Postcard from Yaounde: Navigating a Real Oil Shock

By Vivienne Walt (Originally published in Time Magazine)

Americans wincing over paying four dollars a gallon at the gas pump ought to meet John Gwat. The taxi driver in Cameroon's capital is paying six dollars a gallon, but in a country where the average monthly wage is about $180 — approximately one-tenth of the average American income.


And like American consumers, there's precious little that Gwat and other taxi drivers here can do about the gas prices at the gas pumps. "At the end of the month about a quarter of the cars are just parked on the streets, because no one has the money to buy fuel," he says. Then, when Cameroonians (at least those with jobs) receive their salaries at the end of the month, Yaoundé's streets are once again jammed with traffic.

For all that, Gwat, 29, considers himself a lucky man. With no high school education, he spent several years driving a cab for a taxi company in Yaoundé, earning about four dollars a day — and used that income to put his four younger brothers through high school. Then, a few months ago he borrowed $1,000, quit his job, and bought himself a cab of his own: One of the thousands of battered yellow Toyotas which make up the main transportation infrastructure of Yaoundé, a city of more than 1 million people. It cost Gwat another $50 to customize his vehicle: Its right and left side mirrors are painted with the words "Jesus" and "je t'aime" respectively, and across the rear window and fender is a proselytizing message to other drivers: "Time to Repent," and "Jesus Will Forgive." Gwat believes Jesus has helped him, too. Since he struck out on his own, his income has more than tripled, and on some days he can pull in about $20 — a relative fortune by measure of Cameroon's average daily wage.

But as gas prices rise, Gwat's earnings are being squeezed. When world oil prices shattered the $100-a-barrel mark on January 2 and settled above that in February, Cameroon faced the same conundrum as the United States and Europe, because it is heavily dependent on imported fuel. President Paul Biya, whose 22-year rule has endured almost unchallenged, passed along the cost of the global increase to his country's drivers. Biya was more careful than some of his Western counterparts, however, in choosing his moment to raise the price at the pump: The announcement, in mid-February, coincided with the semifinal of Africa's huge soccer tournament, the Nations Cup, in which Cameroon defeated the host country, Ghana. Cameroonians poured into the streets to celebrate the victory. Amid the raucous partying and the suspense over the impending showdown against Egypt in the tournament final, few noticed that the government had — without a word of discussion on television or in local newspapers — raised gas prices by about 20 cents a gallon. It was only in the depressing wake of Cameroon's loss to Egypt that the full impact of the gas price sank in. "The timing of the fuel prices was very deliberate," says Adam Poumie, who runs a local soccer academy. Even then, few readily understood that the government had chosen to increase prices during the tournament. "It took days for people to make the connection," he says.

But when the realization finally dawned on Cameroonians, the response was explosive. Beginning with a taxi strike in late February, thousands took to the streets to protest not only fuel prices but also the spiraling cost of staple foods such as rice and wheat. Barricades burned across the country and gas stations and government offices were torched. At least 24 protestors were killed by government forces, and hundreds of others were arrested during the ensuing crackdown.

For Gwat, the riots were a fitting reaction. He believes that along with the rise in prices, the quality of fuel at many gas pumps has plummeted. "Our fuel is not fine," he says. "They have started to mix in kerosene. It damages the engines." The managers of two Texaco stations in Yaoundé refute Gwat's claim. Not even the finest fuel would have spared Gwat's taxi the ravages of years of chugging along rutted dirt roads and up and down Yaoundé's muddy hills in the tropical humidity and pounding rainstorms. It requires several runs for the vehicle to make it to the top of the city's steepest hills.

Cameroon's topography and weather cannot change, although better road conditions could improve the fuel efficiency of vehicles. And, so far, the kinds of ideas floated by U.S. and European politicians — gas-tax breaks or increasing use of biofuels — have not yet been broached in Cameroon. Instead, politicians in Yaoundé have tried to ease the burden by cutting taxes and import duties on basic foods. And they have promised to review fuel prices and to build more refineries to boost fuel supplies. Although Cameroon has rich offshore oil deposits of its own, it has only one refinery in the Atlantic port of Limbe, the output from which is largely exported.

Cameroon is hardly alone among its African neighbors in needing to import gasoline despite possessing huge oil deposits of its own. But building new refineries could take years, and require many millions of dollars in foreign aid. Until then, Gwat is hoping gas prices do not rise much further. "I spend a lot of my earnings on fuel," he says. "I earn well, but still it is only 150,000 francs [about $353] a month." And given what he pays to fill up in Yaoundé, he'd gladly settle for the new U.S. average price.

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Photo courtesy of Ann and Chris

Comments

[Nubio]

So Cameroon imports petrol despite supposably being a producer? Our government - as the representatives of the people - needs to tell us:

1. What arrangements it has signed with the expatriate oil companies.

2. What measures it implements to ensure that the oil companies are not taking out more crude oil than they are declaring.

3. Why Cameroon is importing petrol, despite producing more than it needs.

4. The amount of oil Cameroon has produced since exploitation began and how much income Cameroon has earned from this.

Biya certainly has a lot to answer for. The truth will emerge and there will be no mercy when the time of judgement comes.

[George Esunge]

Dear Nubio,

Let me tell you a story about why Cameroon imports fuel:

In 1979 when the sole refinery we've got was built, by some margin of stupidity or oversight, the authorities or their advisers managed to construct a structure that was ill-adapted to processing the heavy crude from the gulf of guinea coastline. We thus ended up with a white elephant (almost as the Nsimalen International Airport).

I gather that, the authorities may have been quite aware of this misnomer. But they preferred to go by this system given the oil bubble of the 1970s. In their greedy minds, they considered that, it would make more money to sell crude (at high prices) and thus use some of the money to buy light crude to refine for national use.

At the time, Cameroon's production rate was pretty high. Moreover, there was a stabilisation fund that used the excess from crude sales to bear the shocks of the international oil markets. In reality we were living beyond our means. Factually, we had taken the short-cut to being rich and that could not last.

With lots of mis-management,corruption and the economic plunge that characterised the 1980s and 90s; the bubble burst. We got into structural adjustment and the state was advised to withdraw from intervening in market issues. Subsidising fuel was one of such points.

A bankrupt state that had depleted its own back-up resources became a simple sellam-buyam without much gain. We were thus exposed to fluctuations. Now we realised that the idea to contruct a refinery that does not refine our own fuel isn't as profitable as we thought.

But the problem now, as the article above suggests is: where do we have the money to construct another refinery when we are so broke? We are barely living from hand to mouth (as they would say in the quartier)!

The money that we got from exporting crude oil when the times were happier? That is another story...I will narrate that one another day (if you do not mind).

For now here are some themes developed from the refinery story:

Poor leadership;
poor economic advice;
lack of vision;
greed;
corruption;
embezzlment;
mis-management;
absence of love for one's community;
global economic problems;

cheers,
George