contagion of inflation

Debt stress, climate change, inflation…Will African countries weather the economic storm?

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This article is part of the dossier:

Africa and the economic storm

By Kanika Saigal

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Posted on October 10, 2022 08:42

© A bureau de change operator counts U.S. currency notes in Abuja, March 12, 2015. REUTERS/Afolabi Sotunde/File Photo — A bureau de change operator counts U.S. currency notes in Abuja, March 12, 2015. REUTERS/Afolabi Sotunde/File Photo

High inflation and subsequent interest rate hikes in the US have had huge knock-on effects across the globe. Africa will need to shift dwindling financial resources to more productive uses if it is to emerge from the current crisis with optimism.

Contagion from developed economies has spilled over into Africa. In Ghana, price growth for August was 33.9%, Ethiopia 32.5%, Nigeria 20.5%, and Rwanda 20.4%. Echoing the US Federal Reserve, a number of central banks across the continent have hiked interest rates to help tame inflation.

So far, the move has done little to stem the mounting crisis. Rising food and energy prices are draining government coffers and fuelling a cost of living crisis across the continent, which will push hundreds of thousands of people back into poverty.

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