Global economic spotlight shifts to Africa this week

AFRICA sometimes flies under the global radar, despite its growing economic power. However, that is changing this week. On Dec 1 (Sunday), South Africa assumed the G20 presidency for the next year, and US President Joe Biden is travelling to the continent from Monday to Wednesday, potentially his last overseas trip as president.

Both moments are big firsts. No African nation has ever held the G20 before. Moreover, Biden’s trip reportedly to Cape Verde and Angola is his first to the continent as US president, as he seeks to showcase to his successor, Donald Trump, and the wider West the strategic importance of Africa in the second half of the 2020s.

South African President Cyril Ramaphosa has said he will use South Africa’s G20 year, which will reportedly see 130 meetings in the next 12 months, to put the spotlight on the huge economic potential of the continent, which is increasingly seen to have the potential to become the main driver of global growth. According to the World Bank, between 2017 and 2021, average global growth was 2.4 per cent, compared with 3.7 per cent between 1996 and 2000.

This growth rate may fall further in the period to 2030. Yet, Africa could potentially boost it. At a time of global demographic ageing, the share of Africa’s population aged 65 or over has remained at around 3 to 4 per cent over recent decades.

Huge consumer market

It has therefore earned the nickname of the “young continent”, with around two-thirds of its population under the age of 30, and 40 per cent under the age of 14. Overall, Africa’s population is forecast to double by 2050, to around 2.8 billion, with a huge consumer market that is increasing demand for global goods and services.

The continent also has abundant, highly diversified natural resources. This includes almost 30 per cent of global mineral reserves, about 12 per cent of oil reserves, and around 8 per cent of natural gas reserves.

Africa also boasts the world’s biggest reserves of cobalt, diamonds, uranium, platinum, and rare earth elements, which are increasingly key in strategic high-tech industries such as semiconductors and electric batteries.

Africa is also a renewables and agricultural superpower. It has around 65 per cent of the world’s uncultivated arable land, and the potential from solar power technology in North Africa and the Middle East, alone, is forecast to potentially be 100 times the electricity demand of Europe, North Africa, and the Middle East.

Biden, who becomes this week the first US president to visit Africa since 2015, will bring attention to this continental growth story in the context of US policy. At present, Africa accounts for only around 1 per cent of US foreign trade, which is dominated by petroleum imports from Nigeria and Angola. Biden has said that he is “all in on Africa” and, in 2022, he hosted the African Leaders Summit in Washington, the first such meeting for eight years.

One of Biden’s early presidential initiatives was the launch of the Partnership for Global Infrastructure and Investment (PGII) at the G7 summit in Germany in 2022. A key goal is to narrow the investment gap for quality infrastructure with the intent to provide an alternative to China’s Belt and Road Initiative.

Biden will reportedly visit Cape Verde, briefly, but spend most time in Angola. His choice of natural resources-rich Angola, Africa’s eighth-largest economy, is very deliberate. At the G7 summit in Japan in 2023, Biden announced – in partnership with the EU – the Lobito Corridor initiative as part of PGII to expand and modernise the transportation route connecting the Democratic Republic of Congo (DRC) and Zambia with global markets through the port of Lobito, Angola.

So, the project, supported by a growing range of corporates including Trafigura, Mota-Engil, and Vecturis, is a potentially groundbreaking African infrastructure venture between the West, African governments, and African financial institutions. If it bears fruit, it may be a partnership blueprint for similar joint initiatives.

Lobito’s rival is an existing China route, transporting minerals such as copper and cobalt from Zambia and DRC – the so-called Tazara railway. This is a line from inland mining countries to the Indian Ocean and, earlier this year, President Xi Jinping signed off on a plan to rehabilitate this project which connects Zambia’s copper belt region to the Tanzanian port of Dar es Salaam.

While Donald Trump’s presidency will have a different policy to Africa than Biden’s, it is likely Trump will support the Lobito project. For instance, Tibor Nagy, a top envoy to Africa under the first Trump administration, said Trump will probably have two strategic policy priorities to Africa: countering China, and, secondly, securing continued US accessibility to key critical minerals.

The United States first recognised the Angolan government in 1993. However, it was not until 2017 that bilateral relations began to warm significantly with Joao Manuel Goncalves Lourenco’s election as president. The nation of almost 40 million people is Africa’s second-largest crude oil exporter, with oil making up most of its exports.

Crucially for the US, Angola is also diversifying its dependence on China. For decades, Angolan dependence on Chinese loans grew after it emerged from the civil war in 2002. The country still owes China around US$17 billion, mostly in the form of oil-backed loans, which had funded infrastructure such as roads and public housing.

The still significant economic dependence of Angola on China is a familiar story in Africa. From 2000 to 2023, China lent Africa over US$180 billion, moving Beijing to become the top bilateral lender for multiple nations on the continent.

Around a quarter of that has been for loans to Angola for mostly energy and transportation projects, with Ethiopia, Egypt, Nigeria, and Kenya making up the top five borrowers.

The US$180 billion is multiples of the total of African Development Bank’s sovereign loans. The majority of these monies have been invested in Africa’s energy, transport and ICT sectors.

The broader context is that, around 15 years ago, China surpassed the US as Africa’s biggest trading partner, with trade volumes recording a record high in 2023. Around a fifth of Africa’s exports now go to China, the bulk of which includes metals, mineral products and fuel.

Taken together, Biden’s trip will focus on the huge potential of Africa, which has global systemic importance. However, with US policy seeking to catch up with China in the continent, Washington’s regional allies rightly worry that Trump’s second presidency could see Africa’s perceived importance relegated again in the White House.

The writer is an associate at LSE IDEAS at the London School of Economics