. Spio-Garbrah.

That effect is exacerbated by low median incomes and, in some countries, plunging currencies that have left millions struggling to pay for fuel—whose price is determined by the exchange rate with the dollar—or the rising fares charged by shared minibus taxis on which many depend to get to work.

“No one wants to go anywhere anymore unless it’s absolutely necessary,” said

Khetiwe Moyo,

a primary-school teacher in the Zimbabwean capital of Harare.

Several governments, including Kenya, where motorists have endured weeks of long lines at gas stations, have increased subsidies or dropped fuel taxes to lower prices at the pump, further eating into already stretched budgets. Others have banned or violently cracked down on protests against the rising prices.

Countries in Subsaharan Africa depend on imported fuel for more than 90% of their domestic demand, with refineries on the continent producing as little as 400,000 barrels a day, according to data from the U.K.-based energy consulting firm CITAC. Inefficiencies and lack of proper investments in maintenance mean that the existing refineries are operating at less than 30% of their optimum capacity, CITAC says.

Supplies are particularly tight in Nigeria, Subsaharan Africa’s biggest exporter of crude oil and its most populous nation, because none of the country’s four state-owned refineries are operational due to maintenance issues, according to the state oil company, Nigerian National Petroleum Corp. Two small, privately owned refineries meet less than 1% of the country’s energy needs.

Last month, airlines in Nigeria threatened to ground all domestic flights, blaming shortages of jet fuel and prices that have more than tripled to $1.70 a liter since before the war in Ukraine. National Petroleum promised to increase supplies and grant operators licenses to import their own fuel, staving off the grounding of carriers’ fleets. But flight cancellations recently have been widespread, and operators say the rising costs pose an existential threat to the industry.

“No airline in the world can absorb this kind of sudden shock from such an astronomical rise over such a short period,” said

Abdulmunaf Yunusa Sarina,

the president of an association of Nigerian airline operators.

In Cameroon, whose ports are the main entry point for supplies to landlocked neighbors such as the Central African Republic and Chad, hundreds of trucks have been stranded along highways in recent weeks. The backup was triggered when gas stations in the capital Yaoundé and along the main highway ran out of diesel, according to Cameroon’s biggest trucking body, the Professional Transporters Network.

Cameroon’s 42,000-barrel-a-day Sonara refinery has been closed since a fire ripped through the plant in 2019.

Zambia, one of Africa’s top copper and cobalt producers, has struggled to keep its sole 24,000-barrel-a-day Indeni Petroleum refinery open since French oil major

TotalEnergies

sold its stake to the government a decade ago. In April, the Zambian government said it would end fuel refining at the plant at the end of the year due to inefficiencies, in favor of importing fuel.

The refinery supplies the bulk of its fuel products to Zambia’s mines, where mineral production slumped by 5% last year as miners suffered operational disruptions, including erratic fuel supplies, according to the chamber of mines. Finance Minister

Situmbeko Musokotwane

told Parliament last month that fuel prices might prevent the cash-strapped country, which defaulted on its debt in 2020, from meeting growth targets this year.

Last week, police officers in northern Zambia opened fire on a crowd of workers at a coffee farm who were protesting low pay in the wake of rising costs, killing one worker and injuring several others, according to union officials.

A bakers’ association in Kampala, Uganda, said some bakeries in the city have had to scale down operations or even close as the cost of fuel added to pressures from higher prices for wheat flour and vegetable oil.

Ugandan authorities have banned any protests against the rising cost of living and repeatedly arrested opposition leader

Kizza Besigye

and other activists for organizing demonstrations.

—Aaisha Dadi Patel contributed to this article.

Write to Nicholas Bariyo at [email protected]