How the U.S-China trade tensions impacts Africa’s free trade agreement

As the U.S-China trade tensions continue to impact global markets, Africa finds itself at a critical juncture in determining its economic trajectory. Martyn Davies, Managing Director for Emerging Markets and Africa at Deloitte, shared insights on how this geopolitical landscape is shaping the continent's position in the world economy. Africa's reliance on China as its largest global trading partner has been a key driver of economic growth in recent years, particularly in commodity exporting countries. The strong growth trajectory of China has propelled African economies, especially in the eastern part of the continent, towards a China-centric economic model. This strategic alignment with China has significant geoeconomic implications for Africa, as it positions the continent at the intersection of the U.S-China rivalry. The relationship between China and Africa has evolved into a symbiotic partnership, with China's investments in infrastructure and commodities driving African growth. However, the U.S-China trade tensions pose a potential risk to this dynamic, as the U.S government targets Chinese companies operating in Africa, which could destabilize certain sectors. Companies like Huawei, with a significant market share in Africa, are facing scrutiny from the U.S government, leading to concerns about the future of Chinese investments in the continent. The prospect of President Donald Trump's re-election raises further questions about the future of Africa's engagement with the U.S. While the current administration has shown interest in Africa through initiatives like Prosper Africa, the U.S approach to the continent remains largely functional rather than geopolitical, creating a disconnect between government policies and political priorities. The potential impact of a Joe Biden presidency on U.S-China relations is a point of consideration, with expectations of a more tempered approach under a Democratic administration. The Africa Continental Free Trade Area (AfCFTA) represents a significant opportunity for the continent to leverage its collective bargaining power in engaging with global partners. However, Davies notes that Africa must move beyond traditional resource-based economies and focus on innovation to attract capital and drive sustainable growth. The COVID-19 pandemic has accelerated existing trends in African economies, highlighting the importance of functional and economically literate states in driving progress. While some countries like Kenya, Ghana, and Ethiopia show resilience amid economic challenges, others lag behind in value creation and development. The upcoming selection of the World Trade Organization's Director-General, with two African candidates in the running, presents a unique opportunity for Africa to champion free trade on a global stage. Davies emphasizes the importance of multilateralism and the need for international institutions to be reformed to enhance efficiency and functionality. As Africa navigates the complexities of a changing global landscape, strategic partnerships and a focus on value creation will be key in driving sustainable development across the continent.