Inflation is perhaps the biggest enemy to wealth creation. This is because of how it silently [but consistently] erodes the value of money. Across Africa, inflation is an ever present problem, although many of those it affects do not know that it’s affecting them. Just to paint a picture of the havoc inflation can cause, let’s quote Nigerian financial expert, Damilola Alonge, who wrote this in 2019:
“If you had N1 million in 2008 and it wasn’t invested, and the average inflation rate was 12% over the ten year period, your N1 million has now become N321, 973.24 in value. Meaning, your N1 million is now worth about N321, 000 today.”
A few things you should know about inflation
According to Investopedia, inflation occurs when there is a significant decline in the purchasing power of a currency. It can be measured by the rate at which the prices of goods and services rose within a particular period. Dramatic increases in the cost of raw materials is often one of the primary causes of inflation. A surge in demand for goods and services can also trigger an upsurge in prices, thereby leading to high inflation.
Common trend among countries with high inflation rates
One trend that is common among African countries with high inflation rates is that they are mostly import-dependent. This is not very surprising. After all, when a country imports more than it exports, it naturally becomes susceptible to various economic challenges, including weak exchange rates (as we discussed earlier) and high inflation rate.
8 African countries with the highest inflation rates in 2021
Whereas inflation is a general problem across much of Africa, some countries have it worse. So, for today’s listicle, we shall be looking at eight countries with the highest inflation rates on the continent. As always, this piece is intended to keep you informed, even as you make wise business and financial decisions. Also note that the list was derived from data compiled by Statista and other reliable sources.
- Sudan: The Republic of Sudan, which is located in the Northeastern part of the continent, has the highest inflation rate on the continent. According to Reuters, the country’s inflation rate stands at a staggering 387.56%
- Zimbabwe: At 50%, Zimbabwe’s inflation rate is the second highest in Africa.
- South Sudan: This country’s inflation rate stands at 40%, making it the third highest in Africa.
- Ethiopia: This country in the Horn of Africa saw its inflation rate rise to 37.6% in August, no thanks to ongoing armed conflicts which have affected the economy.
- Angola: Angola has the fourth highest inflation rate in Africa at 29.7%.
- Zambia: This country has an inflation rate of 22.1%.
- Nigeria: Africa’s biggest economy has an inflation rate of 17.59%.
- Sierra Leone: Sierra Leone’s inflation rate as at August stood at 10.88%, according to information verified from the country’s statistics department.
