Recent developments in Nigeria demonstrate how price volatility affects consumers, businesses, and the whole economy.
Fuel prices in Nigeria have fluctuated considerably in recent years, rising from as low as N699 per litre during festive periods to levels approaching N1,400 per litre, according to Dangote Refinery warnings.
These variations are mostly due to the elimination of fuel subsidies in May 2023, which exposed domestic markets to global price volatility, import dependency, and regulatory constraints.
High fuel costs have a wide-ranging impact on African economies.
Transportation expenses are rising, raising the price of goods and services and leading to higher inflation, which reduces household purchasing power.
Businesses, particularly SMEs, face increased operational costs, which could lead to lower output, layoffs, or closures.
High fuel costs reduce households’ discretionary income for necessities like food, healthcare, and education.
Despite these obstacles, the Dangote Refinery has managed to provide some level of stability.
With a daily output capacity of 40-50 million litres of Premium Motor Spirit, the refinery has alleviated some of the negative effects of price volatility.
Stock levels currently cover more than 20 days of national use, proving that domestic production can help keep fuel prices stable even in the face of global uncertainties.
And while the refinery has the capacity to make Nigeria completely self-reliant in its energy goals, bottlenecks from government and market players have hindered this from becoming a reality.
In October 2024, the Dangote Refinery, Africa’s largest single-train refinery, signed a supply agreement with 20 oil marketers to distribute 600 million liters of petroleum per month, intending to stabilize domestic pricing and reduce dependency on imports.
However, a recent report revealed that the deal failed due to differences over pricing modifications, resulting in a rise in fuel imports.
The failure of the deal to materialize soon also led to increases in fuel imports, which went to as high as 1.563 billion litres in November, highlighting the vulnerability of domestic supply arrangements.
With that said, here are the African countries with the highest cost of fuel as the new year begins, as per data from GlobalPetrolPrices.
Compared to last month’s list, when the global average cost of fuel was 1.29 U.S. dollars per liter, as opposed to 1.28 U.S. dollars per liter, this month, fuel prices for Malawi, Zimbabwe, and Kenya saw slight increases.
Prices for the Central African Republic, Senegal, Burkina Faso, Cameroon, Ivory Coast, and Seychelles, in line with the global average, reduced.
While Zambia displaced Morocco.