AS tensions escalate between the United States and China over trade, Africa may find itself in a unique position to benefit from the shifting global economic landscape. According to Iain Williamson, CEO of Old Mutual Ltd, the ongoing trade disputes present new opportunities for African countries to expand their export markets, particularly in sectors like raw materials and agriculture.
Shifting trade dynamics: a silver lining for Africa
The US is set to impose 25 percent tariffs on imports from Canada and Mexico, alongside 10 percent duties on Chinese goods. These measures could significantly alter global supply chains, forcing the world’s largest economies to seek alternative sources for critical goods.
‘There could be opportunities if we can substitute some Chinese imports into America, particularly in raw materials and agriculture,’ Williamson told Bloomberg. He emphasised that African nations should proactively position themselves as reliable suppliers, capitalising on the gaps created by trade restrictions between the US and China.
Currency fluctuations: a double-edged sword
While the trade war offers potential benefits, it also poses challenges. The uncertainty surrounding global trade has led to a stronger US dollar, weakening currencies like the South African rand and other emerging-market counterparts. This could hinder African economic growth, especially if central banks are forced to maintain high interest rates to stabilise their economies.
A weaker currency may make African exports more competitive, but it also increases the cost of servicing foreign debt and importing essential goods. This delicate balance requires strategic economic management to ensure that potential gains from export opportunities are not offset by financial instability.
Reducing dependency on foreign aid
Adding to the complexity, President Donald Trump has questioned the value of US aid to Africa, raising concerns about the region’s reliance on foreign assistance. Williamson highlighted the importance of reducing dependency on external aid and focusing on building self-reliant economies.
‘Africa’s economic resilience will increasingly depend on our ability to tap into global trade shifts rather than relying heavily on aid,’ he noted. By diversifying export markets and strengthening intra-African trade, the continent can mitigate the risks associated with fluctuating foreign aid policies.
Strategic opportunities for growth
Despite the risks, the trade war could serve as a catalyst for African growth if countries take strategic action. Sectors such as agriculture, mining, and manufacturing stand to gain the most. African nations with rich natural resources and competitive agricultural sectors can fill supply gaps left by disrupted US-China trade relations.
Moreover, the implementation of the African Continental Free Trade Area (AfCFTA) provides an additional advantage by promoting regional trade, reducing tariffs within the continent, and enhancing Africa’s global competitiveness.
A pivotal moment for Africa
While the US-China trade war introduces volatility into global markets, it also opens doors for African economies. The key lies in strategic positioning, reducing foreign aid dependence, and capitalising on emerging export opportunities.
If African leaders and businesses can navigate these shifts effectively, the continent could transform short-term global disruptions into long-term economic gains.
