CAIRO (Middle East Eye) – The government of Egyptian President Abdel Fattah el-Sisi may be the most under threat in Africa from rising inflation, a report published by Renaissance Capital, a London-based investment bank, says.
Rising costs are increasing the risks of regime change in several African countries as higher prices make falls in per-head GDP more likely, said the bank’s chief economist Charles Robertson, according to an article in the Africa Report.
In most global emerging markets in 2022, falling GDP per head has little impact on political risk, because most markets are simply too wealthy and stable, says the economist.
However, he argues, that does not apply in many parts of Africa.
While in richer countries packaging, labor, and transport costs represent a large part of the final food prices paid by consumers, in Africa, the raw material costs of food make up a higher share of the sale price.
Egypt is highly dependent on food imports, especially from Russia and Ukraine, from where almost 80 percent of the country’s wheat imports came last year.
This means the country’s economy has been seriously impacted by the situation in Ukraine.
Over recent weeks, commodity prices have risen dramatically, igniting public anger and pressurizing authorities to take radical measures to keep a lid on prices.
Such measures included the Egyptian government forcing local wheat producers to sell a portion of their harvest to the government.
For the first time in years, the state intervened to dictate the price of bread produced by private bakeries for the tens of millions of Egyptians not registered in the national food rationing system.