Economic news from Africa reports a decision by the Republic of Angola to end the gasoline subsidy. Since June 5, 2023, the price at the pump has increased from 0.49 to 0.87 USD. According to the Minister of State for Economic Coordination, Manuel Nunes Júnior, this decision comes after the liberalization of the price of gasoline in 2021. State expenditure related to fuel subsidies was, in 2022, around of $3.8 billion.
In addition to the Republic of Angola, other African oil-producing countries have also put an end to the fuel subsidy, like Nigeria, Kenya and Ghana. This is a decision that aims to strengthen the social policies of African states, particularly with regard to social security and housing.
The end of gasoline subsidies is good news for Angola’s neighboring countries. Indeed, smugglers and traffickers of petroleum products took advantage of the gasoline subsidy to resell at lower prices on the markets of neighboring countries. Since gasoline in Angola is one of the cheapest in the world, this created an incentive for smuggling. Neighboring countries welcome this decision, which will make it possible to fight against fraud and the smuggling of petroleum products.
To mitigate the impact of this decision on the most vulnerable populations, the Angolan government has provided support measures for taxi drivers, farmers and fishermen. Since these sectors are at the root of social unrest, this is a way for the government to show its benevolence towards the poorest populations.
Finally, this decision by the Republic of Angola is a step towards economic realism. African states must stop the practice of subsidies to strengthen their social policy and contribute to the protection of the environment. The current economic situation requires African States to adopt an innovative and efficient approach to guarantee the improvement of the living conditions of the populations.