Kenya and Tanzania are set to save around $2 billion in lower fuel costs on oil imports over the next year, but economists remain uncertain about whether the energy price drop is good or bad news for the East African economies as a whole.

The UN predicted earlier that this year, of the five regions of sub-Saharan Africa, East Africa is expected to experience the fastest growth, reaching 6.8 per cent in 2015 and 6.6 per cent in 2016. Kenya and Uganda will be key drivers of growth.

Kenya will benefit from rapid expansion in banking and telecommunication services and investments in infrastructure, particularly railways. Uganda’s growth will be supported by increasing activity in sectors such as construction, financial services, transport and telecommunications.

However, while the fuel price drop means many people across the region will have more money in their pocket in the short-term, the medium to long-term prospects are less certain. Of particular concern is the future of oil and gas exploration across the region following major new discoveries in Kenya, Uganda and Tanzania.

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Tullow Oil, a big player in East Africa, has already written down $2.2 billion as a direct result of the oil price collapse. Goldman Sachs has said that almost $1 trillion worth of investments are at risk unless oil companies urgently restructure.

According to analysts at Goldmans, a price of $70 is already too uneconomic for projects already approved.

No change in plans

However, a Tullow Oil spokesman in London said the company has no plans to change its investment plans in Uganda or elsewhere in Africa. “We believe that such fluctuations in the oil price do not fundamentally change the value of these projects,” said spokesman George Cazenove.

Kenya and Tanzania have also signed exploration and extraction deals with Tullow as well as Statoil, AS A, Exxon Mobil and others on the heels of substantial discoveries. But until those projects start pumping fuel, both countries remain net energy importers.

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Nevertheless, cheaper fuel will help many African countries suppress inflation by keeping energy import costs down. But the continent’s biggest economies have staked their futures on high prices for oil and gas.

Pumping high-price crude has generated rapid economic growth and subsequent spending commitments.