<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="234" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600fm-ch1-rising-global-debt-requires-countries-to-put-their-fiscal-house-in-ordercimf-phot-820x234.jpg" alt="" class="wp-image-612798" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600fm-ch1-rising-global-debt-requires-countries-to-put-their-fiscal-house-in-ordercimf-phot-820x234.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600fm-ch1-rising-global-debt-requires-countries-to-put-their-fiscal-house-in-ordercimf-phot-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600fm-ch1-rising-global-debt-requires-countries-to-put-their-fiscal-house-in-ordercimf-phot-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600fm-ch1-rising-global-debt-requires-countries-to-put-their-fiscal-house-in-ordercimf-phot-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600fm-ch1-rising-global-debt-requires-countries-to-put-their-fiscal-house-in-ordercimf-phot-1536x439.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600fm-ch1-rising-global-debt-requires-countries-to-put-their-fiscal-house-in-ordercimf-phot-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">(Credit: IMF Photo/Tuane Fernandes)</figcaption></figure>



Major policy shifts underway have heightened global uncertainty. The series of recent tariff announcements by the United States, and countermeasures by other countries have increased financial market volatility, weakened growth prospects, and increased risks. They come in the context of rising debt levels in many countries and already strained public finances, which in many cases will also need to accommodate new and permanent increases in spending, such as defense. Rising yields in major economies and widening spreads in emerging markets further complicate the fiscal landscape.



We project global public debt to increase by 2.8 percentage points this year—more than twice the estimates for 2024—pushing debt levels above 95 percent of gross domestic product. This upward trend is likely to continue, with public debt nearing 100 percent of GDP by the end of the decade, surpassing pandemic levels. These numbers are based on the&nbsp;<a href="https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025?cid=bl-com-SM2025-WEOEA2025001&amp;utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener">World Economic Outlook</a>&nbsp;reference projections, reflecting tariff announcements made between Feb. 1 and April 4. Amid substantial policy uncertainty and a shifting economic landscape, debt levels could rise even further.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2025/04/23/rising-global-debt-requires-countries-to-put-their-fiscal-house-in-order?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2025/04/11470108/fm-chart1_original.png" alt="Chart1_v1"/></a></figure>



In this environment, fiscal policy faces critical trade-offs: balancing debt reduction, building buffers against uncertainties, and meeting urgent spending needs amid weaker growth prospects and higher financing costs. Navigating these complexities will be essential for fostering stability and growth.



Risk of higher debt



Debt risks were already elevated. According to the&nbsp;<a href="https://www.youtube.com/watch?utm_medium=email&amp;utm_source=govdelivery&amp;v=yab69j8mnOc" target="_blank" rel="noreferrer noopener">Fiscal Monitor’s debt-at-risk</a>, which&nbsp;utilizes data up to December 2024, in a severely adverse scenario global public debt could reach 117 percent of GDP by 2027. This would represent the highest level since World War II, exceeding reference projections by almost 20 percentage points.



Risks to the fiscal outlook have further intensified. Debt levels may rise even further than the debt-at-risk estimates if revenues and economic output decline more significantly than current forecasts due to increased tariffs and weakened growth prospects. Additionally, escalating geoeconomic uncertainties could heighten debt risks, driving up public debt through increased expenditures, particularly in defense. Demands for fiscal support could also rise for those vulnerable to severe disruptions from trade shocks, pushing up spending. The&nbsp;<a href="https://www.imf.org/en/Publications/FM/Issues/2025/04/23/fiscal-monitor-April-2025?cid=bl-com-SM2025-FMOEA2025001&amp;utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener">Fiscal Monitor</a>&nbsp;estimates that a significant rise in geoeconomic uncertainty could lead to a public debt increase of approximately 4.5 percent of GDP in the medium term.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2025/04/23/rising-global-debt-requires-countries-to-put-their-fiscal-house-in-order?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2025/04/11470109/fm-chart2_original.png" alt="Chart2"/></a></figure>



Tighter and more volatile financial conditions in the United States may have ripple effects on emerging markets and developing economies, leading to higher financing costs. This significantly impacts commodity prices, resulting in lower prices and heightened price volatility. Limited fiscal improvements may further heighten risks from rising interest rates, especially as many countries have substantial financing needs. High interest rates could limit essential spending on social programs and public investments. Additionally, reduced foreign aid, due to shifting priorities among advanced economies complicates financing for low-income countries.



Complex policy tradeoffs



In an uncertain and rapidly changing world,&nbsp;countries will need to first and foremost put their own fiscal house in order. This means implementing prudent policies within robust fiscal frameworks to build public confidence and help reduce uncertainty.



Fiscal policy should prioritize reducing public debt and establishing and widening buffers to address spending pressures and economic shocks. This means finding the right balance between adjustment and supporting economic growth, tailored to each country&#8217;s unique situation, available resources, and overall economic conditions.



Countries with limited room in government budgets should implement gradual and credible consolidation plans and allow automatic stabilizers, like unemployment benefits, to work effectively. Any new spending needs should be offset by spending cuts elsewhere or new revenues. For countries with greater fiscal flexibility, it is important to utilize available resources judiciously within well-defined medium-term plans. Fiscal support for businesses and communities impacted by severe trade dislocations should be both temporary and targeted, with a strong emphasis on transparency and effective cost management.



More generally, advanced economies should tackle issues related to aging populations by reprioritizing spending, advancing pension and healthcare reforms, and broadening the tax base. In emerging and developing economies, enhancing the tax system is crucial due to historically low revenues. Low-income developing countries should stay the course on fiscal adjustments given financing challenges. Timely and orderly debt restructuring alongside such adjustments is essential for countries facing debt distress.



Additionally, fiscal policy, alongside other structural policies, should focus on enhancing potential growth. This can help ease challenging tradeoffs between growth and debt sustainability. For instance, well-designed&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2025/04/16/how-to-build-public-support-for-energy-subsidy-and-pension-reforms?utm_medium=email&amp;utm_source=govdelivery">pensions and energy subsidy reforms</a>&nbsp;can generate savings that can be used to support social programs and infrastructure investments.



As significant policy changes and heightened uncertainty reshape the global economic landscape, the fiscal outlook has worsened. To effectively navigate these challenges, governments should focus on building public trust, ensuring fair taxation, and managing resources wisely. By doing so, they can foster resilience and promote sustainable growth in uncertain times.



—This blog is based on Chapter 1 of the April 2025 Fiscal Monitor,&nbsp;“<a href="https://www.imf.org/en/Publications/FM/Issues/2025/04/23/fiscal-monitor-April-2025?cid=bl-com-SM2025-FMOEA2025001&amp;utm_medium=email&amp;utm_source=govdelivery">Fiscal Policy under Uncertainty.</a>”

blog2099x600fm-ch1-rising-global-debt-requires-countries-to-put-their-fiscal-house-in-ordercimf-phot

Rising Global Debt Requires Countries to Put their Fiscal House in Order

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="234" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600weo-ch1-fostering-core-government-bond-market-resiliencecimf-photopaige-taylor-white-820x234.jpg" alt="" class="wp-image-612691" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600weo-ch1-fostering-core-government-bond-market-resiliencecimf-photopaige-taylor-white-820x234.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600weo-ch1-fostering-core-government-bond-market-resiliencecimf-photopaige-taylor-white-300x86.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600weo-ch1-fostering-core-government-bond-market-resiliencecimf-photopaige-taylor-white-160x46.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600weo-ch1-fostering-core-government-bond-market-resiliencecimf-photopaige-taylor-white-768x220.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600weo-ch1-fostering-core-government-bond-market-resiliencecimf-photopaige-taylor-white-1536x439.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/blog2099x600weo-ch1-fostering-core-government-bond-market-resiliencecimf-photopaige-taylor-white-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Credit: IMF Photo/Paige Taylor White</figcaption></figure>



The global economic system under which most countries have operated for the last 80 years is being reset, ushering the world into a new era. Existing rules are challenged while new ones are yet to emerge. Since late January, a flurry of tariff announcements by the United States, which started with Canada, China, Mexico and critical sectors, culminated with near universal levies on April 2. The US effective tariff rate surged past levels reached during the Great Depression while counter-responses from major trading partners significantly pushed up the global rate.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2025/04/22/the-global-economy-enters-a-new-era?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2025/04/11459120/weo-chart-1_original.png" alt="two charts showing effective average tariff rates in the United States from 1825-2025"/></a></figure>



The resulting epistemic uncertainty and policy unpredictability is a major driver of the economic outlook. If sustained, this abrupt increase in tariffs and attendant uncertainty will significantly slow global growth. Reflecting the complexity and fluidity of the moment, our report presents a range of forecasts for the global economy.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2025/04/22/the-global-economy-enters-a-new-era?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2025/04/11459126/weo-chart-2_original.png" alt="bar chart showing real GDP growth in three different scenarios"/></a></figure>



<a href="https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025?cid=bl-com-SM2025-WEOEA2025001&amp;utm_medium=email&amp;utm_source=govdelivery">Our World Economic Outlook</a>’s&nbsp;reference forecast&nbsp;includes tariff announcements between February 1 and April 4 by the US and countermeasures by other countries. This reduces our global growth forecast to 2.8 percent and 3 percent this year and next, a cumulative downgrade of about 0.8 percentage point relative to our January 2025 WEO update. We also present a global forecast excluding the April tariffs (pre-April 2 forecast). Under this alternative path, global growth would have seen only a modest cumulative downgrade of 0.2 percentage point, to 3.2 percent for 2025 and 2026. Finally, we include a model-based forecast incorporating announcements made after April 4. Over that period, the United States temporarily halted most tariffs while raising those on China to prohibitive levels. This pause, even if extended indefinitely, does not materially change the global outlook compared to the reference forecast. This is because the overall effective tariff rate of the United States and China remains elevated even if some initially highly tariffed countries will now benefit, while policy-induced uncertainty has not declined.



Despite the slowdown, global growth remains well above recession levels. Global inflation is revised up by about 0.1 percentage point for each year, yet the disinflation momentum continues. Global trade was quite resilient until now, partly because businesses were able to re-route trade flows when needed. This may become more difficult this time around. We project that global trade growth will dip more than output, to 1.7 percent in 2025—a significant downward revision since our January 2025 WEO Update.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2025/04/22/the-global-economy-enters-a-new-era?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2025/04/11459129/weo-chart-3_original.png" alt="two charts showing global growth and inflation forecast change from January 2025"/></a></figure>



However, the global estimate masks substantial variation across countries. Tariffs constitute a negative supply shock for the implementing jurisdiction, as resources are reallocated towards the production of less-competitive items with a resulting loss of aggregate productivity and higher production prices. In the medium term, we can expect tariffs to decrease competition and innovation and increase rent-seeking, further weighing on the outlook.



In the United States, demand was already softening before the recent policy announcements, reflecting greater policy uncertainty. Under our April 2 reference forecast, we have lowered our US growth estimate for this year to 1.8 percent. That’s 0.9 percentage point lower than January, and tariffs account for 0.4 percentage point of that reduction. We also raised our US inflation forecast by about 1 percentage point, up from 2 percent.



For trading partners, tariffs are mostly a negative demand shock, driving foreign customers away from their products, even if some countries can benefit from the trade diversion. Consistent with this deflationary impulse, we have lowered our China growth forecast for this year to 4 percent, a 0.6 percentage point reduction, and inflation&nbsp;is&nbsp;revised down by about 0.8 percentage point.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2025/04/22/the-global-economy-enters-a-new-era?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2025/04/11459145/weo-chart-4_original.png" alt="two charts showing tariffs effects on forecast changes in growth and core inflation for US and China"/></a></figure>



Growth in the euro area, which is subject to relatively lower effective tariffs, is revised down by 0.2 percentage point, to 0.8 percent. Both in the euro area and China, stronger fiscal stimulus will provide some support this year and next. Many emerging market economies could face significant slowdowns depending on where tariffs settle. We have lowered our growth forecast for the group by 0.5 percentage point, to 3.7 percent.



Dense global supply chains can magnify the effects of tariffs and uncertainty. Most traded goods are intermediate inputs that cross borders multiple times before being turned into final products. Disruptions can propagate up and down the global input-output network with potentially large multiplier effects, as we saw during the pandemic. Companies facing uncertain market access will likely pause in the near term, reduce investment and cut spending. Likewise, financial institutions will reassess borrowers’ exposure. The increased uncertainty and tightening of financial conditions could well dominate the short term, weighing on economic activity, as reflected in the sharp decline in oil prices.



The effect of tariffs on exchange rates is complex. The United States, as the tariffing country, may see its currency appreciate as in previous episodes. However, greater policy uncertainty, dimmer US growth prospects, and an adjustment in the global demand for dollar assets—that has so far been orderly—can weigh down on the dollar, as we saw since the tariff announcements. In the medium term, the dollar may depreciate in real terms if the tariffs translate into lower productivity in the US tradable goods sector, relative to its trading partners.



Risks to the global economy have increased, and worsening trade tensions could further depress growth. Financial conditions could tighten further as markets react negatively to the diminished growth prospects and increased uncertainty. While banks remain well capitalized overall, financial markets may face more severe tests.



Growth prospects could, however, immediately improve if countries ease their current trade policy stance and forge new trade agreements. Addressing domestic imbalances can, over a period of years, offset economic risks and raise global output while contributing significantly to closing external imbalances.&nbsp; For Europe, this means spending more on infrastructure to accelerate productivity growth. It also means boosting&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2024/09/12/trade-balances-in-china-and-the-us-are-largely-driven-by-domestic-macro-forces?utm_medium=email&amp;utm_source=govdelivery">support for domestic demand</a>&nbsp;in China, and stepping up fiscal consolidation in the United States.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2025/04/22/the-global-economy-enters-a-new-era?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2025/04/11459182/weo-chart-5_original.png" alt="chart showing current account balance scenarios for US and China "/></a></figure>



Our policy recommendations call for prudence and improved collaboration. The first priority should be to restore trade policy stability and forge mutually beneficial arrangements. The global economy needs a clear and predictable trading system addressing longstanding gaps in international trading rules, including the pervasive use of non-tariff barriers or other trade-distorting measures. This will require improved cooperation.



Monetary policy will also need to remain agile. Some countries may confront steeper trade-offs between inflation and output. In others, inflation expectations may become less-well anchored, with a new inflation shock following closely after the prior one. Countries that encounter resurgent price pressures will require forceful monetary tightening. For others, the negative demand shock will warrant lower policy rates. Monetary policy credibility will be important in all cases, and central bank independence remains a cornerstone.



The increased external volatility from tariff adjustments and a possibly prolonged risk-off environment, may be difficult to navigate for emerging markets. Our&nbsp;<a href="https://www.imf.org/en/Topics/IPF-Integrated-Policy-Framework?utm_medium=email&amp;utm_source=govdelivery">Integrated Policy Framework</a>&nbsp;emphasizes that it is important to let currencies adjust when driven by fundamental forces, as is the case now, and spells out the specific conditions where it is advisable for countries to intervene.



Fiscal authorities face&nbsp;<a href="https://www.imf.org/en/Blogs/Articles/2024/03/28/the-fiscal-and-financial-risks-of-a-high-debt-slow-growth-world?utm_medium=email&amp;utm_source=govdelivery">starker trade-offs</a>&nbsp;with high debt, low growth and rising financial costs. Most countries still have too little fiscal space and need to implement gradual and credible consolidation plans, while some of the poorest countries, also hit with reduced official aid, could experience debt distress.



New spending needs are further weighing on fiscal fragilities. Calls for support will increase for those at risk of severe dislocation from the shocks. Such support should remain narrowly targeted and incorporate automatic sunset clauses. The experience of the last four years suggests that it is easier to open the tap of fiscal support than to close it.



Some countries, especially in Europe, face new and permanent increases in defense-related spending. How should these be financed? For countries with sufficient fiscal space, only the temporary part of the additional spending—that is, temporary support to help adapt to the new environment or the initial bulge in spending to rebuild defense capabilities—should be financed by debt. For all other countries, new spending needs should be offset by spending cuts elsewhere or new revenues.



We should not lose sight of the need for stronger growth. Governments should continue to engage in fiscal and structural reforms that help mobilize private resources and reduce resource misallocation. They should also invest in the digital infrastructure and training necessary to benefit from new technologies such as artificial intelligence.



Finally, we should ask ourselves why our global system warrants remapping—and recognize that decades of deepening trade ties fostered rapid but uneven economic growth. In many advanced economies, there is an acute perception that globalization unfairly displaced many domestic manufacturing jobs. There is some merit to these grievances, even if the share of manufacturing employment in advanced economies has been in a secular decline in countries running trade surpluses, like Germany, or deficits, like the United States.



The deeper force behind this decline is technological progress and automation, not globalization: in both countries the output share of manufacturing has remained stable. Both forces are ultimately beneficial but can be very disruptive to individuals and communities. It is a collective responsibility to&nbsp;<a href="https://www.imf.org/en/News/Articles/2025/04/17/sp041725-spring-meetings-2025-curtain-raiser?utm_medium=email&amp;utm_source=govdelivery">ensure the right balance</a>&nbsp;between the pace of progress or globalization and addressing the associated dislocations.



<figure class="wp-block-image"><a href="https://www.imf.org/en/Blogs/Articles/2025/04/22/the-global-economy-enters-a-new-era?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://content.govdelivery.com/attachments/fancy_images/USIMF/2025/04/11459185/weo-chart-6_original.png" alt="chart showing output and employment share for Germany and United States"/></a></figure>



This requires that policymakers think well beyond the reductive lens of compensating transfers between ”winners” and ”losers,” be it of technological revolutions or globalization. In this, unfortunately not enough has been done, pushing many to embrace a zero-sum worldview whereby the gains of some only come at the expense of others. Instead, it is important to better understand these root causes so that we can build an improved trading system that delivers more opportunities. This objective is enshrined in our&nbsp;<a href="https://www.imf.org/external/pubs/ft/aa/?utm_medium=email&amp;utm_source=govdelivery">Articles of Agreement</a>, which ask us “to facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income.”



Global integration is not an objective in and of itself. It is a means to an end, important insofar as it supports improved living standards for all.



—This blog is based on Chapter 1 of the April 2025 World Economic Outlook, “<a href="https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025?cid=bl-com-SM2025-WEOEA2025001&amp;utm_medium=email&amp;utm_source=govdelivery">Policy Uncertainty Tests Global Resilience.</a>”

blog2099x600weo-ch1-fostering-core-government-bond-market-resiliencecimf-photopaige-taylor-white

The Global Economy Enters a New Era

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="410" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/AFREXIMBANK-HQ-scaled-1-820x410.webp" alt="" class="wp-image-536730" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/AFREXIMBANK-HQ-scaled-1-820x410.webp 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/AFREXIMBANK-HQ-scaled-1-300x150.webp 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/AFREXIMBANK-HQ-scaled-1-160x80.webp 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/AFREXIMBANK-HQ-scaled-1-768x384.webp 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/AFREXIMBANK-HQ-scaled-1.webp 1024w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via Flickr</figcaption></figure>



This Thursday, Nigeria will witness the opening of the first Afreximbank African Trade Centre (AATC), a state-of-the-art twin nine-storey office and business hotel complex.



Putting sustainability first, this world-class facility designed to transform Africa’s trade and investment landscape incorporates the very best of green-certified architecture, aligning with global environmental standards.



They say that perception matters. The Abuja AATC offers a new perspective to creating clusters that will help cement business opportunities, change mindset and elevate the business environment across our continent.



Why does this commercial development matter? It does because as the first of many across Africa, it will create new benchmarks in real estate and in corporate workspaces.



The development has an office tower and a 148-bed bespoke four-star business hotel. Boasting top-tier business and trade facilities, it will provide dedicated spaces for trade exhibitions, SME incubation, and conference and business amenities.



Our bank’s model of developing integrated trade services hubs is unique, and one that will be replicated at scale across Africa because the continent needs models that are scalable and replicable.



Our institution was created to provide counter-cyclical support and to drive the transformation of our continent through, amongst others, greater trade.



Our forefathers have been calling for economic self-reliance. These trade centres are going to be hubs for business, fostering innovation and empowering small businesses as well as enhancing global trade participation.



The journey to the launch of the Abuja AATC began in 2018 when the idea of creating trade facilitation hubs in key commercial capitals across Africa was first mooted.&nbsp; Nine leading commercial cities were selected to host the network of AATCs across Africa and the Caribbean. They include Abuja (Nigeria), Harare (Zimbabwe), Kampala (Uganda), Cairo (Egypt), Abidjan (Cote d’Ivoire), Yaoundé (Cameroon), Kigali (Rwanda), Tunis (Tunisia) and Bridgetown (Barbados).



Having received land from Nigeria and Zimbabwe respectively, the projects were launched in November 2021 and September 2022 in Abuja and Harare respectively. Four years later, the Abuja AATC is changing the Abuja cityscape and in August this year, the Harare-AATC will be formally opened too. Construction of the Kampala AATC commenced in November 2024, while the Cairo AATC is planned for September 2025.



These are examples of successful Public-Private Partnerships, working with government, investors and a multilateral development bank. These developments also help us deliver on the vision of our founders to provide bespoke financing solutions and advisory services for the expansion, diversification, promotion and development of Intra- and extra-African trade.&nbsp;



But why the Caribbean you will ask? The Barbados AATC will serve as an authentic beacon of trade by embodying the ambition, resilience, and influence of leading commercial cities in Africa and the Caribbean as well as a dynamic focal point for commerce by fostering regional and global trade connections between Africa and the greater CARICOM region, that comprises 20 countries.



To echo our president, Prof Benedict Oramah, the Barbados AATC will serve as the gateway for Afri-Caribbean trade and investments, creating opportunities for doing business with the Caribbean and for Caribbeans doing business in Africa. Something we have termed the Global Africa narrative.



In an increasingly fragmented world, building bridges is important because the last few years have shown that self-reliance is not only a solution, but an imperative.



This $180 million investment is expected to be completed in 2028. It will create 300 permanent jobs, boost the supply of hotel rooms in Barbados, a country dependent on tourism income and it will also host our CARICOM headquarters. Other facilities include a conference centre, a Small and Medium Enterprises (SME) incubator, a Digital Trade Gateway, a trade and exhibition centre.



Actions matter. Our role is to catalyse investment, trade and development and clusters have proven effective means of catalysing ideas and business opportunities.



The Abuja AATC will be seen as a test case for the viability of the idea and dream of business clusters as catalysts for growth and employment and empowerment.

AFREXIMBANK-HQ-scaled-1

Afreximbank African Trade Centres, catalysing business across Africa and the Caribbean

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="473" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Africa_Opportunity-820x473.jpg" alt="" class="wp-image-606896" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Africa_Opportunity-820x473.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Africa_Opportunity-300x173.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Africa_Opportunity-156x90.jpg 156w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Africa_Opportunity-768x443.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Africa_Opportunity.jpg 1026w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Fred Olayele , Ameenah Gurib-Fakim , and Thomas Svanikier</figcaption></figure>



The global system is in uncharted territory, with decades-worth of events rapidly unfolding&nbsp; in a matter of weeks. America’s focus on reshaping supply chains to secure more favorable trade terms through the imposition of tariffs on various trading partners, including traditional allies, is sending shockwaves across regions and key industries.



From technological change and geopolitics to demographic shifts and geoeconomic reconfiguration, the global business landscape is unfolding rapidly. The ongoing cultural and structural shifts will have major implications for global trade and development. Not only will this protectionist stance and transactional style of economic nationalism unfolding across the world alter resource mobilization patterns, but the effects will also reverberate in the global business landscape for decades.



Quo vadis Africa?



Indeed, Africa stands at a pivotal juncture. To thrive under the emerging multipolar world order, nations and corporations must adapt and find ways to update existing political, economic, and technological playbooks. Nowhere is this more important than in Africa. To the extent that the evolving global landscape is expected to shape global private capital allocation for decades to come, complacency is not an option.



With a growing middle class, abundant natural resources, underexploited frontier markets, enormous demographic advantages, and its ongoing digital transformation, Africa holds enormous potential as a future economic and geopolitical powerhouse.



Business leaders and policymakers on the continent must devise a coherent and coordinated resource mobilization strategy that can help Africa to maximize its share of global capital flows.



<a href="https://www.mckinsey.com/mgi/our-research/geopolitics-and-the-geometry-of-global-trade">A 2024 report by McKinsey</a> corroborates how future trade reconfiguration could help drive the investment attraction efforts of emerging and developing economies. Since 2010, about 60% of greenfield investment has flowed into developing economies, albeit the direction of capital flows is shifting.  The paper notes that “The largest leaps in the past two years were in Africa and India,” and these shifts involve varying trade-offs vis-à-vis geopolitical distance versus trade concentration.



To succeed, African countries and transnational firms need a clear understanding of the potential trade-offs of the different paths ahead. Given its young population and the ongoing digital revolution, connecting the continent to maximize its participation in global capital markets may shape the future of global commerce.



The private capital imperative



From Cairo to Cape Town, and from Lagos to Nairobi, the rise of the digital knowledge economy is generating a lot of hope for economic modernization across the continent. The ongoing global configuration points to a private capital-centric future in which traditional global development financing takes a back seat.



As digital entrepreneurship matures in Africa, capital allocators and other players in the global institutional investment industry across multiple regions can become key partners in fostering venture capital and entrepreneurial ecosystems. This will support growth-stage companies from the continent as they expand into global markets, in addition to nurturing existing established businesses as they adapt and innovate.



Relatively small and dispersed stock exchanges pose an exit challenge for private investors. Opportunities abound in Africa for institutional and retail investors interested in alternative investment opportunities for better returns and greater diversification. However, despite financial deepening and rapid digitalization, stock markets across the continent remain small and highly illiquid, with limited digital infrastructure.



Apart from making them unattractive to global investors, this limits greater liquidity and global visibility. Building a framework that creates an interconnected financial ecosystem that offers varied options for exits – while allowing key parties to maximize value without relying solely on local stock exchanges – has never been more important.



With the emergence of multiple power centres and rising regional tensions, African leaders must rethink and devise a pragmatic and fit-for-purpose resource mobilization strategy. A paradigm which prioritizes the development of capital markets for long-term financing, while also fostering the growth of equity markets for seamless access to capital to drive entrepreneurship and innovation.



If well leveraged, the ongoing shifts and retreat from deeply integrated global systems could open the floodgates of private capital inflows as international investors take advantage of the huge investment opportunities in Africa. To find success, a business-as-usual approach will not work. This opportunity must not be wasted.



The elephant in the room



Undeniably, foreign private investment in Africa faces several bottlenecks. From currency volatility due to fluctuating commodity prices to exchange rate risk and concerns about expropriation due to political instability, the apathy on the part of investors is genuine and logical in many cases. However, knowledge about specific private investment opportunities on the continent is limited in much of the developed world in many cases, leading to high transaction costs, asset mispricing, and missed opportunities.



For instance, the persistent negative perception of Africa as a risky investment destination in the Western world remains a deterrent. If not frontally addressed, this infamous badge of honor will continue to limit the continent’s ability to maximize its share of global capital flows.



Also, limited enterprise size poses a major challenge. As noted in <a href="https://www.economist.com/special-report/2025/01/06/africa-has-too-many-businesses-too-little-business">a recent piece by The Economist</a>, “Africa has too many businesses, too little business.” The obsession with micro-enterprises and informal workers without access to financing, markets, or regulatory support will not produce the kind of impact needed to deliver successful change.



To fix the continent’s unattractive investment environment and close the large economic gap between it and the rest of the world, Africa needs more large enterprises with the capacity to achieve productivity gains. Private capital must be front and centre of the debate.



Concluding thoughts



The ongoing global reconfiguration presents a once-in-a-lifetime opportunity to position Africa as the next great economic frontier. Will Africa seize the moment? As Albert Einstein famously said, “In the midst of every crisis, lies great opportunity.”



Seizing the moment will go a long way in addressing agelong structural imbalances that have hampered development for decades, in addition to maximizing the continent’s share of capital flows in the emerging multipolar world order. Ellen Johnson Sirleaf beckons: “If your dreams do not scare you, they are not big enough.”



Fred Olayele, founder and chairman of New York-based pan-African private investment firm, ECANY Capital, is a global economist, professor, and innovation leader.



Ameenah Gurib-Fakim, the 6th and first female president of the Republic of Mauritius, is a professor, entrepreneur, and biodiversity scientist.



Thomas Svanikier, founder and chairman of Svani Group and Africa Capital Ltd, the largest shareholder of Fidelity Bank Ghana Ltd, is a Ghanaian&nbsp;entrepreneur and philanthropist.

Africa_Opportunity

The Africa Opportunity: A Global Private Capital Imperative

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/02/TEARGEYJVBNJZJNNXKQV4QH2KQ-820x547.jpg" alt="" class="wp-image-581989" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/02/TEARGEYJVBNJZJNNXKQV4QH2KQ-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/TEARGEYJVBNJZJNNXKQV4QH2KQ-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/TEARGEYJVBNJZJNNXKQV4QH2KQ-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/TEARGEYJVBNJZJNNXKQV4QH2KQ-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/TEARGEYJVBNJZJNNXKQV4QH2KQ-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/TEARGEYJVBNJZJNNXKQV4QH2KQ-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: U.S. President Donald Trump speaks to an audience at the &#8220;American Freedom Tour&#8221; event in Memphis, Tennessee, U.S., June 18, 2022. REUTERS/Karen Pulfer Focht/File Photo</figcaption></figure>



President Donald Trump in recent weeks has changed his tariff policies more often than some of us change our clothes. The velocity of tariff changes has probably provoked a few nervous breakdowns in the accounts department of American companies trading goods with Mexico and Canada. So far, the African continent has been largely unaffected. The question ahead of 2 April, Trump’s “liberation day”, when he unveils his tariff plans, will we still be so relaxed?



We think the continent can, mostly, relax.



<h1 class="wp-block-heading" id="h-what-does-the-trump-administration-want-to-achieve-with-his-trade-war">What does the Trump administration want to achieve with his trade war?</h1>



Many are still unsure what the Trump administration’s goal is with tariffs.



Why does it matter? Because it means analysis of the potential tariffs on 2nd April are over-complicating the issue. There is too much focus on scenarios like “reciprocal tariffs” (the US will match the tariffs others use against the US), or “including VAT tariffs” (because of the potential US stance that value-added tax act as a de facto tariff).



For reasons we outline below – in this piece we consider just three scenarios.



<ol style="list-style-type:upper-alpha" class="wp-block-list">
<li>The US tariffs everybody</li>



<li>The US tariffs everybody who runs a trade surplus with the US, and</li>



<li>The US tariffs everything except commodities that the US imports.</li>
</ol>



One political consultancy last week told us that the US wants to use the threat of tariffs as leverage for others like the EU or India to cut their tariffs. In the end, tariff threats today may lower global tariffs and therefore boost global trade. We think this is the US Treasury secretary’s hope; however, it does not reflect the rhetoric of the President. We believe this outcome is highly optimistic.



Others focus on the US President’s fond reminisces about the 19th century when tariffs were responsible for most US government revenues, and his hope that tariffs will fund tax cuts. This position ignores the fact that US government spending was less than 10% of GDP in the 19th century, while today it is over 30% of GDP. Tariffs cannot possibly replace income taxes, but yes, at the margin it may help the deficit.



Another view is that the current administration genuinely believes it can create a manufacturing renaissance in the US, with American sweatshops of the 19th century rising again and displacing imports from Asia or Africa. We will be a little surprised if Americans want to compete with the $100-$200 monthly wages of Bangladesh. We also note that in President Trump’s first term, foreign direct investment in the US fell, so the policy did not work.



Our reading of the President’s biographies suggests his tariff views might be viewed as deeply personal. President Trump hates weakness and sees deficits as a weakness which might infect the US. As such, the focus is rarely on the service sector, where the US runs a surplus, but only about trade where it runs a deficit. The current policy stance might not recognise that buying cheap t-shirts from abroad allows Americans work in higher value-added jobs at Google and saves them money so they can spend more at home. As imports are a



small share of the US economy, the import bill is not greatly negative. We pencil in the assumption that the US imposes 10% tariffs but recognise this may be just against countries who have a trade surplus with the US.



<h1 class="wp-block-heading" id="h-who-does-the-us-have-a-trade-deficit-with">Who does the US have a trade deficit with?</h1>



If there is one African country that should be more worried than most, it is South Africa. They are not having it easy, given the cabal of South African immigrants whispering into the US President’s ear. It is perhaps bad timing for South Africa to have a $9bn trade surplus with the US. South Africa’s potential exclusion from AGOA and an inclusion of 10% tariffs both seem eminently plausible.



The next three countries in the proverbial firing line are Nigeria, Algeria and Angola.



Two of the Trump administration’s favourite African countries, Egypt and Morocco, run deficits with the US, thus if any countries on the continent are going to escape 2nd April unscathed, it should be these two. Indeed, over half the continent can argue the case that they run deficits with the US. It wouldn’t surprise us if they are untouched.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1134" height="603" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-1.png" alt="" class="wp-image-604880" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-1.png 1134w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-1-300x160.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-1-820x436.png 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-1-160x85.png 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-1-768x408.png 768w" sizes="auto, (max-width: 1134px) 100vw, 1134px" /></figure>



The commodity experts have noticed that the US is running the biggest trade deficits with Africa’s biggest commodity exporters. Over half of South Africa’s exports to the US are precious metals, diamonds, jewelry and platinum. The vast majority of Nigeria, Algeria and Angola’s exports are oil.



Is the US administration so focused on signaling strength as to tariff the commodities that US industry wants, or the US oil industry refines so it can sell back to Africa?



Yes.



The US has already begun an investigation into copper, which might see tariffs enacted on that mineral. This is why copper prices are surging in recent weeks, as stockpiles are built up, just in case. While there was talk of a lower 10% tariff being imposed on Canadian oil vs 25% on Canada’s other exports, in the end this did not happen.



Does it really matter to an oil exporter if the US imposes tariffs? Not much.



Exporters can divert their oil to any other country. The same will be true of most commodities.



<h1 class="wp-block-heading">How important is the US as an export destination for any African country?</h1>



The US does not trade much with Africa. It imported $39bn of goods in 2024, which is roughly what it imports from Mexico or Canada in just over a month. The US imports more in 24 hours from either of them (over $1bn a day), than it imports in a year from about 40 African countries. The biggest exceptions are South Africa and to some extent Nigeria, which account for over half of everything the US imports from the continent.



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Fortunately for most African countries, the US is not that important either. For over half the countries in Africa, the US accounts for 2% or less of total exports.



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Share of exports is however not the right metric. Instead, we need to understand how open an economy is, by examining how high exports are as a proportion of GDP. So, the best metric is to look at “exports to the US” as a share of the exporting country’s GDP.



When we do this, we find it is Lesotho which gets hit hardest. Its exports to the US are equivalent to 10% of its GDP. That’s particularly unfair because Trump doesn’t believe anyone has even heard of <a href="https://x.com/khayadlanga/status/1897215513270608284">Lesotho.</a>



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1149" height="559" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-4.png" alt="" class="wp-image-604883" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-4.png 1149w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-4-300x146.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-4-820x399.png 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-4-160x78.png 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-4-768x374.png 768w" sizes="auto, (max-width: 1149px) 100vw, 1149px" /></figure>



How much pain would be imposed by 10% US tariffs. We should assume that US retailers may cut their margins by a 2-3%, and Lesotho exporters may do the same. Together that could halve the impact of the tariffs. We might see some currency weakness against the US dollar – even just 5% would then offset the remaining impact.



We can be more bearish and suggest 10% tariffs cut exports to the US by 5% and being extra bearish, assume that countries cannot re-direct their exports elsewhere. For Lesotho, that would cut GDP by about 0.5%, but it is an extreme and unlikely scenario. For South Africa, that would be an impact worth 0.2% of GDP (5% of the 4% of GDP figure above). For Nigeria, the impact would be half this at 0.1% of GDP. But this is surely an exaggeration, because Nigerian oil can be sold elsewhere.



<h1 class="wp-block-heading">What about indirect effects of Trump’s trade wars?</h1>



Should anyone worry about the Trump administration’s tariffs? Yes. There are 14 countries (excluding a few tiny islands) where exports to the US as a share of GDP are higher than Lesotho. Mexico and Vietnam have 27% of their GDP coming from exports to the US. A worst-case 5% hit to that figure from 10% tariffs would strip 1.35% off economic output.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1150" height="440" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-5.png" alt="" class="wp-image-604884" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-5.png 1150w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-5-300x115.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-5-820x314.png 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-5-160x61.png 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-5-768x294.png 768w" sizes="auto, (max-width: 1150px) 100vw, 1150px" /></figure>



This would be more painful if tariffs are higher than 10%. For the EU and China, we think there will be (tariffs on China have already been hiked to 20% since Trump took office in January). Germany, still one of the world’s top 5 economies could suffer more if the tariffs imposed on the EU are around 25%. If exports drop 10-15%, that might be a 0.4% of GDP hit. We know Germany is planning on a fiscal bazooka to lift its economy and balance the effect of tariffs. GDP growth is likely to accelerate versus the pre-Trump baseline, even if he imposes 25% tariffs; so, Germany may buy more from the rest of the world, including Africa. What about China, where the Trump administration has talked about 50-60% tariffs? Only 2% of China’s GDP comes from exports to the US, so an absolute worst-case scenario would not see more than 0.5% of GDP taken off China’s growth, and China is promising fiscal stimulus too. Any slowdown in China would matter more to Africa. The share of South African exports going to China is double that going to the US. It does not look likely that US tariffs will cause a very high amount of pain to China, or to its trading partners.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1124" height="605" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-6.png" alt="" class="wp-image-604885" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-6.png 1124w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-6-300x161.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-6-820x441.png 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-6-160x86.png 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-6-768x413.png 768w" sizes="auto, (max-width: 1124px) 100vw, 1124px" /></figure>



Nonetheless, some small indirect impact on Africa is likely to come from Trump’s tariffs. Global trade is likely to be hit, cutting demand for energy, and pushing oil prices down. Even here, we should be cautious. Global trade may just be re-directed as happened in 2018 when China stopped buying soyabeans from the US and bought them from Brazil instead regardless of the longer shipping route. Consequently, US soyabean exports took Brazil’s previous export markets, again probably adding to shipping and fuel costs.



The key point is that the US is not the only economy in town. Yes, it is responsible for half the world’s current account deficit, so it matters, but it doesn’t matter too much to Africa.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1110" height="436" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-7.png" alt="" class="wp-image-604886" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-7.png 1110w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-7-300x118.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-7-820x322.png 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-7-160x63.png 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/04/Image-7-768x302.png 768w" sizes="auto, (max-width: 1110px) 100vw, 1110px" /></figure>



<h1 class="wp-block-heading">What about inflation and US interest rates?</h1>



Should Africa worry because tariffs are inflationary and they might prompt the Fed to raise interest rates, or cut interest rates less than expected?



The last thing we want to see on the continent is more countries running onto the default rocks. From Mozambique to Senegal, we can see that is still a risk. The Fed kind of answered this question last week. They see tariffs as transitory (yes, we have heard that before), because while there will be a one-off adjustment in prices, there should not be a price-wage spiral as we saw after COVID.



That might underestimate where the Trump administration goes with tariffs. Their last trade war did not achieve preset objectives. The deficit with China remained massive. Perhaps this time the target is to succeed via a continuous ramping up of tariffs. We cannot know this, but at least today, we can be comforted by the Fed’s view that tariffs are a negative for GDP growth, and more important than the inflation impact. As such, the FED assumes two fund rate cuts in this year and another two next year.



<h1 class="wp-block-heading">Conclusion</h1>



We cannot be sure if the Trump administration will impose tariffs on any African countries at all, and if he does, he might go after only the minority of countries. We do not believe AGOA will offer any more protection than NAFTA did in 2016, or its successor USMCA has done in 2025. We do think South Africa is likely to face tariffs, and that it will be Lesotho which gets hit hardest if Trump imposes universal tariffs.



Our most important conclusion is that Trump’s tariffs won’t matter too much, assuming they’re just 10% on Africa.



Enjoy April and be thankful you did not emigrate (japa) to tariff-hit Canada.

The African Continent is (relatively) immune to Trump’s tariffs

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HE Nomatemba Tambo, daughter of apartheid activist and former ANC President, O.R. Tambo, is a prominent South African diplomat and politician who served as South Africa’s High Commissioner to the UK between&nbsp;2018-2022.



The first two months of Donald Trump’s presidency have caused <a href="https://www.economist.com/leaders/2025/03/12/trumps-erratic-policy-is-harming-the-reputation-of-american-assets">tumult</a> on the pages of international broadsheets, as commentators struggle to comprehend the structural transformation taking place in the global political order.



But in truth, the new rules of the game have been clear for many years now. We live in transactional world order, where developed nations seek economic and strategic self- interest in their dealings with the developing world.



Africa urgently needs partners that take a long-term view to the continent’s economic development. Over the last five years, the United Arab Emirates (UAE) has come to fill this role more than any other nation.



It was strangely underreported in African media, but in December of last year the UK’s <a href="https://www.theguardian.com/world/2024/dec/24/uae-becomes-africa-biggest-investor-amid-rights-concerns">Guardian</a> newspaper revealed that the UAE had become the largest investor in Africa.



Emirati companies announced $110 billion of projects between 2019 and 2023, outstripping traditional partners China, the United States and European Union. It’s not the volume of investment that’s remarkable, but rather the sectors targeted.



As the United States <a href="https://www.theguardian.com/us-news/2025/mar/12/trump-fossil-fuels-oil-and-gas">returns</a> to oil and gas and China remains <a href="https://www.politico.eu/article/eu-call-on-countries-china-fund-climate-action-cop29-united-nations-climate-conference/">reticent</a> to contributions to a global climate fund, the UAE has emerged as Africa’s most steadfast partner in financing the continent’s transition to the green energy future, with 65% of the $110 billion dollars pledged set to be invested in renewables.



As China scales back the Belt and Road Initiative on the continent amid its slowing economic growth and deepening debt crises in Africa, the UAE has forged forward with investment in critical infrastructure, currently operating or constructing 12 container ports across the continent through Emirati companies like DP World and Abu Dhabi Ports.



As uncertainty prevails over the liquidity of European financial markets, Dubai has emerged as the centre for African firms seeking business and financing. Meanwhile the number of African companies choosing to register in Dubai has <a href="https://www.wam.ae/en/details/1395303061066">grown</a> significantly in recent years.



The UAE’s role is not just limited to economic development. The country has taken an active role in the continent’s diplomacy in recent years, convening the fifth <a href="https://www.mofa.gov.ae/en/mediahub/news/2024/2/6/6-2-2024-uae-somalia">meeting</a> of the Somalia Quint in Abu Dhabi in February last year and jointly hosting a High-Level Humanitarian <a href="https://african.business/2025/02/apo-newsfeed/united-arab-emirates-uae-ethiopia-african-union-au-and-intergovernmental-authority-on-development-igad-hold-high-level-humanitarian-conference-for-the-people-of-sudan-in-addi">Conference</a> on Sudan in Addis Ababa in February.



The SAF’s <a href="https://news.sky.com/story/sudans-recaptured-palace-is-a-significant-sign-of-return-to-order-13333079">seizure</a> of Khartoum’s presidential palace last week underscores the importance of facilitating negotiations between the two parties in Sudan’s destructive conflict, which is already approaching its third year. And when negotiations are finally able to begin in earnest, Emirati financial muscle will be vital to Sudan’s reconstruction.



Africa’s pivot towards the UAE has been evident for years now, but many commentators are yet to catch up. And the structural pressures of current international politics are only likely to incentivise the disengagement of Africa’s historic economic partners from our continent.



Donald Trump has all but committed to an isolationist path, which threatens to undermine the continent’s economic and development ties with the United States. The 90-day freeze on foreign aid and current <a href="https://apnews.com/article/south-africa-ambassador-expelled-trump-rubio-dba7f4c25e5e91480a8429a53b86b8eb">tensions</a> with South Africa are being cautiously observed by African leaders looking to understand the future of US engagement.



Concerns too remain over China’s economic <a href="https://www.bbc.co.uk/news/articles/crr54x00857o">slowdown</a> and stubbornly <a href="https://edition.cnn.com/2025/03/10/economy/china-cpi-deflation-problems-intl-hnk/index.html">persistent</a> <a href="https://edition.cnn.com/2025/03/10/economy/china-cpi-deflation-problems-intl-hnk/index.html">deflation</a>. Political attention in Beijing is, regardless, being diverted to prospects of a fully blown trade war with the United States, leaving little room for China’s leaders to reignite its Africa policy.



The political debate in Europe is already dominated by confrontation with Russia, relegating the importance of engaging in Africa’s economic development to the bottom of the agenda. And the United Kingdom’s decision to <a href="https://www.theguardian.com/politics/2025/feb/25/starmer-planning-big-cuts-to-aid-budget-to-boost-defence-spending-say-sources">axe</a> its foreign aid budget in favour of defence spending is indicative of the calculations being made across European capitals.



Our transactional times will demand forward-thinking policymaking to safeguard our continent’s strategic interests. 



Africa’s priorities must remain those that have occupied its leaders for many a decade: reducing structures of economic dependency on foreign powers and laying the foundations for sustainable growth in the long-term by stimulating domestic production and investing in the continent’s infrastructure.



But the realities of geopolitics mean the nations that will partner with Africa towards this goal are not those that have long been familiar to us.



The UAE is now Africa’s primary development partner, and so it’s time our political debate reflected this.

Image (1)

Africa looks to the UAE for partnership in a transactional world order

4f08e732-14dc-4b25-aebe-12ad36aed4c9_847x407

The problem of organizing weak states; and why Africa needs a new model of Pan-Africanism

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="719" height="480" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/03/image002.png" alt="" class="wp-image-602043" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/03/image002.png 719w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/image002-300x200.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/image002-135x90.png 135w" sizes="auto, (max-width: 719px) 100vw, 719px" /><figcaption class="wp-element-caption">UAE officers participated in Operation Jungle Shield, jointly with officers from the Lusaka Agreement Task Force (Credit: UAE Ministry of Interior)</figcaption></figure>



Lt. Col. Dana Humaid, Director General of the International Affairs Bureau, Ministry of Interior, United Arab Emirates. 



Modern criminal networks operate with increasing sophistication, their operations unconstrained by national borders. Law enforcement agencies are rising to meet these challenges through collaborative approaches.&nbsp;&nbsp;



As Director General of the International Affairs Bureau at the UAE Ministry of Interior and Secretary of the International Security Alliance, I&#8217;ve witnessed the remarkable effectiveness of coordinated security responses. Africa stands as an inspiring example of transnational police collaboration—pioneering a model for successfully tackling global crime in our interconnected world.&nbsp;



The evidence for this approach is compelling. Criminal enterprises thrive on the inability of national agencies to coordinate. A trafficker stopped in Lagos reroutes through Mombasa; funds stolen in Johannesburg finance extremism in Mogadishu within hours. Yet when law enforcement agencies pool intelligence and resources, the results are transformative.&nbsp;



Through the International Security Alliance, I have witnessed first-hand how the power of coordinated action can disrupt networks in ways that isolated efforts never could.&nbsp;



Interpol’s Operation Screen West Africa provides a striking example. Over 12 nations united in a joint effort that conducted 1.3 million database checks, unearthing 82 individuals traveling with fraudulent documents and arresting 11 internationally wanted criminals. Drug traffickers, counterfeit medicine suppliers, and stolen vehicle syndicates saw their operations dismantled. These figures translate into real-world security: safer streets, disrupted crime rings, and lives protected.&nbsp;



Technology plays a crucial role. Mobile devices linked to INTERPOL’s databases now allow border officers to verify travelers’ identities against international criminal records in seconds. A once-vulnerable border post is transformed into a security stronghold.&nbsp;&nbsp;



But the true value of such tools lies in sustainable capacity-building, not dependency. The advanced technological training initiatives I have personally overseen focus on equipping police forces with the skills to use these systems effectively, creating long-term security capabilities rather than short-term solutions.&nbsp;



Security collaboration flourishes when built on a foundation of trust, with technology serving as a powerful enabler. African nations have shown remarkable progress in overcoming historical hesitations about international partnerships. When officers train together, share intelligence, and conduct joint operations, they forge professional relationships that transcend political boundaries. In my experience, these human connections are proving just as valuable as the cutting-edge tools they employ—creating a powerful synergy that strengthens security cooperation across the continent.&nbsp;



Protecting the vulnerable is another area where international cooperation is making a real impact. As the overseer of the UAE Ministry’s Child Protection Centre, I have witnessed how well-coordinated global efforts can dismantle human trafficking networks. A recent example is INTERPOL’s Operation Liberterra II, which brought together 15 specialized units from INTERPOL’s General Secretariat, along with partner organizations, national agencies, and NGOs. Through cross-border coordination, the operation rescued 3,200 potential trafficking victims. These are not just statistics—they are lives forever changed.&nbsp;



By fostering relationships between specialized units and enhancing cross-agency collaboration, such operations not only provide immediate relief but also build long-term capacity for countries to tackle these difficult and complex issues.&nbsp;



Environmental crime, too, demands a collaborative response. The Congo Basin, a vital carbon sink, is under assault from illegal logging and poaching. Operation Jungle Shield, a 2024 initiative led by the International Initiative of Law Enforcement for Climate (I2LEC), saw agencies from seven African nations unite to combat environmental destruction. The results: 2,111kg of ivory, 34kg of pangolin scales, and $11.2 million in illicit goods seized; 58 arrests; and the disruption of criminal operations responsible for deforestation equivalent to 728 football fields.&nbsp;



The remarkable success of existing collaborative initiatives provides a strong foundation for even greater achievements ahead. Continued investment in African law enforcement capacity is opening new horizons of possibility. I&#8217;ve witnessed the transformative impact of specialized training—from environmental protection investigations to seaport resilience strategies—empowering officers to confidently tackle emerging threats. INTERPOL&#8217;s Support Programme for the African Union (ISPA) is already delivering impressive results in strengthening transnational crime-fighting capacity, showcasing the tremendous potential for future growth.&nbsp;



The groundwork for a safer, more prosperous Africa is being established through enhanced intelligence-sharing, successful joint operations, and deepening mutual trust. The frameworks are firmly in place, ready to be energized by political will and commitment to extend these capabilities across the continent. As Africa experiences accelerating economic growth, robust security cooperation serves as a catalyst for protecting and amplifying these gains. Secure borders, safe cities, and trusted law enforcement create the ideal environment for investment, trade, and development to flourish.&nbsp;



The vision of an Africa where police agencies collaborate seamlessly, where criminal networks find no refuge, and where citizens move freely without fear is now within our grasp. Realizing this inspiring future requires the continuation of our shared commitment to security excellence. By strengthening cross-border cooperation, leveraging innovative technology, and investing in world-class training, we ensure that Africa&#8217;s security partnerships today will powerfully drive its prosperity tomorrow.&nbsp;

image002

Building a Safer Africa Through Global Police Cooperation

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="414" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/03/DIL08644-820x414.jpg" alt="" class="wp-image-601712" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/03/DIL08644-820x414.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/DIL08644-300x152.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/DIL08644-160x81.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/DIL08644-768x388.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/DIL08644-1536x776.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/DIL08644-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



By Ahmed Bin Sulayem, Kimberley Process (KP) Chair 2024 – 2025 and Executive Chairman and CEO of DMCC (Dubai Multi Commodities Centre)



In response to a recent article published on CNBC Africa, titled, <a href="https://cnbcafrica.com/2025/the-kimberley-process-an-illusion-of-ethics/">’The Kimberley Process: An Illusion of Ethics?’</a>, I’ve been compelled to pen a response that not only corrects its false narratives and commentary, but also takes the opportunity to clarify certain underlying facts about the KP’s successes, challenges and responsibilities since its foundation, almost 25 years ago.&nbsp;



Originating in May 2000 in Kimberley, South Africa, as an item on the agenda of the 55th session of the UN General Assembly, the Kimberley Process (KP) was first discussed as a mechanism to mitigate the damaging social effects of the trade in conflict diamonds, and how a framework could be established to reduce these influences. Three years later, the Kimberley Process Certification Scheme (KPCS) was launched as a joint government, industry, and civil society initiative that to date, <a href="https://dmcc.ae/ecosystems/diamonds/kimberley-process">has stemmed the flow of 99.8% of the global production of conflict diamonds</a>.



In the opening paragraph of the ‘Illusion of Ethics’, the writer, Dr. M&#8217;zée Fula-Ngenge, chairman of the African Diamond Council, states that the KPCS “is beset by a confluence of structural, operational, and ethical deficiencies that collectively undermine its legitimacy, efficacy, and relevance within the global diamond industry. These challenges are not merely incidental but are deeply entrenched in the Kimberley Process’ (KP) institutional framework, rendering it ill-equipped to address the evolving demands of ethical sourcing, transparency, and accountability. A critical examination of these issues reveals that the KP’s failures are systemic, necessitating transformative reforms to restore its credibility and ensure its continued relevance.”



Underpinned by United Nations mandate, the KPCS is widely documented as the only successful, collaborative effort to reduce the circulation of conflict diamonds from above 15 per cent in the 1990s, to well under 1 per cent today. Additionally, the KPCS is the only reason for an international framework for regulating the trade of rough diamonds. For these reasons alone, I contest that the KPCS’s significant achievements to date, and its ongoing development have only been possible courtesy of its structural, operational, and ethical strengths, which have demonstrably delivered on its mission of stemming the flow of conflict diamonds into wider circulation – a role it continues to fulfil and refine.



Stating that the KP should be “confronting its limitations, failures, and the broken promise of a ‘Year of Delivery’,” I would like to clarify that 2024 included several significant milestones, namely, the admittance of Uzbekistan as a new KP member, and the readmittance of the Central African Republic to the body following its decade-long ban. The ‘Year of Delivery’ also included the UAE’s initiative of a proof-of-concept for the digitalisation of the KP certification process, one of its key objectives.



The author goes on to cite that the KP’s “inability to address well-documented cases of non-compliance among member states, such as the infiltration of conflict diamonds from regions like the Central African Republic (CAR), demonstrates a systemic failure to enforce its own mandate. This lack of accountability is compounded by operational inefficiencies, including mismanagement and a lack of transparency, which further erode the KP’s credibility.”



As one of the KP’s key accomplishments, it was my personal pleasure to visit the CAR on behalf of the KP in order to fast-track the country’s reintegration in light of an improving security situation – an achievement that was not only widely supported by Jaff Bamenjo of the Civil Society Coalition, but also Feriel Zerouki, President of the World Diamond Council.



Moving onto what Dr. Ngenge referred to as the KP’s “over-reliance on consensus-based decision-making [[which]] exacerbates these issues by stifling critical thinking and suppressing dissenting viewpoints”, while consensus can slow decision-making, it is also what makes the Kimberley Process unique as a rare example of what a truly global multi-stakeholder initiative looks like. Without consensus, the process would risk becoming another top-down regulatory body that lacks the buy-in of key participants, particularly diamond-producing nations in Africa. The Kimberley Process was designed to ensure that all voices are heard, including those from artisanal mining communities. A unilateral approach dictated by a few dominant nations (like the G7) would be far less effective and could potentially alienate the very countries that need the KP the most, i.e., Africa’s diamond-producing nations.



Ngenge’s remaining criticisms can be addressed in a single statement, which can also serve as an important reminder to both diamond industry stakeholders and critics, who remain unclear about the KP’s function.



In brief, Ngenge states that “The economic downturns and shifting consumer preferences have further exposed the KP’s inadequacies in the most unexpected manner”, that the “glaring structural flaws in the KP’s framework is its narrow regulatory scope, which focuses exclusively on rough natural diamonds” and “the KP’s failure to address issues such as smuggling and fraudulent certification.”



It has become common place among detractors to criticise the KP for not being a universal solution for the diamond sector’s global challenges, including, as illustrated by Dr. Ngenge’s comment, what it’s not mandated to do. As a result, I feel this is a timely opportunity to remind the international community that one of the KP’s many key strengths is its function of fitting into a far wider network of organisations that play complementary roles in ethical diamond sourcing.



Let me be absolutely clear: The Kimberley Process was never designed to be a global financial watchdog, an anti-money laundering agency, or a tax enforcement mechanism. Expecting the KP to solve challenges outside its jurisdiction is as illogical as blaming Interpol for failing to regulate corporate tax fraud. Yet, the debate surrounding the KP has taken on an emotional tone, particularly in claims that it is a &#8220;massive greenwashing operation&#8221; or that it &#8220;certifies blood diamonds as legitimate.&#8221; These statements are false and misleading. They do not serve the interests of responsible stakeholders seeking real reform. For the sake of clarity, the Kimberley Process Certification Scheme (KPCS) focuses on the trade of rough diamonds, not polished diamonds. Once rough diamonds are cut and polished, they fall outside the scope of the KPCS.



While I am in admiration of Dr. Ngenge’s commitment to transparency, I am concerned about his promotion of Authentia.io, a yet-to-be-developed traceability platform for which he has claimed to have worked with its developers over the past three-and-a-half years. While this may be true, it indicates a clear conflict of interest, with his ADC standing to gain from its implementation. By positioning the ADC as an authority in diamond traceability while promoting a specific platform, I have several concerns about whether his advocacy is driven by industry ethics or business interests.



Contrary, Dr. Ngenge fails to recognise the Kimberley Process’s recent advances in digitalisation and traceability, particularly through its Verifico platform. Currently in proof-of-concept for digitalisation of the KP, Verifico represents a major step forward in strengthening supply chain integrity by leveraging modern technology. By implementing blockchain and other digital tools, Verifico enhances the tracking and certification of diamonds, making it more difficult for illicit stones to enter the legitimate supply chain. Ignoring this development significantly undermines the credibility of arguments that the KP is outdated or ineffective.



Towards the end of the article, Dr. Ngenge states that “The KP must implement stronger enforcement mechanisms to remove non-compliant members and ensure accountability. This could include the establishment of an independent monitoring body with the authority to investigate and sanction violations, which the ADC is willing to set up and assist with.”



This neatly brings me onto the credibility of Dr. Ngenge and the African Diamond Council.



In the world of African diamond governance, two organisations are often erroneously confused: the African Diamond Producers Association (ADPA) and the African Diamond Council (ADC). While the ADPA is indisputably recognised as the legitimate intergovernmental body for African diamond-producing nations, the ADC remains a lesser-known and often controversial entity. At the centre of the ADC is Dr. Ngenge, a self-proclaimed diamond industry strategist who has made bold claims about his role in shaping the industry, including asserting that he was instrumental in the formation of the DMCC (Dubai Multi Commodities Centre). However, the truth about the ADC, its legitimacy, and Dr. Ngenge&#8217;s claims reveal inconsistencies, self-promotion, and potential vested interests.



The African Diamond Council presents itself as “Africa’s official diamond governing body”, supposedly composed of the heads-of-state from Africa’s diamond-producing countries. It claims to have been founded in January 2000 in Luanda, Angola, with a mission to regulate Africa’s diamond trade. It also frequently positions itself as the supreme authority, even referring to the ADPA as “a continental branch of ADC”. However, no legal or governmental documentation supports this claim.



Unlike ADPA, an intergovernmental body, <a href="https://www.kimberleyprocess.com/observer-groups-and-roles">formally recognised as one of the KP’s Observer Groups</a>, the ADC is not officially acknowledged by any major international regulatory body. It operates as a private advocacy group, relying on self-proclaimed authority rather than government backing. The African Union and other multinational African institutions do not officially recognise the ADC, and there is no evidence of heads-of-state formally convening under the ADC’s leadership.



<a href="https://www.kimberleyprocess.com/observers/african-diamonds-producers-association">The African Diamond Producers Association (ADPA),</a> on the other hand, was officially established in 2006 via the Luanda Declaration and serves as a recognised intergovernmental organisation headquartered in Angola. It consists of the mining ministers from its member states and represents African diamond-producing nations in global forums. It also actively participates in the Kimberley Process, influencing policies that govern the trade of rough diamonds. In total, ADPA includes at least 15 African nations, including major producers such as Angola, South Africa, and Zimbabwe.



In contrast, the ADC has no formal government membership and is not involved in policy-making. Additionally, it isn’t listed as an observer in the Kimberley Process and holds no official standing in diamond trade governance. Its underlying authority and credibility comes almost exclusively from self-published materials and the reputation of its chairman, Dr. Ngenge.



In his capacity as chairman of the ADC, Dr. Ngenge has presented himself as an influential figure in African diamond policy. Previous claims include pivotal roles in:



<ul class="wp-block-list">
<li>The establishment of the Kimberley Process (KP) – he states that he was “Chief Administrative Developer” in 2000 and “Project Launch Team Coordinator” in 2001.</li>



<li>Shaping Dubai’s diamond industry and founding DMCC – he has asserted that he was a “principal trustee and decisive proponent” in forming the DMCC (Dubai Multi Commodities Centre) in 2002.</li>



<li>Advocating for diamond traceability and governance reforms – he promotes the ADC as a leading authority in shaping Africa’s diamond sector.</li>
</ul>



While his involvement in early Kimberley Process discussions may be partially accurate, there is no tangible evidence to support this claim – nor is there any verifiable evidence to support his claims regarding the formation of DMCC.



DMCC (Dubai Multi Commodities Centre) was established in May 2002 by a royal decree issued by Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai. The official DMCC narrative credits Dubai’s leadership and executives, including myself, as the primary forces behind its creation. Nowhere in DMCC’s official records, government statements, or founding documents does Dr. Ngenge’s name appear.



DMCC categorically denies Dr. Ngenge’s involvement in its founding or the establishment of the Dubai Diamond Exchange. Courtesy of these revelations, I am pleased to confirm that Rough &amp; Polished has deleted its reference to Dr. Ngenge&#8217;s false claim about DMCC from the English version of its website.



While I cannot speak for the reasons behind Ngenge’s OpEd, his outspoken criticism coincides with his attempts to participate in the KP’s Intersessional meeting in May 2024, where he was removed by security for attempting to enter closed sessions without verifiable invitation.



In the same way that the KP should be held to account and scrutiny, the industry should also pay close attention to those that criticise it, including their status, credibility, and potential motivations for undermining it. While I will be the first to admit that no organisation is perfect, the KP’s empirical status as the only vehicle of collaborative efficacy in the diamond industry’s global fight against conflict diamonds should not be underestimated, nor disposed of due to ‘room for improvement’.



As we continue with the ‘Year of Best Practice’, I once again look forward to welcoming back all credible members of the diamond community, where we will continue to uphold our mission in stemming conflict diamonds from our global supply chains.

DIL08644

The Kimberley Process: The only demonstrable vehicle of collaborative efficacy in the diamond industry’s global fight against conflict diamonds

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="546" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/03/Thabani-Ndwandwe-820x546.jpg" alt="" class="wp-image-596999" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/03/Thabani-Ndwandwe-820x546.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/Thabani-Ndwandwe-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/Thabani-Ndwandwe-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/Thabani-Ndwandwe-768x511.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/Thabani-Ndwandwe-1536x1022.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/Thabani-Ndwandwe-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Thabani Ndwandwe, Chief Risk Officer, Standard Bank</figcaption></figure>



South Africans were eagerly awaiting Finance Minister Enoch Godongwana’s 2025 Budget Speech, hoping for measures to ease financial pressure. However, the budget presents a mixed bag—while it seeks to stabilise government finances, the cost of living is set to rise due to tax changes. The question is: how will this affect the average South African?



Let’s unpack the key changes and what they mean for consumers:



VAT Increase – Higher Prices for Everyday Goods



One of the most notable changes is the increase in Value-Added Tax (VAT), which will rise from 15% to 15.5% on May 1, 2025, with another 0.5% increase coming in 2026.



For consumers, this means everyday goods and services will become more expensive—from electricity and clothing to transport and personal care products. While basic food items remain VAT-exempt and more items were added to VAT- exempt, the reality is that many essentials will see price hikes, adding further strain to household budgets.



This increase will hit low- and middle-income earners the hardest, as VAT is a regressive tax—meaning it takes a bigger proportion of income from the poor than from the wealthy.



Income Tax Bracket Freeze – More Tax Without a Tax Hike



While there is no direct increase in personal income tax rates, the government has not adjusted tax brackets for inflation. This means that as salaries rise due to inflation, many South Africans will be pushed into higher tax brackets, effectively paying more tax without actually earning more in real terms.



Middle-class and working professionals will feel the impact the most, as their take-home pay shrinks despite salary increases.



Fuel Levies – A Small Relief



In a small win for motorists, the general fuel levy and the Road Accident Fund (RAF) levy will remain unchanged for another year, continuing the freeze introduced in 2022. This move provides around R4 billion in tax relief, preventing an even bigger fuel price hike.



Sin Taxes – Alcohol and Cigarettes Just Got Pricier



For those who drink or smoke, the budget brings another annual increase in excise duties:



&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; •&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Alcohol duties up by 6.75%:



&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; •&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; A 340ml beer will cost about 15 cents more.



&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; •&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; A bottle of wine will increase by 38 cents.



&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; •&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; A 750ml bottle of spirits (whisky, brandy, vodka) will go up by R5.97.



&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; •&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tobacco duties up by 4.75% (6.75% for cigars and pipe tobacco):



&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; •&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; A pack of cigarettes will cost more.



&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; •&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vapes and e-cigarettes are also taxed higher.



The government justifies these increases as a public health measure while raising revenue. However, for consumers, this means that drinking and smoking will take an even bigger chunk of their budgets.



Social Grants – Modest Increases Amid Rising Costs



Millions of South Africans depend on social grants.&nbsp; While grant payments will increase slightly, they may not keep up with food inflation, meaning beneficiaries will still struggle to afford essentials as prices continue to rise.



Public Transport &amp; Infrastructure – Will It Deliver?



The government is allocating R19.2 billion to the Passenger Rail Agency of South Africa (PRASA) to improve train services, alongside an additional R11.8 billion for infrastructure projects.



If these funds are managed efficiently, commuters could benefit from better, cheaper transport options. However, given past mismanagement of infrastructure budgets, accountability will be key to ensuring that South Africans see improvements.



What Should Consumers Do?



Given these changes, South Africans must adapt their financial strategies. Here’s what consumers can do:



<ol class="wp-block-list">
<li>Adjust household budgets – Anticipate higher prices for essentials and non-essentials alike.</li>



<li>Maximize tax savings – Take advantage of tax-free savings accounts, medical aid deductions, and retirement contributions to reduce taxable income.</li>



<li>Monitor fuel and transport costs – If PRASA upgrades succeed, rail transport could be a cheaper alternative to private vehicles.</li>



<li>Consider lifestyle changes – With sin taxes rising, cutting back on alcohol and smoking could save significant money.</li>
</ol>



Final Thoughts: A Tough Year for Consumers



While the government has made some strategic investments, this budget largely increases the financial burden on South Africans through higher VAT, unchanged tax brackets, and rising sin taxes.



For the economy to grow sustainably, South Africa must prioritize job creation, economic growth, and efficient public spending—or risk placing even greater strain on consumers in the years ahead.

Thabani Ndwandwe

How the 2025 Budget Will Impact Consumers: What You Need to Know

<div class="wp-block-image">
<figure class="aligncenter"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4D12AQGZgUKtuFABRg/article-cover_image-shrink_720_1280/B4DZWKXODKG8AQ-/0/1741783123488?e=1747267200&amp;v=beta&amp;t=bYfWpPJC2NYEWFH2eX9eBeyRetdw7Zc7rlfWzUc95yY" alt="Dr M'zée Fula Ngenge, Chairman of African Diamond Council (ADC)"/><figcaption class="wp-element-caption">Dr M&#8217;zée Fula Ngenge, Chairman of African Diamond Council (ADC)</figcaption></figure></div>


Confronting its Limitations, Failures and the Broken Promise of a &#8216;Year of Delivery&#8217;



The Kimberley Process Certification Scheme (KPCS) is beset by a confluence of structural, operational, and ethical deficiencies that collectively undermine its legitimacy, efficacy, and relevance within the global diamond industry. These challenges are not merely incidental, but are deeply entrenched in the Kimberley Process’ (KP) institutional framework, rendering it ill-equipped to address the evolving demands of ethical sourcing, transparency and accountability. A critical examination of these issues reveals that the KP’s failures are systemic, necessitating transformative reforms to restore its credibility and ensure its continued relevance.



At the heart of the KP’s internal challenges lies a leadership crisis characterized by poor decision-making, a lack of strategic vision and instances of unethical behavior at the highest levels of governance. These leadership failures are not isolated incidents, but are symptomatic of a broader institutional culture that prioritizes political expediency over ethical rigor. For example, the KP’s inability to address well-documented cases of non-compliance among member states, such as the infiltration of conflict diamonds from regions like the Central African Republic (CAR), demonstrates a systemic failure to enforce its own mandate. This lack of accountability is compounded by operational inefficiencies, including mismanagement and a lack of transparency, which further erode the KP’s credibility.



It is clear that the KP’s over-reliance on consensus-based decision-making exacerbates these issues by stifling critical thinking and suppressing dissenting viewpoints. While consensus is often lauded as a democratic ideal, in practice, it has led to a culture of complacency and inaction, particularly from KP member states. This is evident in the KP’s repeated failure to adopt meaningful reforms, such as expanding its definition of conflict diamonds to include human rights abuses or implementing robust traceability mechanisms. The result is a certification scheme that is increasingly perceived as outdated, ineffective and out of touch with the realities of the modern diamond industry.



Externally, the KP faces mounting skepticism from consumers, civil society organizations (CSOs), and industry stakeholders, who view its failure to address critical issues as a betrayal of its founding principles. The economic downturns and shifting consumer preferences have further exposed the KP’s inadequacies in the most unexpected manner. Younger generations, in particular, are demanding ethically-sourced and sustainably mined diamonds, with many turning to lab-grown alternatives. This shift in consumer behavior underscores the KP’s inability to adapt to changing market dynamics and its failure to provide credible assurances of ethical sourcing.



The rise of independent certification programs and traceability solutions, such as <a href="http://authentia.io/">Authentia.io</a>, further highlights the KP’s declining relevance. These initiatives, which leverage blockchain technology and other digital innovations, offer greater transparency and accountability than the KP’s outdated self-regulation model. The European Union’s decision to postpone the implementation of stringent diamond traceability requirements until 2026, a delay that has been widely criticized, serves as a stark reminder of the KP’s inability to drive meaningful change within the industry.


<div class="wp-block-image">
<figure class="aligncenter"><a href="https://authentia.io/" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4D12AQG2j4kydPNuOw/article-inline_image-shrink_1000_1488/B4DZWKYVF0GcAY-/0/1741783398305?e=1747267200&amp;v=beta&amp;t=KLwpf60_80J8x5VVifWXIca74B6eVqk2bVqW8x94OcE" alt="Authentia.io"/></a><figcaption class="wp-element-caption">Authentia.io</figcaption></figure></div>


One of the most glaring structural flaws in the KP’s framework is its narrow regulatory scope, which focuses exclusively on rough natural diamonds, while neglecting cut and polished diamonds. This regulatory gap has allowed conflict diamonds to infiltrate the supply chain, undermining the KP’s stated mission of preventing the trade in blood diamonds. The African Diamond Council (ADC) has repeatedly highlighted this issue, noting that participant countries often remain non-compliant while retaining their KP membership. This duality not only undermines the KP’s credibility, but also raises serious questions about its commitment to ethical sourcing.



Moreover, the KP’s failure to address issues such as smuggling and fraudulent certification further erodes its legitimacy. Despite repeated calls for stronger enforcement mechanisms, the KP has consistently failed to take decisive action against non-compliant members. This lack of accountability has created a culture of impunity, in which member states face no meaningful consequences for violating the KP’s guidelines. The ADC’s observation that even self-proclaimed advocates of ethical practices may be complicit in perpetuating the very issues they claim to oppose underscores the need for independent monitoring and oversight.



To restore its credibility and relevance, the KP must undertake a series of comprehensive reforms that address both its internal deficiencies and external challenges. The ineffective certification scheme must expand its definition of conflict diamonds to include human rights abuses, such as forced labor and environmental degradation, which are often associated with diamond mining. This would align the KP’s mandate with contemporary ethical standards and address the growing demand for responsible sourcing. The KP must implement stronger enforcement mechanisms to remove non-compliant members and ensure accountability. This could include the establishment of an independent monitoring body with the authority to investigate and sanction violations, which the ADC is willing to set up and assist with. The KP must adopt digital technologies to enhance transparency and traceability across the entire supply chain. This would not only restore consumer confidence but also provide a credible alternative to independent certification programs. The KP must move beyond self-regulation by member states and establish independent oversight mechanisms to ensure compliance with its guidelines. This would address the inherent conflict of interest that typically arises when member states are responsible for monitoring their own compliance. The KP must engage more effectively with industry stakeholders, including consumers, CSOs and industry professionals, to rebuild trust and foster a culture of accountability. This could include the creation of a multi-stakeholder advisory board to provide input on key decisions.


<div class="wp-block-image">
<figure class="aligncenter"><a href="https://preciousworld.online/" target="_blank" rel="noreferrer noopener"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4D12AQGq0eC9gf5Q_g/article-inline_image-shrink_1500_2232/B4DZWKZJg5HIAc-/0/1741783603907?e=1747267200&amp;v=beta&amp;t=AgL7DkZQbkBJJQtPXyVEd-eyWwQRXGPuQA73ebYHysg" alt=""/></a><figcaption class="wp-element-caption">Precious World Online</figcaption></figure></div>


As I conclude, the current trajectory of the Kimberley Process Certification Scheme (KPCS) is unsustainable. Its failure to address internal deficiencies, adapt to external challenges, and implement meaningful reforms has rendered it increasingly irrelevant in a rapidly evolving industry. The KP’s desperate plea for support letters entwined with the energy currently being exerted to circulate a strategically planned set of activities that are designed to positively impact the scheme&#8217;s reputation or achieve specific objectives will not suffice; only through comprehensive and transformative reforms can the KP hope to regain its credibility and restore confidence among its stakeholders. The time for action is now, as the KP’s continued failure to act will only hasten its decline and further erode trust in the global diamond industry.

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The Kimberley Process: An Illusion of Ethics?

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="216" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/03/south-africa-country-focus-hero-820x216.jpg" alt="" class="wp-image-596892" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/03/south-africa-country-focus-hero-820x216.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/south-africa-country-focus-hero-300x79.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/south-africa-country-focus-hero-160x42.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/south-africa-country-focus-hero-768x202.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/south-africa-country-focus-hero-1536x405.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/03/south-africa-country-focus-hero-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



Improving the business environment, strengthening governance, and reforming the labor market are among the keys to economic success&nbsp;&nbsp;



South Africa is well-positioned to confront significant longstanding challenges that have been holding the economy back: declining real per-capital income, persistent unemployment, pervasive poverty, and one of the highest inequality rates in the world. These outcomes reflect deepening structural rigidities and governance weaknesses, evidenced by the negative contribution of Total Factor Productivity to growth over the past 15 years.



A new Government of National Unity, in power since June 2024, has committed to tackle these challenges by providing new impetus to the ongoing structural reforms initiated in 2020.&nbsp;&nbsp;



“We are steadily removing the obstacles to meaningful and faster growth&#8230; [through] economic reforms that we are implementing as part of Operation Vulindlela,” South African President&nbsp;Cyril Ramaphosa&nbsp;recently remarked.&nbsp;Major electricity sector reforms are underway, allowing for private-sector participation in electricity generation, including from renewable sources. Reforms to the logistics sector are also ongoing, allowing for private sector participation in freight rail and port operations. The government is also moving to streamline digital communications regulations and water licensing procedures and modernize the eVisa system.



<figure class="wp-block-image"><img decoding="async" src="https://www.imf.org/-/media/Images/IMF/News/Country-Focus/2025/03/sa-cf-operation-vulindlela-infographic-portrait.ashx?w=1545px" alt=""/></figure>



These reforms are an important step in the right direction—necessary to alleviate binding constraints to growth, but on their own not sufficient to generate the productivity gains needed to put the economy on a path toward permanently higher growth.&nbsp;



To help unlock South Africa’s full growth potential, the&nbsp;<a href="https://www.imf.org/en/Publications/CR/Issues/2025/01/30/South-Africa-2024-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-561414">IMF recommends</a>&nbsp;fully implementing the reforms already underway as well as pursuing a package of further structural reforms:



<ul class="wp-block-list">
<li>Actions to enhance the business environment—by cutting excessive red tape and administrative requirements and ensuring that small and medium enterprises have fair access to markets—are essential to help support entrepreneurship, firm growth, and job creation. </li>
</ul>



<ul class="wp-block-list">
<li>Further efforts to fight corruption, professionalize public administration, and improve the governance of state-owned enterprises are paramount to build trust in public institutions and create a more stable and predictable business climate. </li>
</ul>



<ul class="wp-block-list">
<li>Complementary labor-market reforms to reduce spatial disparities, help young people enter the labor force, and make regulations for small and medium-sized enterprises more flexible are key to durably reduce the high unemployment rate—and particularly crucial with one in three adults and two in three young people out of work.</li>
</ul>



<a href="https://www.imf.org/en/Publications/CR/Issues/2025/01/30/South-Africa-Selected-Issues-561419" target="_blank" rel="noreferrer noopener">Recent IMF analysis</a>&nbsp;suggests reforms halving South Africa’s business regulation, governance, and labor-market gaps relative to peers could increase medium-run output by 9 percent and further boost employment. By raising employment and growth, such reforms are also key to reducing poverty and ensuring the benefits of growth are widely shared. IMF staff estimates that South Africa’s Gini coefficient—a measure of inequality, with higher numbers reflecting higher income disparity—would decline by 10 points, bringing South Africa closer to its peers.



<figure class="wp-block-image"><img decoding="async" src="https://www.imf.org/-/media/Images/IMF/News/Country-Focus/2025/03/SA-Reform-output-chart-v1.ashx?w=1200px" alt=""/></figure>



Building broad social support for reform efforts is essential to achieve their full benefits. Recent IMF analysis highlights that communication and engagement, along with policies to support vulnerable groups, are vital to increase acceptance of reforms. For example, providing information about the cost of electricity in South Africa, which is 68 percent higher than in the US, was found to boost support for electricity reforms by 9 percentage points. Furthermore, providing compensatory support to vulnerable groups affected by the reforms would lead 75 percent ofindividuals initially opposed to reforms to become reform supporters.



While the challenges are massive, South Africa’s new government has a unique opportunity to use its fresh mandate to implement an ambitious package of reforms that can put the economy on a path toward higher growth and prosperity for all. The IMF stands ready to support South Africa in its efforts to work towards a brighter future.&nbsp;



****



Delia Velculescu&nbsp;is the IMF’s mission chief for South Africa.&nbsp;Kamil Dybczak&nbsp;is a senior economist for South Africa in the IMF&#8217;s African Department.

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Boosting Growth and Prosperity in South Africa

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="5000" height="3335" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/03/MFT5KPTY55OPPPKFL2CKGKSG2E.avif" alt="" class="wp-image-596444"/><figcaption class="wp-element-caption">African heads of state and delegates attend the opening of the 38th Ordinary Session of the Heads of State and Government of the African Union at the African Union Commission (AUC) headquarters in Addis Ababa, Ethiopia, February 15, 2025. REUTERS/Tiksa Negeri/File Photo</figcaption></figure>



In 1989, John Conyers—the longest-serving African-American member of Congress in history—first introduced the “Commission to Study and Develop Reparation Proposals for the African-Americans Act,” or United States House Resolution 40 (H.R. 40), referring to the unmet promise of granting “40 acres and a mule” to freed slaves. H.R. 40 has been reintroduced in each session of the US Congress since then, but has not been enacted into law.



Its passage into law is unlikely to happen under the current 119th Republican-controlled Congress and administration, which has made dismantling diversity, equity &amp; inclusion (DEI) one of the cornerstones of its domestic agenda. According to the Pew Research Center, only 8% of Republicans and GOP leaners support reparations, compared to 48% of Democrats and Democratic-leaning independents. Yet reparatory justice is essential to addressing the US’s long and continuing history of racial inequality, and supporting the American ideal of “life, liberty, and the pursuit of happiness” for all people irrespective of race.



The consequences of the transatlantic slave trade have, of course, extended far beyond the US, affecting Africa and its diaspora all around the world. The historical injustice that started on the continent of Africa in the 15th century has invariably affected all people of African descent worldwide, with the cultural holocaust, loss of identity, and legacy of discrimination and unequal access to opportunities born out of it continuing to stifle their growth and personal development centuries later.



With this in mind, reparatory justice was the overarching theme of the 38th African Union summit held in Addis Ababa, Ethiopia, last month. The summit, involving heads of state and government from throughout the region, aimed to bring together Africa and its diaspora and to galvanize the international community to confront the historical injustice and long-term effects of slavery. To further sustain that momentum the African Union has made “Building a united front to advance the cause of justice and payment of reparations to Africans” the theme of the year for 2025.



Millions of young Africans forcibly transported across the Atlantic Ocean died during the infamous Middle Passage. Those who survived the journey were subjected to atrocious, dehumanizing treatment and exploited. In his 1805 illustrated publication “Injured Humanity”, Samuel Wood provided a vivid representation of what the children of Africa endured as slaves in America, how enslaved people were flogged and branded with a ‘red-hot iron’, how families were ‘violently separated; probably never to see each other more.’



Enslaved Africans and their descendants were given new names by their captors, names with no African root or meaning in their native languages. Superstrate European tongues dominated, contributing most of the vocabulary to the Creole languages that evolved in the ‘New World’, and the African languages became substrate. Today, in Africa itself, European languages also predominate, and African languages are at risk of extinction, reflecting the long-term impact of the colonial education system under which intergenerational transfer of knowledge is no longer carried out through endogenous vectors. The war-torn Democratic Republic of Congo (DRC) provides a tragic case in point—though many millions of Congolese were killed under the bloody colonial rule of King Leopold II of Belgium, the DRC is the second-largest French-speaking country in the world after France, and its capital Kinshasa is today home to more French speakers than Paris.



Across Africa, the continent’s flourishing civilizations were systematically destroyed by slavery and the colonial regime, and ordered systems of governance were brought down. Precious symbols of cultural meanings and artefacts were either looted or destroyed, engendering a sense of cultural discontinuity that has fueled alienation and a loss of identity. The slave trade, which primarily targeted Africa’s young and most-able workforce, stunted economic growth and long-term development, setting the region down a lasting path of external dependency, which has become the root cause of aid dependency as well as intergenerational poverty and systemic inequality.



Several factors have contributed to the transatlantic slave trade’s legacy. First, when imperial powers did finally abolish slavery they did not go through a period of atonement or attempt to reverse the hierarchization of races, which fundamentally transformed the world. Second, those countries that benefitted from slavery were more concerned with preserving wealth accumulation and global economic dominance than with ensuring the emergence of equal-opportunity societies after abolition.



So lucrative was slavery to European imperial powers that they felt compelled to compensate slaveholders after its abolition, further widening wealth and income inequality between races within and between countries. For instance, the Slavery Abolition Act of 1833, which abolished slavery in most British colonies, included a compensation package for enslavers worth £20 million (equivalent to more than £2 billion today), representing around 40% of the government’s total annual expenditure at the time. British taxpayers only finished repaying the money borrowed by the government to compensate enslavers in 2015.



Similarly, France granted reparations to enslavers and colonists to compensate for their lost revenues from slavery. The most emblematic case is Haiti, where France imposed a huge independence debt of 150 million Francs (representing 10 years of the Haitian government’s entire revenue) on former slaves. The payment ran for 122 years, from 1825 to 1947, and the money went to more than 7,900 former slave owners and their descendants in France. French economist Thomas Piketty estimates that France should repay at least US$28 billion to Haiti in restitution. Moreover, Napoleon reinstated slavery in 1802, positioning France as the only country in the world that has had to abolish slavery twice.



And because the abolition of slavery had no cost to France, it was reinstated and later abolished again, still at no cost to the state; because it had no cost to all European imperial powers, it was immediately followed by colonialism and apartheid to perpetuate the system of exploitation and domination which had led to stratified societies in which race and class intersect. People carry the memory of their past sufferings and are often defined by it. For people of African descent, digitalization has created an intercontinental collective imaginary of historical traumas associated with slavery, which is snowballing.



The enslavement of Africans is belatedly being recognized specifically as a crime against humanity. In 2001, France was the first country to declare that the transatlantic slave trade represented a crime against humanity, though President Emmanuel Macron ruled out reparations in 2017, calling instead for reconciliation. In 2020, the European Parliament recognized slavery as a crime against humanity. Last year, California joined a half-dozen US states to officially apologize for slavery, though the state legislature shied away from taking substantial actions relating to reparations. In a more encouraging move, in December 2022, the government of the Netherlands apologized for the country’s role in slavery and established a fund of €200 million (around $208 million) to raise awareness of the Netherlands’ history as a colonial power, as well as “fostering engagement” and “addressing the present-day effects of slavery”. 



International law recognizes that those who commit crimes against humanity must make reparations. Several countries have received compensation under this law, including the Republic of Korea, which suffered under the Japanese invasion, and Israel, which received compensation from Germany after World War II. Several communities have also received reparations for state crimes committed within national borders, including Japanese Americans after their internment and ill-treatment at the hands of US authorities and the Maoris of New Zealand, who received compensation for the seizure of their land by British colonizers in 1863.



In a departure from international norms, African slaves and states did not receive compensation. Instead, the abolition of slavery was associated with costs to slaves in a world where imperial nations had the memory of abolitionists and not of slaves. The restorative justice being championed by the African Union prioritizes repairing the damage suffered by the victims of slavery and their descendants rather than punishing the perpetrators. In addition to acting as insurance against the repetition of past and ongoing historical harms, this process is inherently collaborative, bringing together the descendants of enslaved people and slaveowners for a genuine dialogue to create a better world, going beyond monetary compensation. It also outstrips the piecemeal approach underpinning DEI programs, which often serve as ‘reparations-washing’—true justice demands systemic, structural changes to individual mindsets and corporate behaviors.



Despite the increasingly volatile political rhetoric, the long arc of the moral universe is bending toward justice, to paraphrase Martin Luther King Jr. Even in the US, the process of restorative justice is gaining momentum. The country’s experience after the Civil War can also inform current efforts in the quest for restorative justice at the global level. The original 40-acres-and-a-mule proposal, which was reversed by US President Andrew Johnson, resulted from a consultation between Union General William T. Sherman, African-American leaders, and Christian ministers. By endowing former slaves with means of production to strengthen the foundation of entrepreneurship within the African-American community and equalize access to opportunities in a largely agrarian economic environment, the model would have smoothed the transition of landless and uneducated free slaves into a new world of self-reliance.



Restorative justice today should prioritize the renewal of productive capacities across African and Caribbean nations, but also within the African diaspora in the US and other countries. This will drive entrepreneurship, expand their contribution to global output and trade, and break the vicious cycle of economic dependency and recurrent balance of payment crises that have dominated the post-abolition and independence era. This requires significant investment in physical and human capital to drive endogenous growth and structural transformation in a world where growth is increasingly powered by technology, as well as support from the international community as the African Union intensifies its efforts to pursue restorative justice.



At the same time, African leaders should, in memory of the victims of slavery, establish an International Day of Commemoration to be observed throughout Africa and beyond. They must also reform their institutions and education systems to memorialize and reappropriate their history and cultural heritage. It is equally important and urgent for African leaders to aggressively invest in preserving and restoring their cultures and revitalizing their languages. Language is identity; it is also a powerful vector of projection into the future, and Africa, the cradle of civilization, cannot afford to miss out on the ongoing digital and Artificial Intelligence (AI) revolution. That revolution is also taking a linguistic shape and will be represented by voice.



The process of restorative justice cannot be unidirectional. It requires more than atonement and money—if we are all to heal, collaboration between both descendants of slaves and slave owners is crucial. Recognizing slavery’s lasting impact as a crime against humanity, in addition to the steps being taken now by the African Union and other world leaders, are essential milestones amid ongoing efforts to create a better and equitable future for all people. But genuine success will depend on the commitment of all actors on both sides of the restorative justice equation.



Hippolyte Fofack, a former chief economist at the African Export-Import Bank, is a fellow with the Sustainable Development Solutions Network at Columbia University, a research associate at Harvard University, a distinguished fellow at the Global Federation of Competitiveness Councils, and a fellow at the African Academy of Sciences.

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Reparatory Justice and Africa’s Emancipation

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-820x547.jpg" alt="" class="wp-image-562084" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/QB6JRHKB7ZP6ZHQH64RWM3XN7A-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">U.S. President Joe Biden stands with Angolan Minister of Transport Ricardo Daniel Sandao Queiros Viegas de Abreu, during a visit to the Lobito Port Terminal to receive a briefing on the Lobito Atlantic Railway, in Lobito, Angola, December 4, 2024. REUTERS/Elizabeth Frantz</figcaption></figure>



Joe Biden’s early-December trip to Angola—his first to Sub-Saharan Africa as US president, and likely his last overseas trip in the role—underscored the stickiness of the colonial development paradigm of resource extraction that has long debilitated Africa. The major highlight of Biden’s visit related to a transnational railway initiative, which is considered by some to be the quickest and most efficient way to export raw materials and critical minerals from the Central African ‘Copperbelt’ via the Angolan port city of Lobito.



While indicative of a new era of US engagement with Africa, the Lobito Corridor project nonetheless perpetuates a highly volatile development model that focuses unduly on resource extraction and commodity dependence. Africa is the most commodity-dependent region in the world, with a median value of commodity exports of 90% of all merchandise exports, according to UNCTAD data. Such a high degree of dependency has stymied African economic development for decades, and risks undermining regional economies’ integration into emerging green global supply chains. The economic and social costs could be colossal, ranging from exporting resource rents and rising unemployment to mounting migration pressures, the latter already being exacerbated by climate crises.



Mine-related transport infrastructure that typically connects mines directly to ports—a pattern most prevalent in Sub-Saharan Africa—has been one of the most important physical representations and lasting legacies of colonialism. During the colonial era, transport and infrastructure networks in Africa were not designed to foster endogenous growth or support commodity-based industrialization. Instead, their principal objective was to maximize the extraction and transfer of natural resources and raw materials used in manufacturing processes across various industries to Europe.



Commodity-abundant nations in the Global South were reduced to resource stockpiles in the context of global economic integration, entrenching the divide between developed and developing countries. By holding the monopoly on technology and dominating the production and export of higher-value commodities, European powers widened the income gap with emerging economies in the Global South, locking the latter into a perpetual cycle of intergenerational poverty and aid dependency. Balance of payments crises became commonplace in the Global South, with the deterioration of commodity terms of trade sustaining structural current account deficits in the exclusive bilateral trade relationships between each imperial power and its respective former colonies.



Despite the multiplicity of actors both within the African continent and destination countries in the developed world, the Lobito Corridor project exemplifies these historical patterns. The 800-mile railway will connect Zambia’s Copperbelt as well as the copper, lithium, and cobalt mines of the Democratic Republic of Congo to the Angolan port city Lobito. Backed by the US and European Union (EU), the project will expedite the transportation of essential minerals—including many green minerals critical to the manufacture of electronics and electric vehicle (EV) batteries—significantly reducing transit times from 45 days by road to just 45 hours. For the EU and US, improved access to these critical minerals allows them to diversify and make their supply chains more resilient as geopolitical tensions and great power rivalries deepen and increase the weaponization of commodities.



Biden’s trip was eminently geopolitically motivated, with two key related objectives in a world set on an irreversible energy transition as the combustion engine-led growth model enters its waning years. First, securing access to minerals vital to the green transition and, second, countering China’s growing influence across Africa. China has become a significant economic player in the region, particularly in the natural resource sector and in infrastructure development. For decades, China’s engagement with Africa has prioritized infrastructure projects and investment in the region’s transportation networks, often financed by natural resource-backed loans.



China’s growing influence in Africa is also visible in the trade arena, in which it overtook the US as Africa’s largest trading partner in 2009. China has consolidated that pole position in the years since, while US imports from Africa collapsed following the country’s shale oil revolution and bid for energy independence. Angola, one of the most natural resource-dependent countries in the world—the oil sector accounts for more than 90% of Angolan exports and 70% of government revenues—was particularly affected by US’s shale revolution. Between 2012-23, Angola’s exports to the US fell by more than 88% to around US$1.2 billion, and the country’s direction of trade shifted towards Asia, with China becoming the top destination for Angolan crude oil.



However, though Africa may now be trading with different parties, the nature of the region’s trade patterns has not changed. Under the sticky colonial development paradigm of resource extraction, primary commodities and natural resources continue to dominate Africa’s exports, including around 60% of Sub-Saharan African exports to China. The region’s increasing reliance on China for manufactured goods has led to increasingly large trade deficits—the most recent estimates put Africa’s trade deficits with China at US$45.9 billion in 2022 and US$63 billion in 2023, a record high.



When challenged on the persistence and scale of trade imbalances between China and Africa, Chinese Vice Commerce Minister Qian Keming responded, “Africa must have things to sell [for China to buy].” This candid assessment again underlines the consequences of the costly development paradigm of resource extraction.



But the obstacles to growing African exports—particularly today, when trade is driven largely by intermediate and manufactured goods with increasing technological content—have a long history and have colored Africa’s engagement with both China and the US. Over the years, these hurdles have also skewed the distribution of African trade towards extra-African trade—intraregional trade has remained very low at around 15% of total African trade, compared to 60% in Asia and 70% in Europe.



Despite trade preference programs such as the African Growth and Opportunity Act (AGOA) along with benefits extended under the Generalized System of Preferences program, Africa’s trade with the US remains marginal, accounting for less than 1% of total US trade in 2023. In comparison, consider Vietnam, which accounted for more than 2.5% of total US trade last year. Vietnam’s exports to the US exceeded US$119 billion in 2023, dwarfing the US$29 billion of total exports from the 50 combined Sub-Saharan African nations.



Beyond boosting exports and sustaining high economic growth, Vietnam’s integration into high-value global supply chains has significantly raised per capita incomes and lifted millions out of poverty. It is not a natural resource-rich country, but has successfully leveraged the increasing foreign value-added content of exports to diversify its sources of growth and trade, including the production of critical electronics and other high-demand goods in the technology sector. For instance, 40% of the components in Samsung’s phones are made in Vietnam, while none are made in Africa where countries have remained confined to the bottom of global value chains as feedstocks that provide the raw materials used to produce them.



The colonial development model of resource extraction has been very costly in terms of growth, macroeconomic stability, and welfare. The ongoing net-zero transition provides the opportunity to transcend that model to promote the rise of downstream industries and boost domestic value addition from natural resources. This would enhance Africa’s integration into emerging green global supply chains, including those connected with the EV industry. More than catalyzing the injection of patient capital and technology transfer, that transition will mitigate the substantial foreign exchange reserve leakages and deadweight losses that underpin Africa’s balance of payments pressures. It would also accelerate the diversification of sources of growth to boost African trade and expand employment opportunities, stemming migration pressures in a region where abject poverty and destitution has compelled young people to relocate overseas.



Globally, transitioning to localized value chains in Africa aligns with environmental and economic priorities. That transition will accelerate the diversification of global supply chains for greater resilience and, in the process, address the persistent global macroeconomic imbalances that have become the source of trade frictions between nations. Furthermore, it will enhance the net-zero transition by reducing the shipping industry’s carbon footprint, exacerbated over the years by the highly polluting round-tripping model under which Africa’s raw materials are first exported and then imported as manufactured goods at higher prices. Demographic trends are such that this model is no longer sustainable and will only intensify carbon emissions and external imbalances.In the climate change era, boosting domestic value added from natural resources within Africa is not just good economics, but also environmentally sound.



The world has an interest in increasing downstream processing in Africa to maximize the value of and development impact of commodities and minimize the negative externalities of growth. This historical shift will ensure that African countries have things to sell to the rest of the world and to each other, boosting long-languishing intra-African trade and compounding the benefits of the African Continental Free Trade Area (AfCFTA). The returns on the Lobito Corridor investment project will be even higher if the transnational rail line is the locomotive that sustainably bolsters the export of both primary and higher-value commodities. &nbsp;



For the region to truly benefit from the project, policymakers and investors must look beyond short-term resource extraction and prioritize long-term, sustainable economic development. Only then can Africa move beyond its colonial legacy and become a competitive contributor to global value chains.

U.S. President Joe Biden vistis the Lobito Port Terminal

Biden’s Africa trip spotlights colonial legacies and dangers of commodity dependence

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="768" height="593" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/02/Neema-Lugangira-1-1.jpg" alt="" class="wp-image-590216" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/02/Neema-Lugangira-1-1.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/Neema-Lugangira-1-1-300x232.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/Neema-Lugangira-1-1-117x90.jpg 117w" sizes="auto, (max-width: 768px) 100vw, 768px" /><figcaption class="wp-element-caption">Neema Lugangira, MP, Tanzania, and Ex-officio Lead Group member of the Scaling Up Nutrition (SUN) Movement </figcaption></figure>



For&nbsp;the first time, African countries have made nutrition a key focus of their continent-wide agricultural development strategy. The recent endorsement of the latest 10-year Comprehensive Africa Agriculture Development Programme (CAADP)&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://rr-africa.woah.org/app/uploads/2025/01/English-CAADP-Strategy-and-Action-Plan-2026-2035_250111_165547.pdf">Strategy and Action Plan</a>&nbsp;marks a significant shift in which food quality is prioritised alongside quantity to sustainably improve food production while also ensuring healthy diets.



Nutrition is central to all of the objectives of the Kampala Declaration. By addressing malnutrition in all of its forms, as well as its underlying drivers, societies are better equipped to cope with the risks of climate change and disasters, and the erosion of human capital that comes as a consequence of unhealthy diets.



However, each African country faces its own unique set of challenges, from barriers to agricultural production and climate variations to specific dietary and&nbsp;health&nbsp;concerns. In particular, the different manifestations of malnutrition across Africa, from undernutrition to overweight and&nbsp;obesity,&nbsp;mean that fulfilling the Kampala Declaration will&nbsp;require&nbsp;country-level&nbsp;strategies that address individual contexts as a whole-of-society endeavour.



Governments in every African country must therefore find their own ways to integrate nutrition across all relevant departments and ministries, which include&nbsp;health, agriculture, education, and economy. And there is no time to waste. With just two months until the&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://nutritionforgrowth.org/">Nutrition&nbsp;for&nbsp;Growth Summit</a>&nbsp;(N4G),&nbsp;a&nbsp;global&nbsp;event that fosters financial and political commitments, countries have a narrow window in which to set out their commitments and garner support from the international community.



New data mean parliamentarians across the continent now have a greater understanding of the scale of all forms of malnutrition in Africa alongside the cost of inaction. A staggering&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://www.unicef.org/reports/child-food-poverty">64 million children</a>&nbsp;under five years of age are estimated to live in severe food poverty. This results in inadequate nutrition or undernutrition, which inhibits physical and cognitive development, limiting children’s future productivity to just&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://openknowledge.worldbank.org/entities/publication/2c0b8b5e-0f67-47fe-9eae-d4707d9ed195">40%</a>&nbsp;of its potential and hampering Africa’s future development.



Beyond undernutrition, obesity – another form of malnutrition – is identified as an equally pressing challenge stalling progress in many African countries. Nearly a&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://openknowledge.fao.org/server/api/core/bitstreams/d5be2ffc-f191-411c-9fee-bb737411576d/content">third</a>&nbsp;of adults in Northern and Southern Africa are classified as obese, a trend linked to dietary shifts toward processed foods. Combined, all forms of malnutrition leave Africa’s entire population vulnerable to shocks, including climate extremes, poverty, and disease outbreaks. Integrating nutrition into all sectors can help governments future-proof communities against the impact of these shocks.



Moreover, the benefits of integrating nutrition into national strategies and budgets extend to human development and economic growth.&nbsp;For&nbsp;instance, a&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://openknowledge.worldbank.org/entities/publication/2c0b8b5e-0f67-47fe-9eae-d4707d9ed195">return</a>&nbsp;of up to $23 is expected&nbsp;for&nbsp;every dollar invested in addressing undernutrition in a typical African country. At the same time, investing in nutrition interventions supported by national policy actions to address the underlying causes and impacts of malnutrition would allow healthy growth and development of the population, which, in turn, increases a country’s productivity.



Tanzania’s National Nutrition Strategy is an inspiring&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://scalingupnutrition.org/resource-library/case-studies/case-study-leveraging-office-prime-minister-enhance-nutrition">example</a>&nbsp;of how integrating nutrition into national development agendas could help African leaders address the different forms and impacts of malnutrition. Under the leadership of H.E. President Samia Suluhu Hassan, Tanzania actively raised awareness about nutrition among parliamentarians and fostered partnerships with private and civil society actors.



This led to the development of the country’s National Nutrition Strategy, which established nutrition coordination committees and interventions across all regions, councils and sectors, leading to&nbsp;improvements in nutrition outcomes, particularly among women and children. As an early member of the&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://scalingupnutrition.org/">Scaling Up Nutrition Movement</a>&nbsp;in 2010, Tanzania has benefited from&nbsp;global&nbsp;networks that have helped build the capacities of local communities to implement effective nutrition interventions and sustain these efforts into the future.



Like Tanzania, other African countries must now focus their attention on how each can incorporate nutrition across all regions and sectors to deliver on the objectives of the CAADP Strategy and Action Plan.



The year ahead offers multiple opportunities, including South Africa’s&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://g20.org/g20-south-africa/g20-presidency/">Presidency of the G20</a>, to consolidate new commitments to tackling malnutrition at national levels. Alongside the&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://nutritionforgrowth.org/">Nutrition&nbsp;for&nbsp;Growth Summit</a>&nbsp;in March, the extension of the&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://www.who.int/teams/nutrition-and-food-safety/global-targets-2025">World&nbsp;Health&nbsp;Assembly&#8217;s targets on nutrition</a>&nbsp;to 2025 also provide critical moments&nbsp;for&nbsp;reinforcing the urgency of tackling malnutrition. The&nbsp;<a rel="noreferrer noopener" target="_blank" href="https://scalingupnutrition.org/">Scaling Up Nutrition Movement</a>’s own&nbsp;Global&nbsp;Gathering at the end of the year will be an important moment to work on the implementation of commitments made at the Nutrition&nbsp;for&nbsp;Growth Summit, showcase country case studies and further galvanise support from the&nbsp;global&nbsp;community. All will be essential&nbsp;for&nbsp;driving investment into the special fund established under the CAADP Strategy and Action Plan to support nutrition-sensitive agricultural development.



By aligning national policies, budgets, and actions with the goals of the Kampala Declaration, African countries can foster well-nourished populations that are better equipped to adapt to climate change, improve economic productivity, and build more resilient societies. I am confident that the opportunities in 2025 will help to underpin the collective effort we need from all stakeholders—governments, the private sector, and civil societies alike.

CSIS Tanzania Arusha Day Two-2019-Sala Lewis-221

Africa’s renewed focus on nutrition will help build resilient and productive societies

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="615" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/02/Credit-Mulapwa-Mukopole-UNDP-Zambia-820x615.jpg" alt="" class="wp-image-587471" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/02/Credit-Mulapwa-Mukopole-UNDP-Zambia-820x615.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/Credit-Mulapwa-Mukopole-UNDP-Zambia-300x225.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/Credit-Mulapwa-Mukopole-UNDP-Zambia-120x90.jpg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/Credit-Mulapwa-Mukopole-UNDP-Zambia-768x576.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/Credit-Mulapwa-Mukopole-UNDP-Zambia-1536x1152.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/Credit-Mulapwa-Mukopole-UNDP-Zambia.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Strengthening climate resilience of agricultural livelihoods in Agro-Ecological Regions I and II (GCF), Zambia. Credit: Mulapwa Mukopole/UNDP Zambia&nbsp;</figcaption></figure>



In 2024, Zambia faced one of its most severe droughts in recent history, that placed a deep strain on water and electricity supplies, deepened food insecurity, and exacerbated a deadly cholera outbreak. While the arrival of rain this year has somewhat eased water shortages, electricity supply remains limited, and other challenges persist. A year on from the crisis, President Hakainde Hichilema has effectively led his government towards a new approach; one that transforms these pressing issues into opportunities for sustainable solutions.



Drought Impact and Response



The drought, considered the worst to hit Zambia in two decades, resulted in a widespread food shortage, and an estimated 33% of the Zambian population were expected to face hunger between October 2024 and March 2025, before an expected strong maize harvest in the second quarter this year. In response, at the time, President Hakainde Hichilema declared the drought a national disaster in February last year, enabling the immediate mobilisation of national and international resources &#8211; marking a shift from the delays seen under previous administrations.



The government showed similar decisive action when water scarcity in 2024 exacerbated a brief cholera outbreak which had begun in October 2023. A multi-sectoral ministerial response team was swiftly mobilised to tackle the disease from various fronts. Internal resources were allocated to community awareness campaigns,



Public sanitation efforts, and personal hygiene promotion



Partner organisations, including the Africa CDC, answered the government’s call for support, contributing by training health workers, supplying medical equipment, and enhancing cross-border disease surveillance.



Beyond these measures, the government has taken significant steps to strengthen Zambia’s long-term healthcare resilience. In October 2024, President Hichilema oversaw the signing of a $37 million Memorandum of Understanding (MoU) between the Industrial Development Corporation and China’s Jijia International Company to construct the country’s first cholera vaccine plant.



This domestic production capability addresses a critical gap exposed during the 2023/24 outbreak when vaccine shortages hampered response efforts. Furthermore, it puts Zambia on course to eliminate the disease by 2030, aligning with global health targets.



The government&#8217;s containment efforts in 2024 have yielded promising results. So far, Zambia has recorded 208 cases and 9 deaths &#8211; an enormous improvement compared to nearly 20,000 cases and over 600 deaths at the same time last year. This sharp decline highlights the effectiveness of the government’s proactive health measures.



While managing the health crisis, the government also had to address the drought’s severe impact on energy supply. Water levels in the country’s two major hydropower water basins have been drastically depleted, leading to frequent blackouts with disruption to industries and communities alike.



In response, the government introduced regulations to fast-track the importation and deployment of renewable energy solutions, particularly solar power. It also implemented net metering and enhanced electricity open access, encouraging increased private sector participation in the power sector. These measures align with the broader strategy to diversify Zambia’s energy mix and reduce dependence on centralised hydroelectric power.



Comprehensive steps have also been taken to address food security, moving beyond emergency responses toward sustainable solutions, with a focus on urban agriculture. A key milestone in this effort was the development of Zambia’s first National Rainwater Harvesting Strategy to improve water security, supported by the European Union’s Green Nexus Programme. In 2024, the government strengthened this approach by launching the Comprehensive Agricultural Transformation Support Program (CATSP), designed to enhance food security, create jobs, and boost agricultural exports. This commitment is further reflected in the 2025 national budget, which allocates K15.4 billion to agriculture, fisheries, and livestock interventions &#8211; up from K11.2 billion in



2023 and K13.8 billion in 2024. Of this, 60.1% (K9.27 billion) is earmarked for the Farmer Input Support Programme (FISP), ensuring small-scale farmers have better access to agricultural resources. Support for small-scale farming has been further strengthened through the National Agricultural Mechanisation Strategy, developed in collaboration with universities, farmers, the private sector, and international partners such as the EU, the UN’s Food and Agriculture Organization (FAO), and the International Maize and Wheat Improvement Centre. This strategy aims to increase agricultural productivity across crops, livestock, and fisheries, with a strong focus on maize, wheat, and soya production. Under the same strategy, the government launched the &#8216;Mechanise 360 Ulimi Okwana&#8217; campaign aimed at modernising agricultural practices for smallholder farmers across 500,000 hectares of arable land.



To tackle the broader issue of food security and challenges to public health, the government is also investing in water, sanitation, and infrastructure. The 2025 budget allocates K2.3 billion to water and sanitation projects &#8211; 21% higher than the previous year’s allocation. Under the Food Security and Drought Response Plan, 12 new dams will be constructed, 14 rehabilitated, and 385 will undergo maintenance, with plans to construct 947 boreholes, install 500 piped water schemes, and develop 1,835 water points. These projects aim to improve water management, enhance public health, and reduce the prevalence of waterborne diseases while ensuring reliable water access for over 3.5 million Zambians.



Transforming Crisis into Development Opportunities



By declaring the drought a national disaster and emergency, the government was able to swiftly mobilise resources and coordinate assistance with international partners. Citizens have adapted by finding new ways meet their food and energy needs, shifting away from rain-fed maize farming and increasing their uptake of solar power and alternative energy sources for cooking and heating. Increased government funding and active engagement have strengthened public trust in its capacity to address Zambia’s most pressing challenges.



While the drought tested Zambia’s resilience last year, it catalysed sustainable solutions, demonstrating the country’s capacity to adapt to the evolving demands of climate change and food security.

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