Yin Yang Oil Prices and the Rise of African Economies: Policy Implications

African oil exporters have been hard hit by the sustained decline in international oil prices. African oil importers are seeing dramatically lower oil import bills, but most have economies that are not energy-intensive enough to benefit greatly from the oil price change. For the continent as a whole, growth forecasts have been revised downwards, as the benefits of cheaper oil are being offset by costs associated with reduced demand for African exports of other primary commodities, especially metals and minerals. These developments highlight the continuing vulnerability of African countries to adverse terms-of-trade shocks and to the costs associated with lack of progress in structural transformation and trade diversification away from primary commodities, oil included. The poor growth outlook for Africa clearly shows that success in diversifying trade partners, though it has been highly beneficial and growth-enhancing, does not eliminate the risks associated with commodity-dependent development models.