The International Monetary Fund (IMF) has noted that rising inflation can cause social and political instability in Nigeria and other countries in Sub-Saharan Africa.
The global financial institution noted that while there are significant differences in inflation rates in individual countries in Sub-Saharan Africa, the median inflation rate in the region increased to almost nine percent in August.
IMF further clarified that though the rate of inflation in the Sub-Saharan region is less dramatic when compared with other parts of the world, the drivers of inflation between the two are however different. The financial institution noted that inflation has nearly doubled to the pre-pandemic levels in Sub-Saharan Africa.
In the report titled, ‘Africa’s Inflation Among Region’s Most Urgent Challenges,’ IMF claimed that Sub-Saharan Africa was besieged by a slow recovery from the pandemic, rising food and energy prices, and high levels of public debt.
The report stated that despite the economic rebound that accompanied the Covid-19 pandemic in 2021, economic activities within the region have been relatively quiet and it expects it to grow slowly for the remaining part of this year.
Listing some of the causes of the region’s inflation, the report noted that inflation in Nigeria and other sub-Saharan African countries was being driven more by external developments.
Some of these challenges include the sharp increase in the price of global commodities, disruption in the global supply chain system, sharp differences in the exchange rates and a few natural disasters.
In another development, IMF has cautioned Nigeria on fiscal deficit stating that Nigeria has failed to benefit from the rallying oil price. The financial institution nonetheless recommends fiscal tightening to help tackle inflation and address debt vulnerabilities