IMF: The division between Washington and Beijing opens a door to Africa Economy News

At the annual meetings of the International Monetary Fund and World Bank in Washington, Africa’s ability to withstand the geopolitical winds coming from Washington and Beijing topped the agenda, amid warnings of a “double shock” threatening the continent.

Double hit

US President Donald Trump imposed tariffs, and the African Growth and Opportunity Agreement (AGOA) expired on October 1, dealing a double blow to African exporters.

At the same time, China, facing an increasing closure in the US market, has begun exporting its industrial surplus to Africa, as its exports to the continent rose by 26% last month, while its exports to the United States decreased by 33%.

The International Monetary Fund criticized the United States, China and Canada, noting that 188 out of 191 member countries preferred to continue trading under “most favored nation” rules, rather than escalate tariffs.

Africa is in danger

Africa is particularly vulnerable to the division of major economic powers because of its long association with East and West.

The International Monetary Fund estimated in 2023 that a complete split could cost Africa a loss of 4% of its economic growth, the highest rate among all regions.

Despite this, the continent has shown remarkable resilience, partly due to its weak connection to the American market compared to China, as the volume of bilateral trade with the United States reached $50.8 billion as of July, compared to $222 billion with China as of August.

African moment

Abebe Selassie, Director of the Africa Department at the IMF, sees the trade war between Washington and Beijing as an opportunity for Africa to enhance regional integration through the African Continental Free Trade Area.

Selassie pointed out that intra-African trade tends toward value-added manufactured products, unlike trade with the world that focuses on natural resources.

Morocco and Nigeria: contrasting models

Morocco is considered a success story, as it strengthens its regional ties by developing the port of Dakhla and expanding the air transport network, according to Finance Minister Nadia Fattah Alaoui, who stressed that trade openness provides access to larger markets and broader financing, despite the risks associated with fluctuations in customs duties.

As for Nigeria, it benefited from the devaluation of its currency, the naira, after two successive devaluations by President Bula Ahmed Tinubu, which made Chinese imports more expensive and encouraged local production.

Central Bank Governor Yemi Cardoso said that Nigeria has begun to achieve a trade surplus that is expected to reach about 6% of GDP, as a result of comprehensive economic restructuring.

A call for reform of the global trading system

The G24, which includes 11 African countries, called for the restoration of a stable and transparent trading environment, warning that trade tensions and political uncertainty are burdening emerging market and developing economies, and constraining growth due to escalating financial and debt risks.