The prevailing cost of living crisis in Africa stands as a prominent issue, casting a profound impact on the continent’s economic landscape. Soaring prices of essential commodities, including food, fuel, and basic services, present formidable obstacles for many Africans as they strive to fulfil their day-to-day needs.
The global ramifications of the COVID-19 pandemic have been extensive, inflicting catastrophic contractions on economies worldwide. Despite the world’s effort to move past the worst of the pandemic, economies continue to grapple with debilitating side effects.
While Africa navigated the pandemic’s health threats relatively well, its economies face greater challenges than other regions. The cost-of-living crisis has become particularly evident, affecting large population segments across the continent.
Domestic prices have risen relentlessly across the continent’s major economies – Senegal, Sudan, Kenya, South Africa, Ghana, and Nigeria – even as elevated unemployment levels, especially among the youth exacerbate the impact of diminished spending capacity among the populace.
In December 2023, Nigeria, Africa’s largest economy, saw its annual inflation rate spike to a staggering 28.92%, marking an 18-year high. This surge in inflation was triggered by a combination of factors, including the removal of petrol subsidies and the discontinuation of exchange controls. The spike in inflation was caused by a combination of factors, including the removal of petrol subsidies and the end of exchange controls. The rising cost of living is having a significant impact on Nigerians, many of whom are struggling to afford necessities. The government is facing increasing pressure to take action to address the crisis.
In December 2023, Nigeria, the largest economy in Africa, witnessed an alarming spike in its annual inflation rate to 28.92%, marking a 27-year high. Factors such as the removal of petrol subsidies and the discontinuation of exchange controls contributed to this surge. The escalating cost of living significantly impacts Nigerians, leading to struggles in affording necessities. The government is under increasing pressure to take decisive action to address the crisis.
Simultaneously, protests erupted in Niger state and Kano over the rising cost of food, prompting concern from Nigerian authorities. Finance Minister Olawale Edun, addressing a German delegation in Abuja, expressed the government’s concern and attributed the surge in food prices to rising demand. He emphasized the necessity of boosting agricultural production to alleviate the situation.
South Africa faces its own set of cost-of-living challenges, with unaudited fuel data indicating substantial increases in petrol and diesel prices, primarily driven by surging international oil prices. These prices have surged since August due to reduced output by major oil-producing nations.
In Kenya, fuel costs reached an all-time high on September 15 following a revision of pump prices by the Energy and Petroleum Regulatory Authority.
This added to the economic challenges faced by millions in the country. The retail price of a litre of petrol soared to over 200 Kenyan shillings ($1.36), exacerbating the existing cost-of-living crisis characterised by rising prices for staple goods, new taxes, and a weakening shilling.
Despite efforts by African countries to alleviate the hardships, pricier fuel and the direct impact of global events, such as Russia’s invasion of Ukraine, continue to push food prices to record highs. Disruptions in Ukraine’s exports, a significant player in the world’s wheat and maize exports, have contributed to the surge in grain prices, affecting countries like South Africa. South Africa imports about a third of its wheat from Ukraine and Russia. So far this year, South African bread and cereal prices have risen by almost 20%.
Global cooking oil prices also rocketed in response to the invasion of Ukraine, which disrupted sunflower oil exports from the important Black Sea region. A 750ml bottle of sunflower oil jumped to above R45 in July, from below R31 last year, Statistics SA reported.
The World Bank recently reported a slowdown in economic growth in Sub-Saharan Africa (SSA) from 4.1% in 2021 to 3.6% in 2022, with projections pointing to a further decline to 3.1% in 2023.
This deceleration is attributed to several factors, including the global economy’s persistent sluggishness, high but declining inflation rates, and challenging global and domestic financial conditions amid rising debt levels.
According to the World Bank, growth is estimated to pick up to 3.7% and 3.9% in 2024 and 2025, respectively. However, growth conditions remain insufficient to reduce extreme poverty and boost shared prosperity in the medium to long term.
It remains to be seen how African countries will navigate through this current phase of skyrocketing rate of inflation across the continent. Economists across the continent are advocating for better policies that will ease the hardship on ordinary Africans.
African leaders need to engineer an appropriate temperament for democracy across the economy through reasonable and pragmatic market-based solutions to the economic challenges facing their countries.
Priority should be given to agriculture such that there are designs and implementations of support arrangements that will make both post-harvest storage and pre-processing of agricultural commodities possible and easier. There is also an urgent need for measures to improve access to credit, especially for economic actors lower down the ladder.