The World Bank has named Nigeria, Ethiopia, Malawi, Sierra Leone, and Zimbabwe as the sub-Saharan African (SSA) countries that recorded the fastest rise in food inflation in February this year.
The latest edition of the Africa Pulse report, a biannual survey of African economies, said food inflation and the weakening of domestic currencies are still major drivers of inflation across countries in the region.
“By February 2024, about one-third of the Sub-Saharan African countries with monthly available food price information (14 of 40 countries) had double-digit year-on-year rates of food inflation, with the fastest increases experienced in Ethiopia, Malawi, Nigeria, Sierra Leone, and Zimbabwe,” it said.
It said on the other hand, for countries with stubbornly high levels of inflation, the monetary policy stance should remain restrictive — particularly in countries like Ethiopia, Malawi, Nigeria, Sierra Leone, and Zimbabwe.
“Inflation is cooling in most SSA economies but remains high compared to pre-pandemic levels. The median inflation in the region is projected to fall from 7.1 percent in 2023 to 5.1 percent in 2024 and five percent in 2025–26,” it added.
Last month, the Central Bank of Nigeria raised its monetary policy rate for the second straight time by 200 basis points to 24.75 percent in a bid to fight inflation. In February, the apex bank increased the interest rate by 400 basis points to 22.75 percent.
Over the past 10 months, the inflation rate in Africa’s most populous nation has accelerated largely on the back of the federal government reforms including the removal of petrol subsidy and naira devaluation.
Data from the National Bureau of Statistics (NBS) shows that Nigeria’s headline inflation rate rose for the 14th consecutive time in February to 31.70 percent from 29.90 percent in the previous month.
Food inflation, which constitutes 50 percent of the inflation rate, rose to 37.91 percent from 35.41 percent. And it is on course to hit an all-time high in March due to a combination of rising demand, higher transportation costs, and worsening insecurity.
The World Bank’s latest Nigeria Development Update report revealed that rising inflation and sluggish growth in Africa’s most populous nation increased the number of poor people to 104 million in 2023 from 89.8 million at the start of the year.
Last year, the country’s economy grew at the slowest pace in three years as its Gross Domestic Product growth fell to 2.74 percent from 3.10 percent in 2022.
“Growth in Nigeria is projected at 3.3 percent in 2024 and 3.6 percent in 2025–26 as macroeconomic and fiscal reforms gradually start to yield results. A more stable macroeconomic environment, as the reforms’ initial shock dissipates, will lead to sustained but still slow growth of the non-oil economy,” authors of the Pulse report said.
They said the oil sector is expected to stabilise with recovery in production and slightly lower prices and that structural reforms will be needed to foster higher growth.
“Average inflation will remain elevated at 24.8 percent in 2024, although it is expected to ease gradually to 15.1 percent by 2026 on the back of monetary policy tightening and exchange rate stabilisation. In Côte d’Ivoire, economic activity is set to grow at 6.6 percent in 2024 and to stay firm at 6.5 percent in 2025–26.”
According to the multilateral lender, the risk of debt distress remains high with more than half of countries facing unsustainable debt burdens.
“In 2023, governments in the region spent over 45 percent of their revenues on debt repayments and interests, up from 31 percent in 2022. The impact of an uncertain global environment is compounded by increased fragility, conflict, and the impacts of climate change. As a result, an estimated 105 million people in the region were potentially experiencing severe food insecurity as of March 2024,” it said.
The World Bank added that the pace of economic expansion in the region remains below the growth rate of the previous decade (2000-2014) and is insufficient to have a significant effect on poverty reduction.
“Moreover, economic growth reduces poverty in SSA less than in other regions. Per capita GDP growth of one percent is associated with a drop in the extreme poverty rate of only one percent in the region, compared to 2.5 percent in the rest of the world.”
The World Bank recommended that African governments must tackle structural inequality to foster stronger and more equitable growth, by restoring macro-economic stability, promoting inter-generational mobility, supporting market access, and ensuring that fiscal policies do not overburden the poor.
“The international community can also play a role by providing more concessional financing to facilitate the implementation of structural reforms and supporting external debt management,” it said.