Nigeria, Ethiopia, Malawi, Sierra Leone, and Zimbabwe are the Sub-Saharan African (SSA) countries with the biggest rise in food inflation in February this year, according to a new World Bank analysis.
According to the most recent edition of the Africa Pulse study, a biannual analysis of the African economy, the main causes of inflation in the region’s countries continue to be food inflation and the depreciation of national currencies.
It stated that by February 2024, double-digit annual rates of food inflation were observed in 14 out of 40 Sub-Saharan African nations having monthly food price data, with Ethiopia, Malawi, Nigeria, Sierra Leone, and Zimbabwe experiencing the fastest increases.
However, it stated that the monetary policy approach should continue to be restrictive for nations with persistently high levels of inflation, especially those such as Ethiopia, Malawi, Nigeria, Sierra Leone, and Zimbabwe.
“Inflation is falling in most SSA economies, although it remains high in comparison to pre-pandemic levels. The region’s median inflation rate is expected to reduce from 7.1% in 2023 to 5.1% in 2024 and 5% in 2025-26,” it added.
In an effort to combat inflation, the Central Bank of Nigeria increased its monetary policy rate by 200 basis points to 24.75 percent last month—the second consecutive increase. The prime bank raised the interest rate to 22.75 percent in February, a 400 basis point increase.
The federal government’s changes, which included the withdrawal of the petrol subsidy and the devaluation of the naira, have been a major factor in the acceleration of inflation in the most populous country in Africa over the last ten months.
Nigeria’s headline inflation rate increased for the fourteenth consecutive month in February, from 29.90 percent to 31.70 percent, according to data from the National Bureau of Statistics (NBS).
Food inflation increased from 35.41 percent to 37.91 percent, accounting for half of the inflation rate. And because of a mix of increasing demand, growing transportation costs, and growing insecurity, it is expected to reach an all-time high in March.
In Africa’s most populous country, growing inflation and slow development caused the number of impoverished people to rise from 89.8 million at the beginning of the year to 104 million in 2023, according to the World Bank’s most recent Nigeria Development Update report.
The nation’s GDP expanded by 2.74 percent last year, down from 3.10 percent in 2022, marking the worst rise in three years.
“Growth in Nigeria is estimated at 3.3 percent in 2024 and 3.6 percent in 2025-26 as macroeconomic and fiscal reforms begin to bear fruit. A more stable macroeconomic environment, as the initial shock of the reforms dissipates, will lead to sustained but still slow growth of the non-oil economy,” stated the report’s authors.
They stated that structural changes will be required to promote faster growth and that the oil sector is anticipated to stabilize with a recovery in production and somewhat lower pricing.
“Average inflation will stay high in 2024 at 24.8 percent, but it should gradually decline to 15.1 percent by 2026 as a result of tighter monetary policy and stabilized exchange rates. Economic activity in Côte d’Ivoire is predicted to expand by 6.6 percent in 2024 and to remain stable at 6.5 percent in 2025–2026.”
The multilateral lender states that over half of the countries have unmanageable debt loads, indicating that there is still a considerable risk of debt hardship.
“In 2023, governments in the region spent more than 45 percent of their revenue on debt repayments and interest, up from 31 percent in 2022. The impact of an unpredictable global environment is exacerbated by growing fragility, conflict, and climate change effects. As a result, as of March 2024, an estimated 105 million people in the region might be seriously food insecure,” the report stated.
According to the World Bank, the region’s economic growth is still not keeping up with the growth rate of the previous ten years (2000-2014) and is not fast enough to significantly reduce poverty.
“Moreover, economic growth reduces poverty in SSA less than it does in other regions. A one percent increase in per capita GDP is connected with a one percent reduction in the region’s extreme poverty rate, compared to 2.5 percent in the rest of the world.”
In order to promote stronger and more equitable growth, the World Bank advised African governments to address structural inequality. This can be done by restoring macroeconomic stability, encouraging intergenerational mobility, facilitating market access, and making sure that fiscal policies do not place an undue burden on the poor.
It stated, “The international community can also play a role by supporting external debt management and offering more concessional financing to facilitate the implementation of structural reforms.”
