Africa (Commonwealth Union) _ World is grappling with a multitude of complex challenges: the lingering effects of the COVID-19 pandemic, wars in the Middle East and Eastern Europe, climate change, and a trade war between China and the U.S. These crises have severely impacted global economies, driving up commodity prices, disrupting supply chains, and creating a cost-of-living crisis.
Africa, despite its abundant resources, has been particularly hard-hit. Although African countries contribute only about 3.78% to global greenhouse gas emissions, they are among the most vulnerable and least resilient to climate change. Africa is the most susceptible region to droughts and the second most vulnerable to floods. Temperatures are rising faster in Africa than anywhere else in the world and could increase by up to 6 degrees Celsius by the end of the century.
A report by the Mo Ibrahim Foundation highlighted that widespread poverty and low economic development in Africa hinder governments’ ability to respond to climate shocks, exacerbating the continent’s vulnerability. Additionally, Africa remains exposed to external shocks. The wars in Ukraine and between Israel and Gaza have disrupted global supply chains and dampened Africa’s trade prospects, resulting in a 6.3% contraction in merchandise trade in 2023, following a significant growth of 15.9% in 2022.
This complex interplay of crises, known as a polycrisis, was underscored in the World Economic Forum’s Global Risks Report. Donald Kaberuka, Chairman and Managing Partner of SouthBridge Group and former President of the African Development Bank, emphasized that Africa must learn to manage crises independently. He called for building robust African institutions to address structural deficiencies and reduce reliance on the international financial system.
African leaders are increasingly advocating for a review of the global financial architecture to better serve the continent’s interests. Jeffery Sachs, an economics lecturer at the International Institute of Social Studies, argued for a fundamental change in how rating agencies evaluate Africa. He noted that Africa, despite its bright growth prospects, is often downgraded due to size and scale, which he deemed inappropriate.
Sachs believes Africa can achieve sustained growth of 7% per annum, making it a high-income region by 2063. However, he stressed the need for high levels of investment in education, which offers the highest economic returns. Unity is also crucial, as Africa’s population is expected to rise to 2.5 billion by 2050. To compete globally, Africa must act as a unified entity.
Africa’s unity was recently bolstered by its inclusion as the 21st member of the G20, a platform where the continent must assert its interests. Experts also argue that African governments should create enabling environments for the private sector and leverage the African Continental Free Trade Area (AfCFTA) to create market opportunities.
Yemi Osinbajo, former Vice President of Nigeria, highlighted the need for government support in fostering private sector investment. He pointed to the Dangote Refinery, Africa’s largest oil refinery, as a successful example of private sector initiative. The refinery, which began production in February, has the capacity to produce 650,000 barrels per day, significantly reducing Nigeria’s reliance on fuel imports and potentially supplying the entire African continent and beyond.
Yemi Kale, Managing Director and Group Chief Economist at Afreximbank, echoed these sentiments, noting that AfCFTA could accelerate economic growth and diversification, mitigating Africa’s exposure to global volatility and supply shocks. By harnessing the potential of AfCFTA and fostering a supportive environment for private investment, Africa can navigate the current polycrisis and achieve sustained prosperity.
