West Africa in Focus /

Soaring inflation across West Africa raises social unrest risk

  • Sierra Leone joins the list of countries where rising inflation is fuelling social unrest, but it won't be the last

  • Inflation continues to escalate in Ghana and Nigeria with more rate hikes in the horizon

  • Nigeria central bank's policies are indirectly encouraging interest in crypto despite the regulators stance against it

Soaring inflation across West Africa raises social unrest risk
Janet Ogabi
Janet Ogabi

Senior Research Analyst

Tellimer Research
18 August 2022
Published byTellimer Research

Inflation has been the song of the year and people are beginning to dance to its unpleasant tunes. Protesters in Sierra Leone recently took to the streets of Freetown protesting inflation and the high cost of living – this could signal the rise of social unrest in other parts of West Africa, especially when inflation has hit the 30s in countries like Ghana.

Elsewhere, policies from the Central Bank of Nigeria are pushing Nigerians into cryptocurrencies as poor currency management builds distrust in the naira. There is some good news in Nigeria’s oil sector in the form of the NNPC ending its longstanding disputes and renewing its production sharing contract (PSC) licences with oil majors. This is expected to unlock US$500bn in revenues.

Inflation in Nigeria and Ghana continues to soar

Ghana and Nigeria released their July inflation report this week with inflation in both countries maintaining a dramatically upward trajectory. In Nigeria, the inflation rate increased from 18.6% in June to 19.6% in July, touching a 17-year high. For Ghana, the inflation rate increased from 29.8% in June to 31.7% in July, reaching a 19-year high.

Such high inflation increases the risk of social unrest and tension, although in Nigeria, the upcoming 2023 election might prove to be a distraction.

The monetary policy implications of high inflation are already significant, with both countries raising interest rates to tame soaring prices – we expect the central banks in both countries to maintain their tightening stance.

Inflation continues to surge in Nigeria and Ghana

Violent protests in Sierra Leone over the rising cost of living

Protesters took to the streets of Sierra Leone's capital Freetown last week protesting inflation and the rising cost of living. The protest turned deadly as anti-government protesters clashed with the police.

Sierra Leone is currently dealing with a significantly high cost of food and fertilisers with inflation hitting 28% in June. This mirrors a series of protests that have broken out in countries around the world like Sri Lanka, Kazakhstan, Ecuador and Mauritius (for more on this, see our colleague Hasnain Malik's report on how high misery – inflation plus unemployment – relative to history indicates protest potential).

The protests in Sierra Leone are a wake-up call for other African countries and we believe it won't be the last as inflation continues to surge.

Ghana to raise utility tariffs in September

Despite Ghana's raging inflation, its citizens will face the added burden of an increase in utility bills come September. Tariffs on water and electricity will increase by 21.5% and 27.1% respectively.

On the increase in electricity tariff, the government has said that it is necessary to avoid a power crisis. Ghana generally has better electricity supply than most countries in West Africa and this move – although likely to be painful for its citizens – is necessary to incentivise good service delivery. This is in contrast to the poor electricity supply in Nigeria, which is partly due to tariffs in place that are not cost reflective.

Ghana has the highest rate of electricity access in West Africa

Nigerian state oil firm's renewed contracts to unlock US$500bn in revenue

There was finally some good news for Nigeria's struggling oil sector on 12 August, when state oil firm Nigerian National Petroleum Corporation (NNPC), renewed five Deepwater Production Sharing Contracts (PSCs) with key oil producers including international oil companies (IOCs). This will mark an end to longstanding disputes between producers and the NNPC. It is also the first licence renewal since the Petroleum Industry Act (PIA) was signed last year. The PSC contracts will operate under old terms provided before the PIA was signed, as it is within the regulatory time frame for renewals. Most importantly, the renewed contracts are expected to unlock as much as US$500bn of revenues for Nigeria, according to the NNPC.

We note, however, that the threats to the sector persist, especially as far as oil thefts on onshore oil assets are concerned. The deepwater contract renewals buttress IOCs and their stance to increase investments in Nigeria’s deepwater assets. However, a substantial proportion of Nigeria's oil production is still done onshore and as such, IOC exits still pose a threat to production. In the medium-to-long term, we could expect increased output from deepwater assets and the transition of onshore assets to indigenous players to fill in the production gap.

CBN policies are only making Nigerians more interested in crypto

CoinGecko, a cryptocurrency price tracker, recently tagged Nigeria as "the most crypto-obsessed English speaking country in the world". This is interesting given that crypto transactions have been systematically banned by the Central Bank of Nigeria (CBN).

Surprisingly, the central bank's poor handling of the naira could potentially be what is driving this "crypto obsession". There are two clear reasons why this is happening. Firstly, confidence in the naira has crashed in the past year and Nigerians are now more aggressive about saving in foreign currency. However, the CBN has significantly reduced the supply of US$ to distribution channels (banks, BDCs), so people are now saving in crypto stable coins like USDT. Secondly, more people are now using crypto for cross-border transactions and remittances due to the large spread between the official rate and parallel market rate.

Low trust in Central Bank is driving crypto obsession in Nigeria

In our view, Nigeria will continue to be a "crypto obsessed" country and we think the CBN should do away with the ban, especially since the country's Securities and Exchange Commission has already recognised cryptocurrency and other digital assets as securities.

Read more about Nigeria’s currency crisis here.


Cote d'Ivoire inflation – August 23

Cote d'Ivoire's inflation jumped from 3.5% in May to 5.5% in June due to a spike in the prices of food and non-alcoholic beverages. The IMF projects that inflation could print at 5.5% in 2022 from 4.2% in 2021.

Nigeria Q2 GDP – Aug 26

Nigeria's economy grew 3.11% in Q1 22, a slow down from 3.98% in the previous quarter. The growth was driven by the non-oil sector, offsetting the plunge in the oil sector. the IMF projects the economy will grow by 3.4% in 2022 from 3.6% in 2021.


The Nigeria equities market posted a loss of 0.8% in the past week, bringing the year-to-date gain to 16%. Market width was negative, with 35 losers and 28 gainers.

As interest rates pick up, local Nigerian investors are likely to exit the equities market. Therefore, the equities market continues its losing streak. Looking ahead, we expect the interest in Nigerian market to remain tepid, especially as we draw the curtains on earnings releases (except for some banks).

Market indicators

Tellimer's West Africa Equities Coverage

Nigeria's yield curve (%)

Ghana's yield curve (%)