Fuel Price Doubling in West Africa Disrupts Informal Sector and Economic Activity

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West African nations have experienced significant upheaval on their roadsides as the price of cheap contraband petrol from Nigeria has abruptly doubled, causing disruption to the region’s informal sector, which plays a crucial role in economic activity. The collapse of businesses has affected black market fuel vendors and commercial drivers in Cameroon, Benin, and Togo who heavily relied on smuggled petrol from Nigeria.

 

Since Nigeria eliminated its state fuel subsidy on May 31, supplies of smuggled fuel have dwindled, leading to long queues at official petrol stations where fuel is now priced competitively. In Garoua, a town in northwest Cameroon near the Nigerian border, black market petrol that used to sell for about 300 CFA francs ($0.48) per liter now starts at a minimum of 600 CFA francs.

 

The repercussions of this price increase have extended to motorcycle-taxis, a common form of public transport in West Africa, resulting in conflicts between riders, who often live hand-to-mouth, and customers demanding cheap fares. Many motorcycle-taxis have been forced to more than double their fares, causing customers to refuse payment and leading to a sluggish business environment.

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The trade in black market fuel is so integral to the local economy that authorities often turn a blind eye or are complicit. A customs officer in Garoua was observed by a Reuters reporter sitting on a motorcycle-taxi being refueled with smuggled Nigerian petrol.

 

The exact amount of fuel smuggled from Nigeria is unknown due to a lack of reliable data. The head of Nigeria’s state-controlled oil firm NNPC stated that 66 million liters of petrol leave its depots daily, but it is unclear how much is consumed domestically, although he acknowledged rampant smuggling. Independent energy experts and Nigeria’s Dangote Petroleum Refinery estimate Nigeria’s daily consumption to be below 40 million liters.

 

In neighboring Benin and Togo, small countries to the west of Nigeria, vendors of contraband fuel have lost both supplies and customers, while official petrol stations that were previously quiet are now busy. At the Hilacondji border crossing between Togo and Benin, some black market fuel stalls have shut down, leaving vendors waiting for potential deliveries among rows of empty plastic jerricans.

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The informal sector, which accounts for over 80% of employment in Africa according to the United Nations, plays a crucial role in driving economic activity. The loss of livelihoods in this sector, with the closure of informal fuel depots and unemployment of workers, poses significant challenges to the affected communities.

 

In Cotonou, the commercial capital of Benin, queues have formed at official petrol stations, and some stations have struggled to meet the sudden surge in demand, particularly from motorcycle-taxis locally known as “zemidjan.” Fuel stations have experienced a three-fold increase in daily sales, causing tensions among customers competing for limited supplies.

 

The doubling of petrol prices from Nigeria has disrupted the informal sector, impacted economic activity, and strained livelihoods in West African nations, prompting concerns about the stability of the region’s fuel supply.

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