African Nations Explore Fresh Ways to Ease Pain at the Fuel Pump

African governments from Nigeria to Kenya are adding fresh measures to soften a rise in fuel prices caused by the Iran war.

The Middle East conflict has been a driving force behind $100 a barrel oil and constricted refining capacity, causing pump prices to surge. At the start of the war, African states took steps ranging from suspending taxes to delaying an upward adjustment in regulated fuel prices.

After European benchmark crude oil mostly remained in triple digits last month, Nigeria has introduced a measure referred to as “price modulation.” Finance Minister Taiwo Oyedele said this was designed to delay part of an upward price adjustment and recover that amount when prices decline.

“This is neither a subsidy nor a price control,” he told reporters in Abuja, the capital, on Thursday. “It is designed to smooth prices over time rather than suppressing them.”

Fuel prices and availability are particularly sensitive issues for African governments. Some have agreed to supply agreements with traders or oil exporting countries to help ensure shipments. And transportation costs — which also feed into food prices — typically make up a significant proportion of household budgets.

Not Subsidy

President Bola Tinubu, who is seeking a second term in power in January elections, abolished Nigeria’s fuel subsidy after taking office in 2023. That was one of a series of changes that built investor confidence and strengthened relationships with multinational lenders, said Clementine Wallop, director for sub-Saharan Africa at Horizon Engage, a political-risk consultant.

The latest decision “speaks to the government’s concern around cost of living as campaign season ramps up, and the need for the Tinubu administration to show it understands the pressure on consumers from high fuel prices,” she said. “Politically a move like this is tricky for Tinubu, whose first move as president was to scrap fuel subsidies.”

In Kenya, the government is seeking lawmakers’ approval to slash the 16% value-added tax on fuel in half, to “cushion citizens from the global increase in fuel.”

South Africa initially cut fuel taxes to cushion the blow of higher prices from the war, but set a three-month limit on the relief which expired in June. It raised retail fuel prices 12% to a record this week. Higher pump prices have lifted the country’s inflation rate to 4.4% from 3% before the war began, prompting the central bank to hike interest rates twice so far.

Actions to control the fuel price differ throughout the continent. Zimbabwe on Thursday lowered the price of gasoline by 0.5% to $2.05 a liter.

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