BY OLUFUNKE BARUWA
AFRICA is facing multiple challenges simultaneously and in rapid succession. It appears that once one bad thing happens, it often triggers a series of other negative events, making the situation seem overwhelmingly bad. The successive poor economic, social and political decisions have rapidly overtaken the little gains recorded in the last few decades and exacerbated by a variety of global and local factors.
More than fifty years after the Stockholm groundbreaking Action Plan and halfway from the 2030 deadline, the continent is not doing well at all in its quest for sustainable growth and development. All the developmental indices are pointing downwards and spiralling too in a rather disturbing trend. The often-quoted light at the end of the tunnel is rather dim and too obscure to elicit hope.
Granted, the whole world and not just Africa has had a few setbacks with the Covid-19 pandemic in 2020, but that is not the only event that has threatened progress towards sustainable growth and development. There are other human factors that have undermined progress including democratic backsliding, insecurity and multi- dimensional poverty that has been weaponised to keep the masses at bay.
Set against the backdrop of the implementation of the Sustainable Development Goals (SDGs) and the world’s hopes to achieve progress in all five pillars of the 2030 Agenda of People, Planet, Prosperity, Peace, and Partner- ships, there is still a long way to go. The interconnected nature of these issues creates significant difficulties for many African nations.
A Continental Challenge
High inflation rates in many African countries are significantly driven by rising food prices. This is often due to poor agricultural productivity, climate change impacts, and disruptions in global supply chains. Similarly, global oil price fluctuations heavily impact African economies, especially those that are net importers of fuel. Increased fuel prices contribute to overall inflation and higher costs of living.
Several African currencies have depreciated against major global currencies. This depreciation increases the cost of imports, further driving inflation and making everyday goods more expensive for consumers. Many others have experienced slower-than-expected economic growth occasioned by political instability, inadequate infrastructure, and dependence on commodity exports, which are subject to volatile global prices.
Additionally, high levels of youth unemployment are a significant issue, contributing to social unrest and economic instability while rising public debt remains a huge concern. High levels of debt servicing limit the ability of governments to invest in crucial sectors such as health, education, and infrastructure. Although the greater concern is with the mismanagement of public funds sourced through debt and pundits have called for increased scrutiny in this area.
Ongoing conflicts and security issues in regions such as the Sahel, parts of West Africa, and the Horn of Africa disrupt economic activities, displace populations, and hinder development efforts. The continent is particularly vulnerable to the impacts of climate change, which affect agricultural productivity, water availability, and overall economic stability. Droughts, floods, and changing weather patterns have devastating effects on economies reliant on agriculture.
The regional specifics paint a much grimmer picture. East African countries like Kenya and Ethiopia have faced high inflation rates, driven by food and fuel prices. Political instability and drought conditions have further strained economies. South Africa, the region’s largest economy, has faced slow economic growth, high unemployment, and persistent power shortages. Other countries in the region, like Zimbabwe, deal with hyperinflation and severe economic instability.
There is not much difference in North Africa where countries like Egypt and Tunisia face economic pressures from rising inflation, unemployment, and the impacts of global economic conditions. Political instability also hampers economic progress. In West Africa, countries like Nigeria and Ghana have struggled with currency depreciation and high inflation.
Security issues, especially in Nigeria, exacerbate economic challenges. Governments in these countries have employed monetary policies, economic diversification and social programs which are effective in the long run but rather slow against the backdrop of urgent demands. Central banks across the continent have employed various monetary policy tools to combat inflation, such as raising interest rates. However, these measures can be limited by external factors like global commodity prices and internal structural issues.
Efforts to diversify economies away from primary commodities are ongoing but face challenges such as lack of infrastructure, investment, and political will while the introduction of social safety nets and intervention programs to mitigate the impact of economic challenges on vulnerable populations, are often underfunded and inefficiently implemented.
A Closer Look at Nigeria.
Nigeria has been experiencing significant economic challenges and grappling with persistently high inflation rates. The inflation rate has been driven by various factors, including food prices, fuel costs, insecurity and currency devaluation. Like the continental challenge, a significant portion of inflation is attributed to rising food prices. This is due to both local factors such as agricultural productivity and insecurity issues and global factors like supply chain dis- ruptions.
The removal of fuel subsidies has led to increased fuel prices, contributing to overall inflation. This policy change, while intended to stabilize the economy in the long run, has immediate inflationary impacts. The Nigerian Naira has seen significant depreciation against major currencies, exacerbating inflation as the cost of imported goods rises. This devaluation affects everything from consumer goods to manufacturing inputs. Once Africa’s largest economy, Nigeria’s economic growth has been sluggish. Structural issues, policy uncertainties, and global economic conditions have all played a role. High unemployment rates, particularly among the youth, are a major concern.
This exacerbates poverty levels and puts additional pressure on social services. Nigeria’s external debt has been rising, leading to increased debt servicing costs. This puts additional strain on the country’s fiscal resources and limits the government’s ability to invest in essential services and infrastructure. Finally, insecurity, particularly in the northern and middle belt regions, has severely affected agricultural production and economic activities. This not only con- tributes to inflation but also discourages both local and foreign investment. Increasingly, insecurity has become a common denominator across the country rather than a subnational issue.
The Central Bank of Nigeria has implemented various monetary policies to control inflation, such as adjusting interest rates. However, the effectiveness of these measures is often limited by structural economic issues. Efforts to diversify the economy away from oil dependency have been ongoing but face significant challenges. While there has been some progress in sectors like agriculture and technology, the pace of diversification is slow. The government has also introduced social intervention programs to alleviate the impact of economic challenges on the most vulnerable populations. However, these pro- grams are often hampered by funding constraints and implementation issues.
