Impact of Rising Fuel and Commodity Prices on Nigeria: AfDB Warns of Potential Social Unrest.
The African Development Bank (AfDB) has issued a cautionary note, highlighting the looming threat of Social Unrest in Nigeria due to escalating prices of fuel and commodities, especially in light of government policies like subsidy removal.
In its macroeconomic performance and outlook report for 2024, the AfDB projected a higher economic growth rate for the continent compared to the 3.2% recorded in 2023. However, it also emphasized the potential risks posed by geopolitical tensions in Eastern Europe and the Middle East, as well as the El Nino phenomenon, which could disrupt global supply chains and exacerbate energy and food inflation, with Africa being particularly vulnerable.
The bank further warned about the adverse economic consequences of regional conflicts and political instability resulting from disruptions in constitutional governments. Such turmoil could divert resources away from development and Social welfare towards security and defense expenditures. Additionally, the report highlighted the potential for sanctions following unconstitutional takeovers of government, which could further strain the economy.
Internal conflicts within countries, fueled by rising energy and commodity prices stemming from currency depreciation or subsidy removal, were also identified as potential triggers for social unrest. The AfDB cited examples from Nigeria, Angola, Kenya, and Ethiopia, where the removal of energy subsidies had led to protests and opposition to government policies.
Insights from Nigeria reveal a concerning trend of steadily increasing food and fuel prices over the past year, with the inflation rate reaching 29.90% as of January 2024, marking the 13th consecutive month of inflationary pressure. Food inflation, in particular, soared to 35.5% in January, significantly impacting the cost of living for Nigerians and sparking sporadic protests nationwide.
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Transportation and cooking gas prices have surged to record highs, while the cost of staple foods like rice has also skyrocketed, surpassing earlier projections for 2023. The removal of fuel subsidies in May compounded the economic strain on the populace, with inadequate government measures to mitigate the impact exacerbating the situation.
Last year, organized labor unions staged protests to voice their grievances against the rising cost of living, and the Nigerian Labour Congress (NLC) is gearing up for further demonstrations to highlight the widespread hardship experienced across the country.
In summary, the AfDB’s warning underscores the urgent need for proactive measures to address the socio-economic challenges exacerbated by escalating fuel and commodity prices in Nigeria, to mitigate the risk of widespread social unrest.
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