Emerging Markets: Why Africa Has The Potential To Boost Global Growth

In recent years, Sub-Saharan Africa has increasingly traded old friends, like the US and the European Union, for new ones in emerging markets. Since 2006, the region’s exports to the US have declined by 66 per cent, while exports to countries such as Russia and Turkey have doubled and tripled respectively.

This shift in partnerships comes as Africa embarks on a new era buoyed by the promise of the African Continental Free Trade Area (AfCFTA), the landmark free trade agreement that was consummated recently, which will increase visa openness and harmonization of monetary policy through West Africa’s new Eco currency.

Analysts are of the view that African countries can and should start this decade by taking advantage of this progress to shift from reactive to proactive diplomacy by building new ties with vital emerging markets. For these Analysts, instead of a 21st-century scramble, for Africa, 2021 and beyond marks the beginning of 21st-century partnerships.

Going forward, African nations should turn to their counterparts in emerging markets to stabilize their growth prospects as traditional Western democracies navigate new waters in politics. By now, the China-Africa story is well-documented, but it is not the only emerging market to realize the benefit of increased African engagement.

Investors from emerging markets such as China, India and the UAE now finance more than one-third of FDI projects, as well as more than half of all jobs created and capital invested in the region. These shifts in the balance of trademark the beginning of a shift in Africa’s foreign relations. They point to the development of new alliances that will be critical in the years to come against a backdrop of US-China trade tensions and policy uncertainty in the UK owing to Brexit negotiations.

Between 2014 and 2018, the UAE injected more than $25.3 billion worth of capital into the continent and the volume of non-oil trade between Dubai and Africa rose to $37.2 billion in 2018. Owing to its close geographic proximity, the UAE has positioned itself as a gateway to Africa in more ways than one: Emirates, one of the country’s flagship airline carriers, now boasts one of the largest networks of African destinations in the world; and logistics operator DP World operates, develops and manages seven marine and inland terminals in Africa, including Senegal’s busiest container terminal and facilities in Egypt, Mozambique, Rwanda and Somaliland.

The African Union-led a delegation of African countries in exhibiting at the Expo, presenting an opportunity for its member states to shine a light on new trade and investment opportunities.

Ghanaian health tech start-up mPharma, for example, recently received a round of funding led by Unbound Ventures, the VC arm of India’s Bharti Mittal Family office, best known in Africa for mobile operator Airtel. Given that the Indian regulatory and economic environment has more in common with many African countries than Silicon Valley or London, knowledge and capital exchanges such as the India-Africa Entrepreneurship Forum are likely to grow between the two regions in the coming year.

A third market likely to increase its engagement with Africa is Russia, which now seeks to engage with the region more strategically after decades of reduced engagement since the collapse of the Soviet Union. The Kremlin is now refocusing its efforts as highlighted by the 2019 Russia-Africa summit. At the gathering, Russian President Vladimir Putin told African leaders that he would seek to double trade ties between the two partners in the next five years.

In total, 92 agreements, contracts and memoranda of understanding worth RUB 1.004 trillion ($16.4 billion) were signed at the summit, with a focus on transport and logistics, oil and gas, minerals and banking, among other sectors.