The African Development Bank (AfDB) has issued a stark warning, cautioning that a surge in commodity and fuel prices may spark social unrest, particularly amid opposition to government policies such as subsidy removal.
This caution came in the bank’s macroeconomic performance and outlook for 2024, projecting a higher economic growth rate for the continent compared to the 3.2% recorded in 2023.
The AfDB highlighted several factors contributing to this warning. Firstly, it pointed to increasing geopolitical tensions in Eastern Europe and the Middle East, combined with the El Niño phenomenon, which could disrupt supply chains. Such disruptions, it cautioned, might exacerbate energy and food inflation globally, with Africa particularly susceptible to these shocks.
Moreover, the report underscored the potential economic toll of regional conflicts and political instability stemming from disruptions in constitutional governments. It warned that resources earmarked for development and social welfare could be diverted towards security and defense expenditures, further straining economies.
The AfDB further emphasized the adverse consequences of unconstitutional government takeovers, citing potential sanctions that could have detrimental effects on the economy.
Additionally, the report highlighted the risk of internal conflicts in countries stemming from rising energy and commodity prices, often triggered by currency depreciation or subsidy removal. Specific reference was made to Nigeria, Angola, Kenya, and Ethiopia, where energy subsidies had been eliminated, leading to social unrest driven by opposition to government policies.
It stated, “Internal conflicts and violence could also result from rising prices for fuel and other commodities due to weaker domestic currencies and reforms. For instance, the removal of fuel subsidies in Angola, Ethiopia, Kenya, and Nigeria and the resulting social costs have led to social unrest driven by opposition to government policy.”