The new race for Africa: How can Africans win this time?
In December 2022, 49 African leaders came together in Washington to meet with President Joe Biden at the U.S. – Africa Leaders Summit, the first one since 2014. The summit not only represented America’s commitment to the International Liberal Order since Trump’s disengagement, but it also symbolized Africa’s new eminence in global affairs.
Today, Africa matters more than ever in the global economy, with several super and middle powers scrambling to share the fruits of its potential growth. By 2050, Africa’s booming population is expected to reach 2.5 billion, and it’s working population is to make up 70% by 2035 compared to the estimated 37% today. Furthermore, there has been a gradual shift from extraction-focused economic development to a more diverse business portfolio, evident in FDI flows, such as agriculture and telecommunications.
The growing demand of consumption and labour, coupled with stabilizing politics and increasing diversification, translates into an untapped market of potential. As such, Africa has recently been labelled the ‘‘last frontier market,’’ meaning that it could be the next prosperous region of the world. As manufacturing becomes increasingly costly in Southeast Asia, multinational corporations and investors are reorienting their businesses to Africa. Additionally, the disposable income stemming from Africa’s emerging middle-class presents itself as an untapped market for global businesses seeking to expand their goods and services. However, the gap in infrastructure supporting Africa’s growth and its people’s livelihood persists.
Therefore, African leaders will have to strategically select their partners to fund and sustain their individual needs. This means making difficult decisions and avoiding short-sighted opportunistic offers that will not catalyze the (long-term) development agenda of the recipient country. Sector-specific priorities that will improve the wellbeing and economic prospects of Africans need to be the first concern.
Unsurprisingly, the rivalry between the West and China is also manifesting in Africa, but that may be used to African leaders’ advantage. Realizing that African leaders are no longer interested in serving as an instrument of foreign interests, Washington’s approach has shifted from paternalistic to a partnership approach. From an African perspective, it makes little sense to play a zero-sum game and exclusively subscribe to U.S. and U.S.-backed partnerships. Instead, African countries should invest in their negotiating capacity, by encouraging and tapping into the pool of African students abroad to foster country-specialists. Understanding the language, business culture, and interests of their partners could reduce information asymmetries when conducting bilateral deals. Eventually, this could also facilitate an institutionalized cost-benefit analysis framework that helps match a country’s individual needs to the ‘‘menu’’ of potential partners.
By the same token, an effort should be made to export African culture (e.g. Nigerian Afrobeat music), similar to how Japan projects it’s soft power through pop culture (e.g. anime, sushi, etc). Projecting African culture into the world will not only foster an interest into African affairs, but also help dismantle the detrimental narratives of an impoverished and dysfunctional continent. The perception of Africa as a land of opportunity needs to happen beyond the global political elites and business leaders, but also within the public opinion.
Adhering to Western claims of Chinese neo-colonialism in Africa would be devoid of nuance and can work against the interest of African development. Replacing an overreliance in a country/consortium (e.g., China) with another (e.g., the West) will not deter the lenders from exerting its influence on the continent for their national interests. Instead, partner diversification is what will empower African agency in their development. African nations should consider themselves a prize and pit competitors against one another in order to secure better deals for themselves.
For example, Ethiopian negotiators secured 850 million USD in May 2022 when it alloted its first telecom licences to a consortium of operators including Kenyan, British, and Japanese companies. As it liberalized its economy, Ethiopia strategically limited the number of bidders in line with their national interests. Furthermore, the government refused any mobile-money services unless new operators built their own infrastructure, or leased it from the Ethiopian state, rather than allowing third-party tower operators. This has led to the biggest foreign direct investment in Ethiopia’s history, amounting to 8 billion USD for the network’s infrastructure.
This kind of assertiveness in negotiations could avert debt-mishaps, like what transpired in Angola, where the fall in oil prices meant they could no longer repay China’s oil-backed infrastructure loans. Nevertheless, China provides Africa with critical infrastructure funding that should not be dismissed. Thus in order to avoid the potentially high risks of resource-backed loans, the continent’s leaders should take advantage of the revitalized competition for Africa by compelling competitors to either provide better deals (i.e., pitting them against each other), or to cooperate and engage in mutually beneficial deals.
With that said, Africa’s emergence as an important global player is undeniable, but its prospects will be highly contingent on how the continent strategically embraces and leverages the bidders seeking to bet on Africa’s future.