African countries still have to tighten their belts to survive the severe shocks in the global economy, including skyrocketing food and energy costs stemming from geopolitical tensions, such as the Russian-Ukrainian war, political instability on the continent, and climate change.
The post-pandemic era continues to broaden the gap between the rich and poor in emerging economies, with a vast population struggling to cope with the new normal. African central banks have steadily increased interest rates to stabilize the cost of living.
However, it has been difficult for the middle and lower classes as access to capital for investment and the smooth running of business remain shattered in the middle-income economies.
The inflationary trend seems to have receded in the last year, but the most vulnerable still remain unprotected in low-income economies.
The global economy continues to record meager growth, according to the world economic outlook forecast, with the advanced global markets having the lowest growth at 1.7 in 2024. And 1.8 in 2025. The global economic growth forecasted in five years is the slowest in decades, at 3.2, despite the steady decline in inflation.
The high inflation rate, accompanied by a soaring cost of living, drove most households into acute poverty as purchasing power dwindled. A couple of African countries have the lowest minimum wage, which aptly applies to the public labor market, while others have no statutory labor laws that can cushion employees from exploitation.
African economies have consistently recorded stagnating living standards due to the fact that a rapidly growing population does not correlate well with GDP. Nigeria is the biggest economy on the continent, but the rising population, with relatively sluggish growth, proportionately lags the GDP per capita.
The continent’s population is projected to grow in thirty years, even as the GDP continues to slug. Most middle- and low-income countries are reeling from the high rate of unemployment due to the ballooning population.
For that matter, minimum wages are set to the lowest to accommodate most of the population and relieve pressure on labor costs, which, if not considered, can trigger price inflation and non-compliance in the labor market.
Burundi has the lowest minimum wage on the continent and is among the most despicable in the world. Despite having a population of only 13.6 million in 2023, the country has a GPP per capita of $230.04, the least in Africa.
Burundi’s neighbor, Rwanda, has a minimum monthly wage of $2.29, which has been in place since 1974 and is considered to be below the international living wage standards. The International Labour Organization (ILO) first adopted the Protection of Workers Claim Recommendation in 1992, three decades into the post-colonial economy, but a couple of countries have yet to implement the same.
The ongoing war in Sudan has completely overhauled it’s economic growth and potential wage adjustment, as political instability remains the biggest threat to sustainable development and planning in human history. With only a minimum of $5.12, the adverse effects of climate change and the soaring energy and fuel prices can wither its ability to sustain the vulnerable population.
Uganda first adjusted it’s monthly minimum wage to UGX130,000 in 2017, from UGX6,000, which lasted more than three decades since the Obote II government took office in 1984. The current wage is still below the estimated UGX250,000 living wage, which could span years before change implementation.
Despite the existing wage policies in these countries, they are not uniformly enforced across the public and private labour divisions. The private labour market is the worst hit, as wages are often negotiated between employers and employees. Kenya has one of the highest wages on the continent, but the private market is often overlooked, leaving employees susceptible to the deplorable economic environment.
Somalia is one of the countries that does not have a minimum wage policy enforced in the entire country but has employee benefits and statutory leaves pegged in the public sector. The country’s unemployment rate stands at 54 percent and is worst affected by political instability and terrorism.
Nigerian lawmakers, the continent’s economic powerhouse passed a legislation on July 23, 2024 to adjust the minimum monthly wage to N70,000 from N30,000, ending months of standoffs between the labour unions and the government. Nigeria experienced the highest inflation in Africa in the post-pandemic era. The goveerment seeks to cushion workers against the rising cost of living, as the country suffer shortage of fuel and food.
