The African continent needs to strengthen itself economically and increase intra-African trade if it is not to bear the brunt of increasingly frequent global geopolitical shocks.
I write today from the sadness with which I have been contemplating the world's future in recent days. Just when it seems that nothing can get worse at the international level, a new war appears to remind us that, yes, everything can get worse. Israel's attacks on Iran and the ensuing Iranian response have already led to an open war with unpredictable consequences, both because of the nuclear threat and the risk of the United States' possible involvement in the conflict, which could once again lead us into a situation with a major impact on the global economy and security.
What is predictable is that every time a new conflict breaks out, the whole planet suffers, trade and commerce of all kinds suffers, and those who are most dependent on economic ups and downs suffer the most: the developing countries. And in this damage, right now, African countries are always at the forefront. Paradoxes of life: Africans are the ones who suffer the most from climate change, even though they have polluted the least, and they are also the first to perceive impacts on their daily lives when missiles fall thousands of kilometres away.
Here are a few examples: following the Israeli attack and Iran's retaliation, oil prices rose by more than $4 a barrel, slightly more than 5%. In a country like Ghana, in the midst of economic recovery and in negotiations with the International Monetary Fund to avoid defaulting on its debt service, fuel prices were estimated to rise by up to 7 percent in the two weeks following the start of the conflict. Ghana's recovery, experts pointed out months ago, was closely linked to whether oil prices could be kept low.
Another example is South Africa, where its currency, the rand, fell by 1.6% against the dollar. In financial terms, government bonds become more expensive when external investors see the risk factor increasing, which inevitably makes things more difficult for those countries, African countries, which the world economy has always tended to regard as unstable.
Other factors that are curious to follow are also purely diplomatic and geopolitical. Several African countries had in recent years initiated good and close relations with Iran.
South Africa, Burkina Faso and Niger are good examples of this. All of this puts pressure on the option that many African countries have been demanding for years as a way to overcome the colonial scheme: to stop living with a major partner, a former colonial power, in order to diversify partners and take advantage of the potential of other actors.
Already African countries clearly remember the consequences of Russia's attempted invasion of Ukraine, which highlighted the vulnerability of an Africa still suffering the harsh aftermath of the COVID-19 global slowdown. In addition to the increase in the cost of basic commodities such as food, fuel and fertilisers, economists' estimates put the impact of the Ukrainian war on the continent's GDP at 0.2%. In some countries, such as Ethiopia, Kenya and Sudan, the impact was devastating and could be as much as 3 points of their national GDP.
The war in Europe exacerbated pre-existing weaknesses in our neighbouring continent. Many African governments already had limited fiscal space due to the pandemic, and rising global interest rates and borrowing costs following the Russian invasion further reduced their capacity to spend on development. In 2023, 16% of the world's 68 poorest countries (about forty of them African) were at high risk or already over-indebted, twice as many as in 2015.
Recurrent global geopolitical shocks underline the urgent need for Africa to forge its own path to socio-economic resilience at the global level. For the geopolitical scenario seems clear: with the US having discarded Africa as a strategic priority (evidenced by cuts in US cooperation in the humanitarian and health fields, first, and now by outright bans on entry into the US of passport holders from specific countries) and with Europe not only in clear decline but in a moment of deep unpopularity across the continent (the clear example of which is France).
In this context, the countries of the continent are unashamedly opening up a melon of realignment and diversification of alliances, which in some cases include partners that, given their behaviour towards Europe, we here consider hostile and dangerous, as in the case of Russia. This is the so-called multipolarity, which includes partners such as China, Turkey, Iran, Korea, India and the Gulf States.
To face geopolitical ups and downs with greater autonomy, Africa needs to deepen its commitment to self-reliance and structural transformation. This process is already underway: fiscal reforms are being promoted to mobilise domestic resources, African financial institutions such as the African Development Bank are being strengthened, and innovative mechanisms such as diaspora bonds and public-private partnerships are being used.
Industrialisation and intra-African trade, driven by the African Free Trade Area, the AfCFTA, are gaining momentum as pillars of a new development strategy that prioritises local production, especially in key sectors such as pharmaceuticals, agribusiness and mineral processing. At the same time, investments in renewable energy and the digital economy are opening up new frontiers of growth and technological sovereignty.
Just one example here with figures of what intra-African free trade can mean: in its forecasts, the world's largest free trade area, the AFCFTA, plans to increase intra-African trade by more than 50% over the next 10 years and to generate up to 450 billion dollars in additional revenue for the continent's economy.
On the horizon, African countries are clear that the solution is to stop being a passive recipient of global policies and become a strategic agent with greater bargaining power. Stop exporting cocoa to directly manufacture chocolate, in other words. Its control of critical resources, record demographic growth - its population will be the largest in the world by the end of the century - and its insertion in a multipolar world give it unprecedented geopolitical weight.
But consolidating this position is not easy, and to achieve it the continent will have to prioritise institutional stability, security, investment in human capital and economic integration. Only in this way will it be able to transform its potential into true resilience in the face of global turbulence, building a sustainable and fair development model whose economies stop trembling every time a missile explodes in Tel Aviv or Tehran.
