Survival Odds

Regime-change risks in Africa are growing as inflation accelerates, says Rencap

By David Whitehouse

Premium badge Reserved for subscribers

Posted on April 22, 2022 04:00

Egypt’s President Abdel Fattah al-Sisi
Egypt’s President Abdel Fattah al-Sisi. (Johanna Geron, Pool Photo via AP)

Rising inflation is increasing the risks of regime change in African countries as higher prices make falls in per head GDP more likely, according to research this month from Renaissance Capital’s chief economist Charles Robertson.

Inflation rates of 20% or more mean that per head GDP is likely to fall, which in terms increases the chances of political upheaval, the research argues.

In most global emerging markets in 2022, even falling GDP per head has little impact on political risk, because most markets are simply too wealthy and stable, Robertson says. That, he argues, does not apply in many parts of Africa. The continent’s low-income countries face more risks when there are destabilising external events, such as the Russia-Ukraine war, because food represents a higher share of the consumer price basket than in richer economies.

Further, while in richer countries packaging, labour and transport costs represent a large part of the final food prices paid by consumers, in Africa, the raw material costs of food makes up a higher share of the sale price.

For political change, Robertson uses the “Polity Score”

There's more to this story

Get unlimited access to our exclusive journalism and features today. Our award-winning team of correspondents and editors report from over 54 African countries, from Cape Town to Cairo, from Abidjan to Abuja to Addis Ababa. Africa. Unlocked.

Subscribe Now

cancel anytime