The American credit rating agency, Fitch, has in its latest report, indexed four African petroleum producing countries whose ratings have been gravely impacted by the COVID-19 pandemic. The countries are Angola, Congo Brazzaville, Gabon and Nigeria.
According to the report, the financial resources of these countries have dangerously dropped due to the combined shocks occasioned by the COVID-19 pandemic and the drop in the price of crude oil.
“These countries have been particularly touched by the fall in crude oil prices, considerably affecting their budgets which essentially depend on petroleum revenues”, the agency noted.
It predicted that “there would be new sovereign shortcomings, an increase in primary budgetary deficits and augmentation of the public debt.”
As concerns Gabon, the American ratings agency predicted a drastic deterioration in the short term of its sovereign ratings.
Fitch Ratings reveals that the COVID-19 crisis has resulted in the increase in the indebtedness of Sub- Saharan African nations at a rhythm more rapid and at a level higher than other emerging markets.
“This situation increases the risk of new degradations and defaults in payments,” the agency stated.
“This new alert by Fitch Ratings should go to remind African oil-producing countries to the continued risk of dependence on crude oil production alone to cushion their foreign exchange earnings.
“The warnings have been given in the past that these countries should diversify their economies, but the warnings seem to have always fallen on deaf ears”, Cameroonian economist Oben Valentine said.
“Nigeria and Gabon, especially, should make it as a matter of urgency to diversify their economies. Their continued dependence on mostly oil as its main foreign exchange earner can only spell disaster in the years ahead.
“Though Nigeria seems to be putting in some efforts at diversification, the input in this direction so far is not good enough. They should do better,” Valentine added.
“Gabon’s dependence on oil is becoming a national cancer to the lives of the people.
“The oil economy has bred a purchasing culture within the national community to the extent that villagers who should otherwise depend on farming and other natural means of subsistence, would rather import food from Cameroon especially than grow it themselves.
“This is not good for a national economy”, declared an official in the Gabonese embassy in Yaounde, Cameroon.
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