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Interview: Experts urge African economic diversification against oil price shocks

Xinhua, September 28, 2016 Adjust font size:

Experts attending the Second Africa Oil Governance Summit here said Tuesday that it would take the diversification of Africa's economies to insulate them from shocks of future global oil slumps.

Speaking to Xinhua on the side of the summit, Theo Acheampong, a Ghanaian Associate at London-based Crystol Energy, said Africa's economies had been hit this hard by current oil price slumps due to their over-dependence on oil exports.

"A number of the African countries are actually quite exposed to the oil price shocks. For example, in Nigeria where you have over 80 percent of the government revenue coming from oil," he recalled.

In the same vein, Ghana's annual economic growth of seven percent on the average before the oil price falls saw a sudden reduction substantially to between 3.5 percent and 4.1 percent over the last two years as a result of the oil price falls.

"Governments have had to respond structurally. So you've had some subsidies being taken out; you've had some fiscal adjustments as well taking place in terms of tax cuts and all these have had impacts on people's livelihoods on the ground," Acheampong noted.

He said African governments had the opportunity to think structurally on how to grow the economy, how to grow the non-oil sector of the economy and build linkages between the oil sector and the manufacturing sector.

Nchimunya Ndulo, Legal Counsel at Abidjan-based African Legal Support Facility (ALSF), supported the call for economic diversification.

Rather than a one-size-fits-all prescription, Ndulo said each country should identify where it had the potential, especially in infrastructure development and agriculture, as alternatives to explore. Endit