Navigating Global Trade Tensions: New Opportunities for African Businesses

Amb. Albert Muchanga,   former Commissioner for Economic Development, Tourism, Trade and Mining, African Union Commission,  says investing in research and development is crucial for Africa’s competitiveness.

Muchanga said this during a Ministerial Panel on “Can Africa Trade its way into Development?” at the 23rd Annual General Meetings of the Afreximbank in Abuja.

He said, according to The Economist magazine, for an economy to be globally competitive, it must invest 2.4 per cent at the minimum of its Gross Domestic Product (GDP) in research and development.

Muchanga, however, said he recommended to the African Union member states that investments in research and development be increased to 1.5 per cent of GDP.

“ If Africa has to trade her way into government, we need to come up with uniquely African products of high quality,  and to achieve that, we need to invest in research and development.”

He noted that Africa’s population had reached 1.55 billion people, accounting for 18.3 per cent of the world’s population, and is projected to rise to 25 per cent by 2050.

However,  Muchanga said in spite of the rapid growth, Africa’s economic progress had been slow, with the continent accounting for only three per cent of world trade and less than three per cent of the world’s GDP.

“We have a very high and young population,  but we are very low on productivity and competitiveness.”

Muchanga noted that slow progress had bred complacency, with many Africans relying on aid rather than driving economic development through trade and entrepreneurship.

“Therefore, if we are to leverage trade to promote rapid economic development, we must do our own business.

“Yes, Africa can use trade to power Africa’s progress. We have no choice because development is a do-it-yourself environment; nobody is going to do it for Africa. We have to do it ourselves.”

He highlighted some other growth opportunities, including industrialisation, which he said was key to Africa’s economic development.

Muchanga said initiatives like the Arise Integrated Industrial Platforms, the Africa Creative Nexus Programme, and the Africa Enterprise Network were promoting value addition and manufacturing.

He added that identifying high-potential value chains, such as pharmaceuticals, food processing, mining, and automotive sectors, could help drive economic growth and industrialisation.

Muchanga said Africa’s large and growing population presented opportunities for investors, with the continent’s consumption patterns making it an attractive investment hub.

He said establishing a customs union could facilitate deeper economic integration among African countries, enabling them to exploit economies of scale and become more competitive globally.

According to Muchanga,  research suggests that Africa can establish a common market within 10 to 15 years, promoting economic cooperation and unity among member states.

“So this is the opportunity for Africa really to come together or to defragment  while others are preventing deeper economic integration.”

Muchanga said  Africa’s permanent membership in the G20 provided a platform for the continent to assert its voice on global economic issues and shape the future of the global economy.

He said rapid economic growth and harmonised trade policies can amplify Africa’s influence on the global stage, enabling it to contribute to restructuring the global system.

Speaking on the recent surge in tariffs and trade tensions, Prof. Marlene Attzs, Advisor, Institutional Effectiveness and Strategy, University of the West Indies,  said African and Caribbean nations should see the opportunities that lie within.

Attzs said one such opportunity was in strengthening trade relationships with countries that share a deep history and economic quest.

“Rather than relying on traditional partners, African and Caribbean nations are exploring new avenues for cooperation and growth.

“We should not let a crisis go to waste.

“ There is some chaos, crises, and some unknowns, but it is a good time for us to pivot and reimagine what our economies look like and identify opportunities, even in the midst of the challenges.

She said that the shift in perspective could potentially unlock new markets, foster economic diversification, and propel structural transformation. (NAN)