Africa’s petrostates are crashing hard. A cool $115 in the summer of 2014, a barrel of Brent crude, the international pricing benchmark, now fetches below $40. And having failed to build massive foreign exchange reserves like Saudi Arabia or other Gulf monarchies, African oil exporters are now being forced to grapple with depreciating national currencies, mounting inflation, and deep cuts in government spending.
Some of these states are now dangerously unstable, staring down popular unrest or domestic insurgencies that left unaddressed could set them back years, if not decades, in development terms. The “Africa rising” narrative, built on climbing income levels and an emerging middle class on the continent, is now under strain.
But instead of across-the-board decline, Africa is witnessing a gradual shift in the continental balance of economic power — away from petrostates like Nigeria and Angola and toward less flashy but more diversified economies like Ethiopia and Tanzania. After decades of lavishing attention on the oil-powered economies of West Africa, investors are now flocking to the economies of East Africa, which have demonstrated their resilience to lower commodity prices and challenged outdated perceptions of Africa as resource-dependent and burdened by irredeemably poor governance.
But the petrodollars were squandered. Pervasive corruption within the ruling party and a construction boom in the capital, Luanda, that ignored the rest of the country did little to develop other sectors of the economy or reduce Angola’s dangerous dependence on oil. When the bottom fell out of the oil market last year, the government was forced to slash its budget by 25 percent. Meanwhile, the loss of thousands of jobs, rising fuel and food costs, and a recent yellow fever outbreak have engendered popular resentment toward the ruling elite.