The continuous decline in crude oil prices is posing a number of challenges for Sub-Saharan Africa, according to Fusion Group.

Michael Kimondo, Head of Treasury Operations at Fusion, said that the growth of net oil exporters, especially countries such as Nigeria, Congo, Angola, Gabon and Chad, which generate more than 50% of the total fiscal revenues from oil production, would be under pressure.

“The negative impact on oil producers could include deteriorating external and fiscal accounts, weaker currencies, higher inflation and decreased investment. Headline growth and budget deficits to come under pressure,” he said.

Global oil prices have plunged by more than 40% since June 2014.

As a result of lower oil prices and tighter policy, Nigeria’s growth, for example, has been revised down from 6.4% to 5.2% for 2015.

Other SSA countries such as Chad, Sudan and Cameroon are also vulnerable as they have only marginally positive or negative trade account balances and low levels of foreign exchange reserves, according to Kimondo.

He said: “External accounts of SSA's oil producers are also at risk as foreign direct investment inflows to the oil sector could decline amid falling prices. Additionally, deep-water explorations off the coasts of Ivory Coast, pre-salt projects in Angola, LNG projects in East Africa and the ongoing onshore explorations in Kenya and Uganda (Tullow Oil) are also at risk. However exploration companies are prioritizing onshore explorations over offshore explorations, owing to their relatively lower cost.”

Kimondo said that frontier bonds, especially bonds of oil exporters such as Nigeria, could be due for a sell-off.

“Oil producers, including Nigeria and Angola have seen their bond prices decline in the previous month. If oil prices stay under pressure in 2015, frontier countries that depend on oil exports as a large part of their revenue could find themselves struggling to pay off their international debt,” he said.

In addition, lower oil prices are likely to be accompanied by US dollar strength, which would weigh on all SSA currencies.

“Nigeria has been hit particularly hard and in a bid to stabilize the financial system, the Central Bank of Nigeria has devalued the currency by 8.0%,” he said.

Nevertheless, for oil importers, the decline in oil prices could be beneficial, according to Kimondo.

Countries such as Kenya, Ivory Coast, Seychelles and Ethiopia “could see a reduction in their trade deficits”.

“Low oil prices in the East African economies may translate into lower inflation. The lower interest rates will in turn make borrowings cheaper, encouraging spending and investment and in turn stimulating economic growth,” said Kimondo.

“On the negative side, Kenya and Uganda, countries that have invested heavily in recently discovered oil could suffer negative effects if the trend persists. Sustained low oil price will impact on their future earnings from oil and negatively affect expected oil driven investments and job growths,” he added.