Africa’s Oil Bill Outstrips Overseas Aid
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Africa’s development efforts could be at risk of stalling, said a representative from the International Energy Agency (IEA) on Sunday, after new figures showed that African countries were paying out more for oil imports than what they received in financial aid.
According to the IEA, Sub-Saharan Africa received just $15.6 billion in overseas development aid last year, as compared to the $18 billion they spent during the same period for importing oil from overseas.
Africa’s development efforts could be at risk of stalling, said a representative from the International Energy Agency (IEA) on Sunday, after new figures showed that African countries were paying out more for oil imports than what they received in financial aid.
According to the IEA, Sub-Saharan Africa received just $15.6 billion in overseas development aid last year, as compared to the $18 billion they spent during the same period for importing oil from overseas.
Poorer African nations are effectively “running to stand still” in development terms, said a report by the Guardian, with soaring global oil prices creating huge problems for developing nations’ budgets.
“People in poorer countries are being hit twice by the oil industry,” said Greenpeace UK chief policy adviser Ruth Davis to the British paper.
[quote]“They are the first to suffer the impacts of climate change, while their economies are blighted by the rising cost of imported fuel,” she noted.[/quote]Related: The Fear Premium Is Driving High Oil Prices: Nouriel Roubini
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Consequently, IEA’s chief economist Fatih Birol has advised developing countries, particularly those in Africa, to turn to renewable sources of energy as a cheaper alternative to oil.
“If you diversify the sources of energy, that is a good thing and clean energy means using free, homegrown resources so that will bring down the import bills,” he said.
Developing and emerging countries often require huge energy resources in order to power their nations’ industrialisation process. But while countries such as China and India are now investing in wind and solar energy, African nations still lag behind in the renewable energy field.
Birol, one of the world’s foremost authorities on energy economics, added that the problem of oil addiction in developing countries was also exacerbated by distorting subsidies for fossil fuels, which will reach a record $630 billion this year.
Although such subsidies are meant to protect poor people from the impact of rising energy prices, they usually disproportionately benefit the better-off, and in some cases are hijacked by profiteers, said Birol, who suggested that the money spent on providing subsidies could be better spent on social projects such as in education or health.
Countries will have to spend $4.30 within the next two decades to make up for every dollar they do not spend on renewable energy now, claimed the IEA report on Sunday.
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Several analysts have also called for international organisations to invest specifically into renewable energy projects in order to guarantee sustainable development for emerging economies.
[quote]“Instead of giving taxpayer handouts to the fossil fuel industry through World Bank aid programmes and Export Credit Guarantee schemes, countries like the UK should be investing in renewable energy and energy efficiency projects in developing countries, which will improve access to energy for the poor and help build stronger economies,” said Ruth Davis.[/quote]
