Written by Ed Cropley | From Reuters

Plunging world oil prices have dealt a blow to Africa far greater – in purely economic terms – than Ebola, setting back investment in exploration and plans to industrialize.

The highest profile victim so far has been Africa’s top producer, Nigeria, which was forced to devalue its naira currency by 8 percent this week after the central bank admitted dwindling reserves were making it hard to defend it.

In dollar terms, the devaluation knocked $40 billion off the value of Nigeria’s economy – considerably more than the $32 billion worst-case scenario the World Bank projected in October for Ebola’s economic impact on the entire sub-Saharan region.

Last week, the bank’s chief Africa economist said the latest assessments of the epidemic suggested the economic fallout might not be as bad as feared, and was likely to be closer to the $3-4 billion end of its projected range.

The same cannot be said for crude-backed African currencies.

Even after the Nigerian devaluation and a 100 basis point hike in interest rates, the naira came under more pressure, trading at a record low of 178.85 to the dollar.

It opened flat on Thursday around 177.0, a level that is already weaker than the de facto 176.40 lower limit of the central bank’s target band, revealing scepticism the currency can hold at that level.

In Angola, the continent’s number two oil producer, the kwanza has shed more than 3 percent since September, hitting record lows on an almost daily basis amid concerns about the state of government finances.

A year ago, Luanda was projecting growth of 8.8 percent with a fiscal deficit of 5 percent of GDP as it poured cash into reconstruction from a long civil war that ended in 2002.

But its spending plans were all predicated on oil – which accounts for half of GDP and 90 percent of foreign exchange earnings – at $98 a barrel.

The government is budgeting a more sober $81 for next year but even that might be over-optimistic after Brent crude hit a four-year low on Thursday of $76 as ministers from oil-producing OPEC countries met in Vienna.

Read more at Reuters