Against the backdrop of rising food and energy prices globally, country risk and industry research company Fitch Solutions sub-Saharan Africa country risk head Jane Morley estimates that inflation will average 22.1% in sub-Saharan Africa this year – more than double the average seen between 2011 and 2020.

Moreover, the ongoing war in Ukraine will keep prices higher for longer in South Africa, she said during a webinar presented by Fitch Solutions on April 14, which focused on the economic effects of Russia's invasion of Ukraine and its impact on sub-Saharan Africa.

“While the economies of sub-Saharan Africa are not as immediately exposed to the Russian invasion of Ukraine as emerging markets close to the conflict, it's clear that the war will still have significant economic effects,” she said.

She said the elevated international oil crisis would have a knock-on impact on the cost of transport, which accounted for about 14% of South Africa's Consumer Price Index basket.

Morley noted that Fitch now forecast real gross domestic product (GDP) growth for sub-Saharan Africa of 3% this year, down from the 3.8% projection at the beginning of the year, and well below the pre-pandemic ten-year average.

“This reflects downward revisions to growth forecasts for several of the region's major economies, including South Africa, Nigeria, Kenya and Ethiopia, as well as Uganda and the Democratic Republic of Congo,” she said.

In a commentary published by Fitch Solutions in March, the company said it expected sub-Saharan Africa to be negatively impacted on by rising global commodity prices in the short-term, owing to the war.

Russia’s invasion of Ukraine, which began on February 24, continues to be a major source of volatility in global financial markets. Currencies and stocks have been selling off in Europe, and particularly Eastern Europe, owing largely to the region’s strong trade ties with Russia.

Russia and Ukraine produce 20% and 10% of the world’s wheat respectively, while Russia is the world’s top fertiliser producer and accounts for 10% of global oil supplies.

Prices of key commodities such as oil, gas, aluminium, palladium, wheat and maize have been rallying amid concerns over supply shortages resulting from the war in Ukraine and potential restrictions or disruptions to Russian exports.

While supply shortages are likely to be less severe in sub-Saharan Africa than in Europe and the Middle East and North Africa, Fitch Solutions said, the ongoing rise in energy and food prices will fuel inflationary pressures in the region, eroding household purchasing power.

Some energy and metal exporters in sub-Saharan Africa stand to gain from the short-term rally in prices, the commentary said.

Over the longer term, relatively high oil prices were unlikely to reverse declines in Nigerian and Angolan oil output, but efforts by the European Union to diversify away from Russian gas held upsides for investment and exports in Nigeria and Mozambique.