African trade ministers meet today over US tariffs affecting exports
Deceleration in inflation across Sub-Saharan Africa driven by policy measures and market stability
Deceleration in inflation across Sub-Saharan Africa driven by policy measures and market stability
By: Nii Ammui Fio | 2 mins read
Inflationary pressures in Sub-Saharan Africa have softened significantly, driven by firm policy interventions and improving market conditions, the World Bank revealed in its April 2025 Africa Pulse Report.
According to the Bank, “the median inflation rate dropped from 7.1 percent in 2023 to 4.5 percent in 2024,” signaling widespread progress in curbing price hikes. This trend is expected to hold steady, with projections showing a “4.6 percent average inflation rate between 2025 and 2027.”
Roughly 70 percent of countries in the region experienced slower inflation in 2024, thanks to a trio of contributing factors: policy tightening, reduced global supply disruptions, and improved currency stability. The World Bank attributes the overall cooling to “the gradual easing of supply chain pressures, the effects of contractionary monetary and fiscal policy, as well as greater currency stability.”
Despite this regional progress, inflation remains uneven. “Fourteen countries still face double-digit inflation,” including Ghana, Nigeria, Sudan, Ethiopia, and Zimbabwe. This number, however, is expected to drop to just six by 2027, if current policies persist.
The monetary response across Africa varies. Many central banks have either paused rate hikes or begun easing, though a few are still raising rates to address localized inflation spikes. The World Bank warns that emerging global trade barriers—such as tariffs—could derail disinflation efforts by hiking trade costs and weakening local currencies. In such cases, “higher-for-longer interest rates” may return, it cautioned.
On the fiscal front, governments are slowly improving budget discipline. The region’s “primary deficit is expected to narrow to 0.3 percent of GDP by 2025,” compared to 0.5 percent in 2024. Continued consolidation efforts could yield “an average surplus of 0.1 percent of GDP” between 2026 and 2027.
However, rising debt service obligations are taking a toll. Interest payments alone are projected to average “3.4 percent of GDP from 2025 to 2027.” This financial burden is already forcing tough trade-offs: in 2024, “20 countries in Sub-Saharan Africa spent more on debt service than on health and education combined.”
Public debt servicing, which consumed just 16 percent of government revenue in 2012, has ballooned to nearly 50 percent in 2024. Though some relief may come through restructuring deals, the long-term outlook remains uncertain without strong fiscal management and pro-growth reforms.
External financing has also taken a hit. The region is forecast to pay “US$20 billion in interest on public and publicly guaranteed external debt” in 2025, with about three-quarters owed to private creditors and Chinese lenders. Since 2016, principal repayments have exceeded new inflows, leading to a drop in net external debt financing—from “US$37.7 billion annually in 2016–2019” to “US$18.4 billion in 2023.”
With commercial and bilateral flows receding, the World Bank notes that “multilateral institutions now account for 80 percent of post-pandemic financial flows” into the region.
