Oil price and real sector in oil-importing countries: an asymmetric analysis of sub-Saharan Africa

This study examines the asymmetric impact of oil prices on the real sector in sub-Saharan African nations that import oil. The nonlinear autoregressive distributed lag model was applied to panel data of 20 oil-importing nations between 1987 and 2021. Except for service value-added when the Brent oil price is employed, the study confirms an asymmetric link between the oil price and the real sector indicators. However, when Brent and West Texas Intermediate oil prices are simultaneously used in the same model, the service and industrial sectors are symmetric while the agricultural sector is asymmetric. The study found that the responses of sectors to oil price shocks vary in oil-importing countries and also depend on the oil price used. In the long-run, industrial value-added does not respond to oil price increases while a decrease in oil price is beneficial to industrial value-added. The response of agriculture value-added to positive and negative oil price shocks depends on the oil price used. In the short-run, industrial value-added does not respond to oil price shocks. A decrease in oil price is beneficial to service value-added when West Texas Intermediate oil price is used. The response of agriculture value-added to oil price shocks depends on the oil price used. Overall, the value-added in the services sector and the agriculture sector are more sensitive to oil price used than industrial value-added.