The African Development Bank (AfDB) has issued a stern warning regarding the potential for social unrest across Nigeria due to increasing commodity and fuel prices, particularly in response to government policies such as subsidy removal.
The bank’s latest macroeconomic performance and outlook for 2024 highlight potential challenges for Africa, despite projecting higher economic growth compared to the previous year’s 3.2% recorded growth.
In its report, the AfDB emphasized Africa’s vulnerability to global supply chain disruptions, citing ongoing geopolitical tensions in Eastern Europe and the Middle East, as well as the El Niño phenomenon. These disruptions, it warned, could exacerbate energy and food inflation, posing significant consequences for social stability.
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The report further cautioned that regional conflicts and political instability, often triggered by disruptions in constitutional governments, could divert vital resources away from development and social support towards security and defense.
“Internal conflicts and violence could also result from rising prices for fuel and other commodities due to weaker domestic currencies and reforms,” the report stated.
It also highlighted the negative economic implications of any unconstitutional takeover of government, which could lead to severe sanctions.
The warning comes at a crucial time for Nigeria, Africa’s most populous nation, which recently faced significant public outcry over the removal of fuel subsidies. This move, aimed at addressing economic challenges and fiscal deficits, has led to widespread protests across the country.
“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 economic hardship,” the report said.
The consequences of these policies are already evident, with ordinary Nigerians bearing the brunt of the economic hardships. High fuel prices have cascading effects, impacting transportation costs, food prices, and overall living expenses. For many Nigerians, already struggling to make ends meet, the removal of subsidies has exacerbated their financial burdens.
In urban centers like Lagos and Abuja, where the cost of living is already high, the sudden spike in fuel prices has further strained household budgets. Commuters face increased transportation costs, as public transportation operators pass on the higher fuel costs to passengers. This, in turn, affects businesses reliant on transportation for the movement of goods and services, leading to higher prices for consumers.
Rural communities are not spared from the economic fallout either. Farmers, who rely heavily on fuel for agricultural machinery and transportation of produce, find themselves grappling with higher operational costs. As a result, food prices surge, pushing many families further into poverty.
Moreover, the removal of fuel subsidies has a ripple effect on other sectors of the economy. Industries reliant on fuel for power generation or as raw materials experience cost escalations, potentially leading to layoffs and reduced production.
In response to the economic hardship, civil society groups and labor unions in Nigeria have announced plans to embark on a two-day warning strike, demanding a reversal of the subsidy removal and greater government accountability. There are concerns that the protest has the potential to escalate social unrest if the government fails to address the underlying economic grievances effectively.
The AfDB’s warning comes amid others, urging policymakers across Africa to consider the broader socio-economic implications of their decisions to mitigate the risk of unrest and ensure sustainable development for all citizens.