1.16 Angola and Nigeria: Oil Production

FIGURE 1.16: Angola and Nigeria: Oil Production (million barrels per day)

2.4

2.2

Million barrels per day 2.0

1.8

1.6

1.4 Oil production declined slightly in Angola to 1.17 million barrels per day in August, well below the OPEC+ quota of 1.5 million barrels per day, and more than Nigeria (1.13 million barrels per day).

1.2

1.0

Jan-10 Apr-10Jul-10 Oct-10 Jan-11 Apr-11Jul-11 Oct-11 Jan-12 Apr-12Jul-12 Oct-12 Jan-13 Apr-13Jul-13 Oct-13 Jan-14 Apr-14Jul-14 Oct-14 Jan-15 Apr-15Jul-15 Oct-15 Jan-16 Apr-16Jul-16 Oct-16 Jan-17 Apr-17Jul-17 Oct-17 Jan-18 Apr-18Jul-18 Oct-18 Jan-19 Apr-19Jul-19 Oct-19 Jan-20 Apr-20Jul-20 Oct-20 Jan-21 Apr-21Jul-21 Oct-21 Jan-22 Apr-22Jul-22

Nigeria Angola

Source: U.S. Energy Information Administration.

44.2 in August from 46.3 in July. This decline reflects weakness in private sector activity, down for five successive months, associated with uncertainty about the election and reining in inflation. Industrial production in Rwanda was up by 33.3 percent (year over year) in July after an upturn in June (1.1 percent year over year), supported by rising manufacturing production, electricity, and mining and quarrying.

By contrast, incoming data from Uganda send mixed messages. On the one hand, activity shows signs of recovery after the upturn in the PMI, just above the 50-point mark (50.5) in August, from three straight months of contraction. On the other hand, business confidence continued its downward path in August (52.8). Output plummeted due to accelerating inflation, which breached the upper limit of the central bank’s target range (7 percent) to 7.9 percent in July. The monetary policy authorities reacted by raising the policy rate 250 basis point since January. In Mozambique the PMI decreased steadily to 50.8 in August, marking the seventh consecutive month of decline in private sector activity. The PMI for Zambia edged down to 50, after showing signs of expansion for two months in a row, rising slightly above the 50-point mark. Strong demand despite elevated costs pushed up production and new orders. The central bank kept the policy rate unchanged for three successive meetings to support economic growth as inflation dropped to single digits (9.9 percent) for two straight months, closer to the upper bound of the official target band of 6 to 8 percent.

In AFW, incoming data point to further weakening of activity reflecting the spillover of global shocks, which include uncertainty arising from the prolonged conflict between Russia and Ukraine and risk of recession in advanced economies alongside the monetary policy tightening cycle. In Nigeria, the Stanbic IBTC Bank PMI decreased to 52.3 in August, after an uptick in the previous month (53.2). The sentiment of weakness in the private sector reflects feeble recovery

in output, inflows of new orders, and purchasing activity. Despite the economic expansion in the second quarter, the oil sector continues to struggle to regain its performance of the pre–oil collapse era of 2014, which was characterized by the production of 2 million barrels per day. The downward trend in production recorded after the plunge in oil prices in 2014 persists in the third quarter of 2022 (figure 1.16). This low production prevents the country from benefiting from elevated oil prices. Oil accounts for 80 percent of Nigeria’s external revenues.

In Ghana, the S&P Global PMI dropped from 48.8 in July to 45.9 in August—the lowest reading in 28 months. The subdued level of the PMI reflects private sector weakness—with activity being held back for seven straight months. New orders and output have been trending down for many months. Rising input costs, on the back of high fuel and raw material prices, compelled businesses to cut workers for the first time in about a year. The central bank of Ghana has hiked the interest rate by 750 basis points since the start of the year, in an attempt to stop the steep rise in inflation and keep the cedi from depreciating further.

High-frequency data reveal weak performance of WAEMU countries in the third quarter of 2022, dragged primarily by rising prices, which erode households’ purchasing power, lead to contractionary macroeconomic policies and weak demand from the rest of the world, and threaten stability in the Sahel region. The data suggest that the weakness of the Senegalese economy observed in the first quarter of this year persisted over the second quarter. Industrial production dropped for three consecutive months, by 8.5 percent in June, after a plunge of 13.8 percent in May. Both mining (-31.1 percent) and manufacturing (-2.9 percent) activity dragged industrial production. The expansion of Jihadist attacks in Mali poses a risk to stability in the region, which may delay foreign direct investment inflows as uncertainty mounts.

In Côte d’Ivoire, growth of industrial production increased from 10.1 percent (year over year) in April to 12.4 percent in June. However, month-over-month growth points to a decline of 3.1 percentage points, after a big drop of 9.7 percent in April. This performance indicates that activity slowed in the second quarter. Declining cocoa prices since May 2022 could hold back growth. Côte d’Ivoire also faces threats to stability from Jihadist activities in Mali and Burkina Faso, which could pose challenges to growth in the medium term. Data from Burkina Faso and Mali show signs of contraction in growth partly due to instability. The economy contracted by 0.4 percent (year over year) in Burkina Faso in the first quarter of 2022. Gold production was down by 10.3 percent, construction dropped by 13.7 percent (year-over-year), and the agriculture sector faces challenges from conflict and related internal displacements due to loss of available farmland. Rising prices of fertilizers and unfavorable weather conditions add to the existing setbacks for the agriculture sector.

Overall, the Economic and Monetary Community of Central Africa (CEMAC) countries continue to enjoy the benefits of high oil prices with twin surpluses, causing an increase in foreign reserves and providing an opportunity to reduce debt. This, in turn, has contributed somewhat to containing inflationary pressures. Average inflation in CEMAC is projected at 4.6 percent for 2022, lower than the regional median of 8 percent. Nevertheless, countries in the region have failed to capitalize on elevated commodity prices. Oil production falls short of the OPEC+ quota. For example, production in the Republic of Congo was steady for two months at 261,000 barrels